Sales & Marketing
What to consider to make the most from entering BRIC countries
8 min read
15 December 2014
Ecommerce is booming in Brazil, Russia, India and China, which are collectively the BRIC countries. This is not surprising when you consider they represent 25 per cent of the world’s land mass, 40 per cent of the world’s population and a total market value of $221bn (£141.08). The number of internet users likewise is staggering; 642m in China, 243m in India, 108m in Brazil and 85m in Russia.
With internet penetration in all four countries still less than 50 per cent, it is clear that the potential for growth is only going to increase. Despite this huge opportunity, many vendors aren’t selling effectively, or at all, in BRIC countries.
BRIC market entry is lower than it should be because there is no easy blueprint for a successful approach, which creates a challenge for many businesses. Each country has unique infrastructures, banking and payment systems; even online buying preferences vary by country. Brazilian shoppers, for example, prefer to pay via instalment plans. Credit cards in India are issued by the bank after the borrower makes a fixed deposit. Russian consumers prefer mobile commerce – both for research and actual buying.
If merchants take the time to understand the nuances of selling online in these markets, find the right partners and learn from existing success stories, BRIC countries are great markets to target.
Building trust is critical
A characteristic that BRIC markets have in common is the importance of customer trust. In markets like the UK, we take for granted the protection we have when purchasing online. However, in BRIC markets consumers have few guarantees, so when they are choosing an online retailer an important factor in their purchase decision is guarantees the retailer will deliver what they are selling. It is therefore vital that merchants understand customer expectations around payment, order fulfilment and data security. Failure to do so will prevent customers from trusting them, and will cost them business.
One of the main ways businesses can gain trust is by using onshore payment options. For example, in India, local payment methods have significant security protocols, including 3D security on debit and net banking options. Indian service providers typically guarantee domestic transactions from fraudulent activities, providing an added layer of security.
To be global, you must think local
When entering any new market, businesses have to demonstrate that they understand the region. If they want to succeed, they will need to look, feel and act like a local brand. That means taking care of the details.
Retailers need to ensure all online commerce sites are translated and localised in the languages spoken by the buyers in the supported regions. Language localisation is a basic point of entry that companies must implement straight away.
Product prices need to be displayed in local currencies. It is crucial to ensure that prices reflect amounts that regional consumers deem acceptable and appropriate, and take into account country-specific pricing and exchange rates.
Marketing strategies need to comply with local email and privacy regulations. Banner ads and search engine campaigns that are fully localised and optimised to drive ROI can attract more customers and drive more sales.
Retailers need to decide how to back up their website with customer support. Those customer-service personnel need to speak the language of local customers and handle email communications, returns, and other functions in a way that caters to local customers in order to be well received on a regional basis.
Consider cross-border commerce practices
Businesses need to keep a focus on improving conversion rates, and controlling overhead costs and risks associated with managing merchants’ local entities.
This can be simplified by offering onshore payment options, which are designed for the market intricacies, reducing overhead and mitigating risk.
Meeting market expectations is particularly important in Brazil where consumers expect instalment options to be available. In Brazil, businesses should, therefore, consider using a partner that can manage the risks associated with instalment payments.
Speed to market is vital, so move fast!
Building local solutions and administrative (tax, legal, accounting) infrastructures takes money, resources, and more importantly time. While businesses are working to understand the tax and legal complexities of a new market, their ecommerce world will continue to advance and often at times evolve with new rules and regulations emerging before they’ve had a chance to master the old ones.
Unless a business wants to invest heavily in building their own expertise, which is a costly and risky route, they should look to partner with a vendor that manages the administration for the business.
Don’t lose control of your brand
Launching a product into an emerging market means more than simply generating revenue, it will also prevent customers from trusting you and will cost you business. Product, pricing, promotion and placement are all critical components of successfully marketing products in the long term. Unfortunately, companies too frequently have to relinquish too much control of their business when entering emerging markets, leaving them without adequate control over their brands, resulting in long-term issues.
In India, for example, control over all of these elements needs to be handed over to a local reseller, often a partner, in order to sell to consumers (as mandated by Indian law). In China, consolidation in channels means there are only a few key players controlling the online retail market, leaving concerns over retaining control or influence.
The complexity of BRIC market channels means that retailers need to carefully consider how they will manage their customer relationships and consumer insights. If a retailer isn’t directly interacting with their customers, then they need to find other channels to connect; social media, digital marketing, data analysis. Even if they are having direct interaction with customers, conclusions need to take into consideration local culture and preferences.
Don’t try and do it all yourself
Working with a partner, one which has an operational product offering and established administrative infrastructure, can often eliminate the need for merchants to solve every problem on their own. Taking advantage of a partner’s existing processes and expertise, rather than reinventing the wheel for each of the BRIC markets, can leave them free to focus on building, launching, and marketing their business effectively.
Ultimately, the most important thing is that businesses seriously consider each of these factors when deciding which new markets to enter. BRIC countries offer a huge opportunity, which shouldn’t be ignored, but it is vital that merchants do their research. Get these basics right and BRIC markets can be a huge boost to a business’ growth.
Marco Vergani is general manager and vice president of EMEA at Digital River.