{"id":1136,"date":"2016-07-27T00:00:00","date_gmt":"2016-07-27T00:00:00","guid":{"rendered":"https:\/\/www.motionpoint.com\/?post_type=blog&p=1136"},"modified":"2023-09-25T10:37:54","modified_gmt":"2023-09-25T14:37:54","slug":"brexit-can-help-uk-companies-look-beyond-eu","status":"publish","type":"blog","link":"https:\/\/www.motionpoint.com\/blog\/brexit-can-help-uk-companies-look-beyond-eu\/","title":{"rendered":"\u2018Brexit\u2019 Can Help UK Companies Look Beyond the EU"},"template":"","blog_categories":[7,5],"resource_categories":[],"targeted_localized_audience":[],"document_categories":[],"class_list":["post-1136","blog","type-blog","status-publish","hentry","blog_categories-international-business-strategies-europe","blog_categories-international-business-strategies"],"acf":{"blog_short_description":"Tariffs may soon spurn EU-based online shoppers, but UK e-retailers can survive\u2014and thrive\u2014by serving global markets.","news_inline_styles":"","blog_video_id":"","article_body":"

For years, the UK\u2019s e-commerce market has been the strongest in Europe<\/a>, and\u2014until last month\u2019s Brexit vote\u2014was on track to reach $132 billion by 2018. M-commerce sales accounted for half<\/a> of all UK e-commerce sales. The market\u2019s \u201cdigital buyer\u201d penetration is nearly 90%, the highest in Western Europe.<\/p>\n

UK e-retailers have clearly had a good run \u2026 but in a post-Brexit world, these companies will likely face challenges. As we recently reported<\/a>, if the UK and EU don\u2019t reach a free trade agreement by the time Britain formally leaves the Union in 2018, fewer European consumers will likely shop UK e-commerce sites due to high tariffs and customs fees.<\/p>\n

That\u2019s bad news for UK e-retailers, many of which depend heavily on EU shoppers. Currently, European markets represent more then 50%<\/a> of UK e-retailer exports, with France and Germany representing nearly 40% of that demand. These exports comprise a full fifth of the UK\u2019s online retail economy\u2014or more than 6%<\/a> of the UK\u2019s GDP.<\/p>\n

The Stakes Are High<\/h2>\n

The ripples of the Brexit referendum are already being felt. Last week, the International Monetary Fund changed its projections<\/a> for the UK\u2019s output growth. Mere months ago, the IMF projected that UK growth in 2016 and 2017 would increase by 1.9% and 2.2%, respectively. Those projections have been lowered<\/a> by 0.2 and 0.9 percentage points. The Brexit \u201chas thrown a spanner in the works\u201d of growth on a global scale, one IMF director recently wrote<\/a>.<\/p>\n

This impact will be long-lasting, too. By 2030, UK household incomes will be negatively impacted by at least \u00a31,500<\/a>, one study says\u2014though more pessimistic reports suggest they might be negatively impacted by as much as \u00a35,000. In two years, the negative impact on GDP may reach -1.3%, another study<\/a> suggests. This may reach -3.3% by 2020. By 2030<\/a>, the negative impact on GDP may vary from -2.7% to -7.7%. With so much on the line\u2014both in the short- and long-term\u2014UK e-retailers can\u2019t afford to sit on the sidelines. Proactive action is required. If EU-based customers bail on buying from UK e-commerce sites in the upcoming years, much of the UK\u2019s \u20ac174 billion ($191.5 billion)<\/a> B2C e-commerce market will be at risk.<\/p>\n

What can UK e-retailers do? For starters, they should take to heart what one UK Treasury spokesperson recently said<\/a>: \u201cThe decision to leave the European Union marks a new phase for the British economy,\u201d she said, \u201cbut the message we take to the world is this: our country remains open for business. We are the same outward-looking, globally-minded, big-thinking country we have always been.\u201d<\/p>\n

This is how UK e-retailers can protect their revenues and profits. They must continue to sell online\u2014and they should diversify the international markets their sites can reach.<\/p>\n

By serving markets far beyond the EU, UK businesses can offset any losses caused by a contraction of EU-based spending. They can also increase their mindshare and profitability by serving new customers around the world.<\/p>\n

A Straightforward Solution<\/h2>\n

UK e-retailers can easily leverage proven technologies and authentic, culturally-relevant translations to expand into new online markets, and serve global consumers in their languages of choice. Years ago, this endeavor was technically complex and prohibitively expensive; these days, sites can be affordably translated and launched in less than 60 days.<\/p>\n

(MotionPoint\u2019s solution<\/a> easily scales to launch localized sites to serve dozens of international markets. It also features technologies that boost these in-language sites\u2019 SERP<\/a> in regional search engines, and increase on-site engagement and conversion rates.)<\/p>\n

Armed with such solutions, UK e-retailers can dedicate their attention where it\u2019s needed most: identifying the right markets beyond the EU to serve.<\/p>\n

As Export Britain<\/a>, an online resource for the British Chambers of Commerce, advises: \u201cThe first step when thinking about starting or expanding your export business is to identify those markets which offer the biggest opportunity and gather as much information as you can, either remotely or from people on the ground.\u201d<\/p>\n

Where To Go?<\/h2>\n

While we can\u2019t provide on-the-ground insights, we can certainly identify several hot, expansion-worthy markets where cross-border e-commerce purchases are thriving. Some of these findings hail from third-party sources, while others come from MotionPoint\u2019s exclusive data and insights.<\/p>\n

