How Puma is Going Global
Ninety percent of the world's internet population lives outside of North America, with 46 percent residing in Asia, and, more specifically, China. Within China alone, there are 700 million internet users — and that's only 50 percent of the total market. That's a massive market opportunity for U.S. brands that can extend their reach beyond their domestic borders.
This was the message of Tom Davis, head of global e-commerce at Puma, during his keynote address at the eTail East conference in Boston yesterday. Davis likened the opportunity for brands to go global to the early days of the dot-com boom. “It's like 1999 all over again,” he said.
Puma has an e-commerce presence in 30-plus countries, with sites in 13 languages and accepting 11 different forms of currency. The sportswear and athletic footwear brand views its global strategy as a growth driver — i.e., a way to drive more people to its site.
Flirting, Dating, Marriage
How retail brands go about the process of marketing and selling their products to international consumers can be broken down into three steps, which Davis likened to the stages of building a relationship: flirting, dating and marriage.
Flirting is akin to operating a cross-border business from within the United States where you ship your products internationally. This stage lets you gauge whether there's interest in your brand, and doesn't require much of an investment. It's quick, easy and low cost, and there are a number of providers that can help you, Davis said, mentioning Borderfree and Bongo International.
Dating is the next step in the relationship. Here retailers invest in opening a foreign office, develop country-specific websites and begin to become to part of the local community. However, they're still using multiple platforms, have a lack of synergy with the domestic business and are dealing with one-off costs.
Marriage is when the retail brand is fully invested in going global. It's importing product into the international markets, has “feet on the ground” in those markets and is operating on a single platform. This stage isn't quick, easy or cheap, and it has a high margin for error, but the payoff if done right is worth it, said Davis.
Global or Local Org Structure?
This is a primary question that brands must answer when taking their business global. With a global structure, the business is controlled from a central headquarters, with direct communication, and everyone reporting straight up the organization chart. A local organizational structure consists of multiple regional directors, who may have different strategies — e.g., discount brand in country, full price in another.
Retailers must also consider how their e-commerce technology is set up within their organizational structures. For a global org structure, everyone is mandated to use the same platform and business systems (CRM, ERP, order management, inventory, etc.); in a local org structure, there are regional platforms and systems.
Davis noted that one org structure isn't necessarily better than the other, it depends on what's the best fit for your brand. What trade-offs are you willing to make, he said, adding that there are pros and cons for each.
3 Tips for Going Global
Davis closed his presentation by offering three tips for the retailers in the audience to help them get started selling internationally online. By his own admission, these are three things that Davis wishes Puma would have done differently when it started selling in foreign markets.
1. Be wary of using “western” solutions providers in international markets. Third-party vendors in the U.S. have a hard time keeping up with the complexity of selling internationally (e.g., taxes, shipping, currencies), and because of this “cost creep” sets in — paying for add-on solutions.
2. Implementing a single platform for all markets is easier said than done. The costs are huge and the timelines are slow. In addition, the markets are evolving so quickly that by the time you launch your platform is already out of date.
3. Sell your products on marketplaces. Once considered down market and too promotional, online marketplaces are now critical to international e-commerce success, Davis said. If you're not selling on online marketplaces, you're missing 60 percent to 70 percent of the international market opportunity, he added. For example, 90 percent of e-commerce sales in China occur on marketplaces, primarily Tmall and Taobao. Ninety-five percent of Puma's business in China comes from marketplaces, Davis said.