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Why do American and Canadian consumer Brands fail to sell their products in Europe?

Different cultures and different approaches, as well as a more fragmented market make it difficult to enter Europe successfully. Here's why and how to do it properly.
American Brands Selling in Europe

Despite the existence of numerous scenario analyses and predictions stating that overall eCommerce volumes of sales for Europe are expected to reach unprecedented heights for the years to come and are no way near the full potential, many brands that felt ready to conquer the old continent and started their expansion campaigns haven’t been succeeding as expected or have experienced difficulties that translated into poor performances. 

Is this eCom proliferation in Europe a hoax? 

Are predictions untrue? 

Why do eCompreneurs and Brand Owners that expand to (and into) such a vast area, defined by many as eCommerce-ready – therefore so attractive – have experienced failure or an outcome that doesn’t present much of what forecasts promised as outstanding?  

Developing an eCommerce business in a foreign market will present many challenges indeed. The  huge opportunities are there, but we are always talking about stepping into someone else’s home. It’s a new territory with new rules. 

If you don’t comply, you might as well get ready to say bye!

Below, we’ll cover the TOP 4 reasons why Brand Owners and eCompreneurs that expand their business to Europe end up in failure. By keeping these in mind when programming your strategy to venture overseas, you will be able to successfully enter European markets and seize the exciting opportunities that make this continent attractive for many overseas businesses.

Reason number 4: Unexpected costs – The total cost of selling overseas has nothing to do with the costs of selling in the domestic market. It is crucial to prevent unpleasant surprises such as additional costs or fees that can accumulate to the point of erasing or substantially reducing your profits. In other words, you must have a very clear idea of all your future costs. 

In fact, extra costs can make operations totally unfeasible, especially for smaller businesses. The need of covering the unannounced expenses could then lead you to recalculate and charge the new public with higher prices or even reflect on your internal minimum order quantities in the attempt to break even. 

Although many refer to these extra costs as “hidden”, they actually are very visible and just need to be taken into consideration. 

A complete calculation must include: custom fees, storage fees, delivery fees, VAT and taxes as well as transaction costs. Do not neglect to include marketing costs, modifications to product, packaging, labeling, product liability insurance as well as particular costs related to compliance with foreign standards. If you will need to hire locals, also consider employer social security contributions and termination laws that can greatly differ from country to country.

If in doubt, it’s best to seek advice from or consult with peers or professionals who are already operating on the new target territory before going all in.

Reason number 3: Culture and Language – you most certainly can’t copy/paste your strategy when marketing a product to another country. Not all European countries present the same level of English knowledge and regardless, in order to represent your Brand in the most effective way possible and in order to establish an authentic connection with your new target audience, you must consider marketing in their native language. From a global perspective  75% of people prefer to make purchases in their own language and 70% of internet users are not native English speakers. When focusing on Europe though, it is critical to consider that we are dealing with one of the most linguistically diverse areas of the world. Even where English-learning is ubiquitous is schools, like in the Netherlands – where an English speaking tourist wouldn’t find any difficulties in interacting with the population – still 50% of the population that purchases from the internet prefers buying from websites in their native Dutch.

Removing the language barrier means creating ads in different languages as well as creating a translated version of your store. For this purpose, you will need to do extensive research with an open mind and understand the culture of the target market. Why an open mind? Your research might lead you to completely change your strategy, all the way to selecting a different product to launch for that specific market. 

Moreover, the new copyrighting should be executed through a Transcreational approach rather than just performing a mere translation. The term Transcreation is a combination of the words “translation” and “creation” and the purpose of adopting this method is to assure your content will carry the same impact and emotion as the original. By fully adapting your work you will be able to maintain the original message and the feeling associated with the original ad copy. In other words, you will effectively communicate your brand’s message. 

For this reason it is highly recommended to collaborate with qualified professionals that are also native speakers (to be clear, the Fiverr translation might not always be the most effective solution). 

Reason number 2: Wrong Target countries – The most common and expensive mistake Brands make up to today is to narrow down the panorama of opportunities to Western and North Europe. This could appear like a good strategy, but it’s not. Especially in the post-pandemic era. 

Even if that’s where the “big money” apparently circulates, with the highest spending in eCom per capita and highest salaries, these are also the markets that present the highest competition, the highest product saturation and the most rigid application of the consumer rights code. 

When given a closer look, you can see that not everything is as it seems and that there are further – untapped – areas of opportunity. 

