In his bestselling 2008 book, The Long Tail: Why the Future of Business is Selling Less of More, author Chris Anderson lays out a model in which merchants offer personalized, niche products rather than relying on a handful of generic products that are in high demand at the moment. He explains, “As the cost of reaching consumers drops dramatically, our markets are shifting from a one-size-fits-all model of mass appeal to one of unlimited variety for unique tastes. From supermarket shelves to advertising agencies, the ability to offer vast choice is changing everything and causing us to rethink where our markets lie and how to get to them. Unlimited selection is revealing truths about what consumers want and how they want to get it.”
We can apply this same principle to a brand’s cross-border e-commerce expansion journey. Putting all of your hopes and dreams (and revenue) into one or two lucrative markets is fine for the short-term. But it’s not sustainable for long-term revenue growth. In an analysis 2019 vs. 2018 of the IR1000, domestic web sales of retailers on this list grew 17% YoY, while international web sales grew by 57% YoY. This shows how quickly international e-commerce growth is outpacing domestic sales growth. Eventually, successful e-commerce brands will reach critical mass in their domestic markets. Then what?
For most retailers, a strategic, long-tail approach to global expansion is needed to ensure that you are capitalizing on consumer demand at the right time. It makes sense for e-commerce merchants to target certain countries first because they are convenient in some way. For example, U.S. retailers may look at making Canada their first expansion point because of the close geographic proximity. You may even already have operations and a retail location in Canada. But what about beyond the “low hanging fruit?” And more importantly, how can you scale quickly enough to meet demand in specific markets where you don’t have operations on the ground?
Brands and retailers with a long-tail strategy know that it’s not just about offering the hot item of the moment for a “one and done” transaction. Instead, the focus should be on demonstrating to your global customers in each market that you understand their unique needs. And then, it’s imperative to deliver a frictionless customer experience that builds loyalty. This way of thinking will help you extract more value from previously untapped markets over a longer period of time.
An example of a brand that has transitioned to a long-tail approach is Universal Standard. The size inclusive apparel retailer had already adopted this strategy with its merchandise, specializing in attractive, fashion-forward plus-size clothing. It’s no surprise that Universal Standard filled a void in this niche category, resulting in an explosion in demand from global shoppers. However, the brand’s initial foray into cross-border e-commerce was largely driven out of convenience, selecting Canada based largely on its existing brick-and-mortar location in Seattle.
It wasn’t until Universal Standard partnered with Flow that they had the power to take a more data-driven approach to international e-commerce. With Flow’s flexible cross-border e-commerce solution, the brand could get a handle on international shipping costs and delivery times while conducting A/B testing in target markets to learn more about local preferences. Now they are able to ship to dozens of markets, and have increased international sales 86% since implementing Flow’s platform and have seen an 80% growth in their on site conversion rate for international markets.