Internationalization in E-Commerce Part 1

The essence of e-commerce is decisively shaped by constant accessibility and independence from location: two properties that are otherwise only attributed to the theoretical model of the "perfect market". These two characteristics ensure that the customer base, regardless of the goods or services offered, is not limited locally, but is in principle global. With the operation of an online shop, the number of potential customers grows many times over.

However, if goods and services are to be traded across national borders to neighboring or even international countries, shop operators face special challenges. A survey by the Federal Statistical Office shows that the expansion of e-commerce activities abroad is worthwhile or is at least aimed at by the company's own competitors and can therefore be necessary simply to maintain competitiveness. 77% of all German online shops already deliver abroad. Of the remaining 23%, a full 81% are also planning to expand their activities abroad soon[1]. Online shops in Germany that only operate domestically will be an exception in the future.

A study by OC&C Strategy Consultants in cooperation with Google also shows the potential of internationalization, especially for Germany. In 2013, 18.6 billion euros were traded by the six largest e-commerce exporters, with Germany taking third place with a trade surplus of 26.1 million euros. This puts Germany far behind Great Britain (746 million euros) and the USA (134 million euros). Sales of around EUR 97 billion are expected for 2020, which highlights the growth opportunities of internationalized e-commerce. ### Suspected and actual difficulties There are many reasons for the lack of activity abroad. A survey by the consulting and research institute ibi Research of over a hundred e-commerce companies that are not (yet) active abroad has shown that legal uncertainties in particular when selling to foreign customers are perceived as the greatest obstacle. In addition, difficulties with customer service in the respective national language, uncertainties in payment processing and complex shipping are given as deterrent reasons.

In fact, the expected complications coincide with those that internationalized online shops are already confronted with, as a survey by the Federal Statistical Office shows. The legal uncertainties mentioned above are the number one problem for companies with a turnover of more than €500,000, closely followed by difficulties in offering services in the local language. The situation is exactly the opposite for smaller companies with a turnover of less than half a million euros. They primarily have to struggle with language-adapted service and only secondarily with legal uncertainties, closely followed by complex shipping processes. The latter is entirely plausible, given the effort required for international logistics processes (coordination of various service providers, consideration of country-specific requirements regarding storage, packaging, labeling, etc.). Also not to be neglected - as a survey by Deloitte from 2008 showed - are cultural differences between the already known domestic market and the new foreign market to be developed.

The expansion of one's own online shop into new markets outside the national catchment area therefore requires precise planning in order to overcome the hurdles. These arise in any case, whether SME or large corporation.

Basic requirements met?

The basic requirements for successful trading abroad can generally be reduced to a few simple points. First of all, those who have stable domestic success and corresponding sales are more likely to succeed in internationalization than companies with fluctuating sales and unclear future forecasts.

In addition, it can be stated that companies that expand abroad driven by so-called "push factors", i.e. environmental factors that force them out of the domestic market, are less successful there than companies that expand internationally due to "pull factors". will. The latter "move" companies abroad, for example due to a good economic situation and an overall increase in international demand, and thus open up new market opportunities.

Another factor that determines the success or failure of expanding entrepreneurial efforts is, in principle, an obvious one: In a study by BDO Deutsche Warentreuhand from 2011, almost 70% of the companies surveyed stated that simply the quality and service of their products on the new market were crucial. A “healthy mixture” of established and new products on the new market is the preferred division. ### Analysis of the circumstances There is no general strategy for internationalization; no market is like the other. This even applies to neighboring countries with the same national language. If the above requirements are met, the next step is to examine the circumstances and requirements of the future target market. For this purpose, market as well as competition and customer analyzes must be carried out.

• Analyzes of the sales market provide information about its volume, into which segments the market is divided, how the pricing policy is presented, what growth can be expected, whether there are other legal framework conditions to be observed than in the domestic market and much more.
• A competitive analysis shows which competitive conditions are to be expected in the new market: whether the market is divided between a few large providers, whether there is an undisputed market leader or which niche within the market is served by which competitor. This allows market opportunities to be identified.
• When it comes to customers, you have to deal with country-specific preferences. First at the product level: Which products are in demand in the new market? What is unlikely to sell at all? Do I have to make any changes, etc.?