In fact, the average number of European e-shoppers rose from 58.8% in 2017 to 71.4% in 2021 and every single European country now presents relevant numbers for businesses looking to expand. 

If we look further into this data we will notice how Eastern Europe is probably the most interesting area since the pandemic-effect led to a 36% growth of the eCommerce economy compared to 4% of Western Europe. 

Here is an example of what this means. 

Average online annual spending per capita for online shopping in Europe from 2016 to 2020, by country

Source: Statista

According to 2020’s estimates, Great Britain presented the highest per capita annual spending of €1020 for online shopping while Poland “only” had an average of €420. However, we can notice by observing the graphic how all countries have been constantly growing through time. 

Predictions confirm that this growth will continue and eCommerce will become more popular, the revenue for the European eCommerce markets is expected to show an annual growth rate (CAGR 2022-2025) of 13.84%. 

It’s not incorrect to say that the Polish situation of 2020 can be considered almost equivalent and certainly comparable to what was happening in Spain during 2017.

In fact the average annual eCom spending per capita of a Polish citizen was almost as much as the spending of a Spanish citizen in 2017. Meaning that while demand is present all over Europe, the highest spending countries aren’t necessarily the only ones carrying opportunities. 

Reason number 1: Payment and Shipping method – The payment attitudes of consumers in the euro area can greatly vary according to the country, let’s start with that. This is the first and most frustrating and infuriating cause of failure of a European expansion campaign. Just like the previous points, it derives from a poor analysis of the target markets and audiences and occurs when point 4, 3, and 2 are done right – that’s why it’s so infuriating-.

In fact, as we have seen in the previous points, cultural differences between countries reflect on how goods are consumed, distributed and even purchased. In particular, these differences can regard payments and delivery, which belong to the bottom of the sales funnel, before the actual conversion. Europe is a fragmented reality of cultures and languages, we already know that, but this extends to consumer behavior all the way to the very end of the purchasing process. In the aforementioned emerging economies situated in Eastern Europe, it is still very common to pay in cash upon receipt of the goods, whereas this rarely happens in western countries with the exception of Italy, Spain and Portugal where Cash On Delivery accounts for an average 20% of conversions. The reasons are various: lack of trust in online payment systems, fear of being scammed by the online store, lack of funds on the card at the time of the purchase, low credit card penetration, need of discretion for those who don’t want to share their personal data on the internet, aging population – that despite being familiar with online shopping have difficulties to use their card online or to remember a password – and the list of reasons go on.

Europe presents huge slices of consumers that exclusively buy when presented the opportunity to pay directly to the courier. Not making this chance available results in high abandoned cart rates with a subsequent loss of the marketing budget invested to launch in that country. 

Instead, presenting the Cash-On-Delivery option not only increases conversion rates, but has also a positive effect on prepaid conversion rates. It gives trust and this is why such a solution can actually boost sales of an online business. Also multinational companies that sell to Europe – like Sephora, Amazon, Nike just to name a few – have implemented systems to allow customers to pay by cash and all local brands offer both options in order to not leave any money on the table. In addition to this, many e-commerce websites use this as a strategy to increase their average order value (AOV) by selling this option as an actual service therefore charging a fee for it. 

The bottom line is that Cash-on-Delivery is an option that can make or break the success of the international chapter of an online business.

WANT TO START WITH THE RIGHT FOOT?

Not assuming that the same norms and practices from your home country apply to your new target areas is just the beginning. The next step is partnering up with a company that understands your goals and can help you get there. At Borderl3ss you will find a team in which every single member has experience in the eCom field and masters the profoundly interdisciplinary nature of logistics for eCommerce retailers and DTC Brands.  

We know that nothing is obvious when it comes to entering a new market and that developing a business in European countries calls for special support.

Our qualified team is ready to help you develop your business in Europe and successfully reach new customers within its different markets. To do this we give you tools and services designed to minimise complexities while raising your competitiveness. 

The toughest pain point in this phase is keeping focus on the big picture and your business under control. At Borderl3ss we know that the best support we could give to an Entrepreneur looking to make a brand succeed in Europe is assuring the black box experience that can allow you to stay focused on the general picture.

Book a Demo now to discover what we can do for you.

Robin Calandri

Robin Calandri

DTC Fulfillment Blog

Find all the information you need to optimize your European fulfillment operations. 

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