Colombia<\/h3>\n

Export Britain has identified Colombia as an ideal market<\/a> for expanding UK companies, particularly those that provide technologies, products and services that can assist the country\u2019s ever-improving infrastructure. The market\u2019s sound financial policies and free trade agreements also reduce risk.<\/p>\n

This jibes with our findings. When examining the performance of nearly a dozen Spanish-language sites we operate\u2014noting the traffic, engagement and conversion hailing from Colombia-based consumers\u2014we\u2019ve seen impressive results. In two years\u2019 time, one international airline\u2019s Spanish site saw a 40% lift in traffic from Colombian consumers. Ticket bookings rose over 800% during the same timeframe. Another airline\u2019s Spanish site saw an increase of nearly 75% over a one-year period.<\/p>\n

Conventional e-retail, such as fashion, also saw growth. One global fashion brand\u2019s Spanish site has seen a 26% increase in traffic and 41% increase in revenue from Colombia over the course of a year. A major UK fashion retailer\u2019s Spanish site saw a nearly 20% increase in traffic from Colombia, and 25% increase in revenue.<\/p>\n

Mexico<\/h3>\n

Mexico\u2019s predictable, stable economic growth will make it the world\u2019s seventh-largest economy by 2050, Export Britain writes<\/a>, making it a market well worth serving today. Also compelling: its integrated supply chains, free trade agreements with over 40 countries, and opportunities for retailers and other sectors such as manufacturing and telecommunications.<\/p>\n

MotionPoint\u2019s data supports this. Mexican cross-border e-commerce is thriving. We examined the performance of key Spanish-language sites we operate, which were originally launched to serve U.S. Hispanics. Nearly 20% of traffic for these e-commerce sites hailed from Mexican shoppers. This number rose to over 50% when we excluded other Spanish-speaking markets.<\/p>\n

Further, Mexican e-shoppers are big spenders. Spanish-speaking U.S. Hispanics spend nearly 20% more per order than the U.S. average. However, Mexicans spend nearly 95% more per order than U.S. Hispanics do.<\/p>\n

China<\/h3>\n

China\u2019s recent industrial pivot has ushered in a predicted slump into the country\u2019s economy\u2014though it\u2019s far from the \u201csky is falling\u201d knockout punch some alarmist analysts claim. Despite the slump, things still bode well for UK businesses, Export Britain says<\/a>. Indeed, food and financial services are uniquely positioned for success, the group says. Other analysts say China\u2019s e-commerce retail sales will double by 2019<\/a>.<\/p>\n

We think China is a great market for UK e-retailers, too. Consumption is up. Chinese e-retail powerhouse Alibaba\u2014which offers storefronts for domestic and foreign brands via its \u201cvirtual mall\u201d websites\u2014will soon surpass Walmart as the world\u2019s largest retailer. Chinese consumers spent nearly $500 billion on Alibaba sites and services last year alone. Overall retail sales increased by 10.6% in March, slightly above expectations.<\/p>\n

Cross-border e-commerce is surging in China, too. It grew by more than 70%<\/a> last year. This year, more than 15% of the country\u2019s population will spend an average of $473.26 on cross-border purchases. By 2020, that will rise to a full 25% of the population\u2014or 350.5 million<\/a> people.<\/p>\n

South Korea<\/h3>\n

South Korea\u2019s \u201calways on\u201d Internet-savvy population is crazy about e-commerce. UK companies in several sectors\u2014including financial services, fashion, textiles and food and drink\u2014have lots of room to grow in South Korea, Export Britain reports<\/a>.<\/p>\n

MotionPoint\u2019s experience complements these findings. South Koreans are very savvy cross-border e-commerce shoppers. Thanks to local retail monopolies that make online buying prohibitively expensive, Koreans will often buy from foreign e-retailers. Even with shipping costs, tariffs and unfavorable exchange rates, prices are usually much lower than buying domestically.<\/p>\n

This trend\u2014called jikgu<\/i>\u2014is growing. South Korea\u2019s e-commerce imports grew five-fold between 2009 and 2013. 2014\u2019s imports smashed through 2013\u2019s $1 billion record. These smart shoppers are worth serving.<\/p>\n

Japan<\/h3>\n

\u201cJapan holds plenty of promise for businesses looking to operate in a large stable market,\u201d Export Britain writes<\/a>. \u201c(T)he Japanese market is characterized by consumers with high levels of disposable income.\u201d UK companies in the services, technology and manufacturing sectors stand the most to gain, the group says.<\/p>\n

We\u2019re bullish on Japan, too. We recently showcased the market in our Trendbook<\/i> e-book series<\/a>. We examined the performance of the 1,000+ localized sites MotionPoint operates, and combined those findings with authoritative third-party information to highlight growing\u2014or exciting\u2014online markets.<\/p>\n

Japan easily made the list of our Top 30 hottest markets. It\u2019s an attractive market thanks mostly to the population\u2019s penchant for saving money\u2014and its tendency to spend big in certain verticals such as mainstream and luxury apparel.<\/p>\n

* * *<\/p>\n

Read more of our Brexit coverage:<\/b><\/p>\n

Will the \u2018Brexit\u2019 Bruise UK E-Commerce?<\/a><\/i><\/p>\n

\u2018Brexit\u2019 Upside: Short-Term Gains Await UK Manufacturers<\/a><\/i><\/p>\n

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