Now is the ideal time for both online and multichannel retailers operating in the UK to expand their horizons internationally, according to the Managing Director (MD) of a fast-growing British e-business.
Mohammed Hussain, MD of mobile accessories e-tailer Mobilefun.co.uk, said today that there are a host of reasons why companies such as baby and mother products specialist Mothercare and high street giant Marks & Spencer are choosing to grow their brands abroad.
“Retailers solely relying on the UK economy are missing a huge potential customer base,” he told Retail Gazette.
“With the exchange rate in our favour, and opportunities in both western and eastern Europe, now is a good time to expand internationally.
“Additionally, in the online retail space, the European e-commerce market is less mature which allows us to gain a competitive advantage.”
His comments come on the same day that Mobile Fun launches online sites in both Spain and the Netherlands for the first time.
Having already enjoyed “fantastic success” through the company’s UK, German and French websites, with the latter receiving more than 40,000 orders in its first year of trading ending in July, the decision to open in new territories seemed a natural one for Hussain.
Sales and profit levels at the business have been positive, with turnover for the 2010/2011 financial year surpassing £9 million and net profits reaching £898,814.
The MD acknowledges how the fierce competition between manufacturers in the smartphone market has been “great news for us”, driving sales significantly over the last 18 months.
He also admits that the current economic climate is very difficult, even for online-only retailers, but pure-play e-tailers arguably have an edge over multichannel firms due to the “more mature” SEO and online marketing practices they use.
And whilst Hussain is a keen advocate of retail international expansion, there are a number of challenges companies face in making such a move successful.
“While it is possible to enter the online retail market without people on the ground, localisation is critical to operating successfully, so finding and retaining the right people is a key challenge,” he explained.
“To combat this challenge, we use a blended model of teams on the ground in established markets and foreign nationals working out of our UK offices to set up new territories.
“International teams provide localisation services, in terms of language nuances, market and country knowledge, support and payment preferences. Trying to acquire this knowledge from the UK is extremely costly and time consuming.”
In advice to other businesses looking to follow suit, Hussain also warned that the significant levels of administration and bureaucracy should not be underestimated.
“Plan ahead for regulatory and legal compliance issues so you aren’t caught out by something significant,” he argued.
Prior to the Dutch and Spanish websites being unveiled, international sales accounted for a quarter of all Mobile Fun trading, so it should be expected that out-of-UK operations are only set to grow in importance for the e-tailer following today’s announcement.
With research published last week by PayPal predicting that UK retail sales through phones are set to grow significantly in the next five years as more consumers start using smartphones, there are signs to suggest that the market in which the retailer operates is only set to expand.
Hussain noted: “With phones such as the iPhone 4S selling four million in its launch weekend, the appetite for new devices is huge, both in the UK and across the 50 other countries we ship to.
“The buoyant smart phone sector means that we are adding new products all the time and offer 8,000 mobile device accessories, which represents the widest range stocked by one retailer.”
As of today, these products will be sold from five dedicated international websites.