Expanding to the USA--consider this first

There are several reasons why the US market is attractive to UK retailers, but by the same token, there is potential for failure too. In a session titled “What is the US market like for UK cataloguers” at this year’s ECMOD Conference and Exhibition, which took place in London on 6th and 7th October, US-based consultant David Ballard led a discussion looking into the opportunities and pitfalls of expanding in to the States. Some pearls of wisdom:

• There’s no language barrier, so adapting copy for a US audience is more straightforward than translating it into a foreign language. However, ensure that you do localise content—American consumers don’t look to buy “trousers”.

• The size of the market is very alluring, but panellist Andrew Ward, development manager at business-to-business cataloguer International Dance Supplies (IDS), advised against opening up in all 50 states at once. Carefully target the areas you wish to expand to.

• American consumers are used to shopping online in a similar way to UK customers. Americans are happy to pay by card on the spot, whereas in Germany, for example, customers don’t pay for the goods until they arrive.

• There are more catalogue lists on the list-rental market from which to choose, and more names on these lists. Plus, Ballard said that when you rent a list in the US, you can see who else is using it. Base rental is also cheaper than in the UK and the selections can be more complex because there is more data.

• Response rates are lower than what UK mailers are used to, but average order values are higher. Ballard said that UK apparel catalogue Wrap (known as Wrap London in the States) enjoys a well-above-average order value of $320. This places Wrap’s AOV in the top five in the women’s apparel category.

• Small and midsize firms with fewer than 250 employees and who meet certain other criteria, are eligible for a grant of up £5,000 from the Export Marketing Research Scheme (www.britishchambers.org.uk/emrs) in order to carry out market research prior to expansion, said Ward.

• More advice from Ward: Know your market, its size, structure and channels of distribution--how do your customers prefer to shop? Who are your competitors and what is their market share?

• Does the US market need another supplier in your area? When researching the market, IDS found is that the US market was already very well served for dance costumes but that dance schools and teachers needed to source their accessories from a number of different suppliers to complete the outfit. It decided to launch an accessories range to fill that gap in the market.

• It might be tempting to hire a third-party to research the market for you, but Ward advised to do the work in-house, after all it is you who needs to make the contacts overseas.

• Sanjay Patel, commercial director at More2 and formerly finance and mail order director at luxury-leather goods brand Smythson, said that having stores in the US prior to launching an international website gave the business credibility. However, don’t open stores just to support a mailing strategy.

• To succeed you need a distinctive product--Charles Tyrwhitt and Joseph Turner sell colourful shirts, before them the US didn’t really have an equivalent, said Ballard.

• Provide excellent customer service—Americans can be “cranky” and “spoilt” said Ballard. They have come to expect a certain standard.

• Build a user-friendly website—at the very least it needs to allow customers to buy in dollars. And make it as easy as possible to shop from you regarding duties, taxes and returns.

• Americans shopping from a British brand like to hear a British voice. International Dance Supplies started out with a US-based call centre, but found it could give better service by extending up its UK contact centre to operate 24 hours a day.

• Make your delivery charges reasonable, American customers won’t specifically buy British if the charges are too high.

• Patel warned that if you have a retail presence in some states, watch out for the sales tax (similar to VAT), as laws can differ from state to state.