What's Next for Smaller Retailers in 2023?
2022 was in many ways a challenging year for retail, marked by economic fears and shifts in consumer sentiment. While there are signs that retail may be beginning to stabilize, with record sales being recorded during last year’s Black Friday, there are also clear indicators that shoppers’ behaviors are constantly shifting.
The way consumers worldwide prefer to shop online is evolving. A 2022 survey our company conducted revealed that 58 percent of online shoppers prefer buying directly from the retailer’s website rather than an online marketplace (40 percent) or local resellers (35 percent). Furthermore, in the U.S., the rate of growth for new digital buyers is decelerating, whereas in regions like the Middle East, LATAM, and Africa, it's exploding. Clearly, there are a plethora of new ways to reach a rich potential of global digital buyers — a strategy that can be beneficial for small to midsized businesses (SMBs).
While SMBs see helpful revenue spikes from the domestic retail powerhouse holidays like Black Friday, Christmas, and Valentine’s Day, those highs typically moderate shortly thereafter and competitive obstacles inevitably return.
SMBs can thrive by extending their offerings to focus on growing their international business. This can be achieved by tapping into other global holiday peaks with an international consumer base. By taking advantage of the wide variety of local holiday-inspired shopping peaks throughout the year, retailers will be able to capitalize on a cross-border e-commerce market that's estimated to reach $2.25 trillion by 2026.
However, this strategy for the upcoming year hinges on retailers’ willingness to localize their offering to target international e-commerce buyers. Those that succeed can capitalize on the diversity of year-round consumer crazes happening throughout the world.
A Local Approach Abroad
Selling internationally is inherently complicated — a business model that thrives in one market is never guaranteed to translate overseas for a wide range of reasons: operational issues, dealing with multiple import regulations, as well as the differences in consumer preferences and even differently timed shopping peaks that require a great deal of resource and manpower to maneuver. SMBs, which typically lack the resources needed to overcome all of these challenges in-house, should consider getting the help of third-party providers and tech solutions to simplify the nitty-gritty details of international sales.
But perhaps the biggest underlying challenges to cross-border e-commerce lie in converting international traffic into increased sales and overcoming the obstacles that ultimately dissuade any shopper from finalizing their purchases. After all, expecting new audiences to open their eyes to new and unfamiliar brands is a tall order.
The key to selling cross-border successfully is to adopt smart localized approaches, whereby the entire shopping experience, from browsing to checkout to delivery and returns, is tailored to the unique characteristics of each and every market, reflecting the needs and interests of their respective customers. But this requires knowledge and experience — the know-how of what drives shoppers in each market to place an order and which specific factors impact conversions. If applied correctly, the shopping experience you introduce will feel familiar — local — thereby resonating with the international consumers in question.
Every retailer wants their business to perform extra well during the major domestic holidays. Unfortunately, many are blinded by the promise of these select few opportunities, causing them to overlook the global shopping peaks that occur everywhere else: the Chinese New Year, Singles’ Day (the unofficial holiday kickstarted by China which has since spread to Europe), India’s Diwali, and the Muslim celebration of Ramadan, to name a few. In this sense, the term “holiday season” is really just a matter of perspective — which holiday season and to whom? The fact that 2022 is over is insignificant; 2023 is beginning.
Having a localized offering and the capacity to sell to consumers worldwide opens up additional untapped revenue streams by exposing brands to virtually limitless consumer bases. This is because once you invest in localizing your proposition, you’re in a better position to capitalize on additional peaks at any given time or location. In this dynamic environment, SMBs especially can avoid being tied down to a specific “make-it-or-break-it” season.
A Whole New World
The retail market isn't static nor does it operate in a vacuum. It's impacted by trends and changes, both global and local — and e-commerce is no exception.
Over the next several years, however, global retail e-commerce sales are expected to grow by 56 percent. This explosion of growth extends far beyond any individual holiday season. Rather it's indicative of deeper trends shaping global e-commerce — trends that even small retailers can take advantage of.
This presents an excellent opportunity for SMBs to grow their sales by expanding into overseas markets. SMBs that discover the long-term, reliable revenue streams that cycle throughout the year across the numerous niche markets around the world no longer have to be reliant on this holiday or that to be merry year-round.
Matthew Merrilees is CEO, North America of Global-e, a platform to enable and accelerate global, direct-to-consumer cross-border e-commerce growth.
Matt leads Global-e’s growing North American-based team and has extensive experience in the cross-border world. He previously served as the Global Managing Director of Sales at FedEx Cross Border, and prior to that, Matt worked at DHL Express US for 10 years. During his time at DHL he held many roles, from field sales to leading DHL’s National Account Segment in the Northeast US.
Matt holds a Bachelor’s Degree from Fairfield University with a focus in Business Management.