The phrase “testing the market digitally” has evolved into a familiar expression, yet its implications are profound. Brands previously limited to select retailers or a singular storefront now perceive digital platforms as gateways to broader international opportunities.
However, transforming online engagement into a lucrative endeavor necessitates vigilance against specific pitfalls.
This theme was poignantly underscored by Mathieu Grodner, president of Simone Pérèle, during a panel featuring Rémy Daguillard from Stellae and Basile Ricordel of Global-e at the Welcome on Board event, which was orchestrated by various federations and professional committees dedicated to economic growth in the fashion and export sectors.
Mathieu Grodner (right) with Rémy Daguillard from Stellae, and Basile Ricordel from Global-e at the Welcome on Board event – WOB
For Grodner, the leader of a premium lingerie brand, the digital realm emerged as a complementary asset to its physical retail footprint. “We approached online sales through our own platform,” stated Grodner, heir to the brand’s founder.
He continued, The challenge lies in cultivating our digital business in a manner that is not only profitable but also engaging for consumers. We were fortunate enough to have established logistics channels to deliver superior service to customers globally.
Initially, we focused on our primary markets, the United States and Australia, before broadening our horizons to other regions. Adapting to diverse geographical landscapes and the evolving international environment is paramount.
The brand undertook the essential task of implementing tools to accurately pinpoint customer locations and cater to their needs in terms of language, currency, payment options, tax implications, customs duties, and local logistical intricacies.
“The complexity is in dismantling the purchase barriers that may impede customers,” asserted Rémy Daguillard, Stellae’s president for France and a logistics specialist for high-end brands.
“The goal is to guarantee that the end consumer, regardless of their global location, experiences the same level of service as if they were purchasing domestically.”
“It’s not necessarily about selling globally everywhere,” added Basile Ricordel, commercial director at Global-e, referencing his observations of the digital growth of the American brand Surface to Air. E-commerce was perceived as a goldmine.
Yet, logistical issues arose, such as miscalculations in customs duties and taxes. Considerations like packaging choices, transport provider selection, and return policies were overlooked… Consequently, costs can escalate rapidly.
Experts warn that these cumulative costs can significantly erode profit margins, sometimes even leading to financial losses.
They advocate for meticulous examination of customs duties and taxes to prevent redundant expenditures, and suggest optimally sizing packaging to reflect actual product dimensions for cost efficiency.
Additionally, establishing returns collection points in select markets can consolidate returns, thereby decreasing transportation expenses.
While e-commerce offers a portal to global markets, a methodical strategy for deployment is recommended. At Global-e, comprehensive data analytics enable targeted market identification tailored to brand needs.
“We possess insights into best practices, consumer preferences, and macroeconomic dynamics aimed at enhancing conversion rates,” stated Ricordel. Given the current international landscape, entering the US market is particularly challenging.
Therefore, we advise reallocating investment towards other promising markets, such as Japan at the moment, focusing on five to ten countries suitable for investment to cultivate profit margins.
Furthermore, Daguillard stresses the importance of local and geopolitical realities in brand strategies. “Navigating e-commerce in countries like Russia is fraught with difficulties. Yet, other markets remain open and merit understanding. Take Mexico, for instance, where the luxury goods market is vibrant, albeit with distinct considerations concerning hidden costs.”
He illustrated the inconvenience faced by customers required to provide extra payments to couriers for parcel collection. “You can devise the most sophisticated model; however, practical challenges emerge as each country operates under different norms.”
“One cannot afford to be overly ambitious on all fronts,” Grodner confirmed, noting that digital sales today account for 20% of his business. “Achieving excellence in every market is unattainable, a lesson we’ve learned the hard way.
Nonetheless, our aspiration is to maintain greater uniformity across global markets, as one cannot effectively claim to be an international brand if disparate pricing or offerings exist.” WOB
This emphasis on strategic prioritization is particularly crucial against a backdrop of persistent geopolitical instability, notably highlighted by recent confrontations regarding US customs duties.
The elimination of the de minimis exemption, which had allowed shipments valued under $800 to enter the US without incurring duties or taxes since 2016, has significantly disrupted export frameworks targeting the US market.
“The implications of the American market have been a critical concern for our clients who have attempted to adapt since the de minimis rule was rescinded on August 29, particularly regarding new taxes and customs duties,” Daguillard explained.
“We’ve engineered a model allowing customs duties to be based on the transfer price, effectively mitigating adverse impacts.”
“Amid tariff discussions, brands expressed worry about the repercussions on their operations,” Ricordel added.
“Questions arise regarding goods manufactured in Europe versus those sourced from China. Brands ponder the feasibility of maintaining local stock, leading to additional queries involving fiscal representation… all while aiming to uphold profitability in the US.”
Despite these challenges, significant opportunities persist in the US and other markets; however, the volatile economic and geopolitical environment necessitates a prudent approach from brands venturing into new digital territories.
Source link: Us.fashionnetwork.com.