What must the online shop be able to do abroad

In addition to coordinating the product portfolio, the online shop must of course be tailored to the needs and habits of the customers. Both technical and user-side aspects must be taken into account. The aim should be to offer users abroad a shopping experience tailored to their language and culture.

The right language for every country

First of all, the respective online shop should be translated into the corresponding national language. Only rarely are customers willing to shop in English in an “international” shop. Therefore, from a technical point of view, it is necessary to have a back-end that can be used to deliver product data and various product portfolios, invoice documents and prices according to the target country.

Similar to the product data management system (e.g. PIM Product Information Management), the shop system of the expanding company must also be able to display product designations and descriptions in different languages. If necessary, the shop system must also support UTF-8 encoding in order to support languages with characters outside the Latin alphabet (e.g. Cyrillic letters).

In order to be able to present the customer with the right language variant and currency, the use of IP detection is a good idea. The language and currency is then adapted to the current location according to the GEO IP. In the event that the location is not recognized correctly, it should always be possible for customers to switch languages. In the case of products that differ internationally (e.g. due to legal restrictions or a deliberately different range), it can make sense to draw the customer’s attention to the shop in their own language by means of a banner. In this way, amazon.com refers to amazon.de.

Hosting, domains and URL structure

The shop can be hosted either locally in the target country of the expansion or from the home country. For reasons of search engine optimization (SEO), the target country is recommended as the hosting location. Google recognizes the targeting of an online shop based on several factors, in particular the ccTLD (country code top level domain such as .de, .co.uk, .fr), the setting for the geographical targeting (for generic TLDs such as .org and .com) as well as the physical server location via IP address. However, the physical location factor is not always the best choice for content targeting, as some websites are hosted in another country due to better infrastructure or using content delivery networks, i.e. a network of locally distributed servers. Virtualization aspects can also be decisive. Which solution makes the most sense must be weighed up on a case-by-case basis.

As the factors mentioned above already suggest, the URL structure has a decisive influence on the geographical orientation of the online shop and its visibility. Google lists various methods for identifying the shop's orientation using the URL structure, but they all have advantages and disadvantages. - Country-specific URLs using ccTLDs (de, beispielshop.it) are clear in terms of alignment and optimal for SEO aspects. However, it is also more expensive to administer and the implementation of publication aspects is more complex. The various language versions can be regulated by different directories (beispielshop.de/de/, (beispielshop.de/en/). This structure is useful if there is a suitable ccTLD for each country in which sales are made and this can be realised is. - Subdomains of generic TLDs (exampleshop.com, fr.exampleshop.com) are easier and cheaper to set up, easier to manage and publishing processes are also easier to implement. In addition, this combination allows different server locations and subdomains can be aligned by country - but not necessarily unique for users (subdomain for country or language?). This structure is particularly useful when selling internationally or in business sectors. Here, too, the various language versions are implemented in directories. A list of all generic TLDs is provided by Google: support.google.com - Subdirectories of generic TLDs (com/de/, beispielshop.com/fr/) are also easy to set up, but very confusing in combination with the language versions to be displayed. In particular through the language level, which must then be mapped using an additional directory structure (exampleshop.com/de/en/) or country and language must be mapped using a single directory structure (exampleshop.com/de_en). Since directory structures should be kept rather uncomplicated from a search engine point of view and the country orientation in the webmaster tools cannot be optimally implemented, this is not an effective solution. - URL parameters are discouraged (com?loc=de) because the geographic orientation is not recognizable for Google there, not even through the declaration in the webmaster tools.

The Google webmaster tools offer the possibility to assign a geographical target to a previously verified page. This also includes every subdomain as an independent domain or web property; however, only one country can be assigned per site property.

Since versions such as exampleurl.xx, www.beispielurl.xx and the https versions are also independent web properties, they should also be set up in the webmaster tools. A preferred domain can then be defined for all versions via 301 instructions (for access) and in the webmaster tools (for alignment) and access can be forwarded to the actual domain.

rel=”alternate” hreflang=” “ href=

After the structure of the site is settled, you can now offer alternative language versions. Since 2011, Google has also provided webmasters with the marker (not a command!) rel="alternate" hreflang="..." with which Google can be given information about the existence of various international sites and country-based language variations. The value of the hreflang=" " can be a language in general (identified with the common ISO639-1 country code, e.g. hreflang="de") or a combination of language and country in order to better address different native speakers within a country (e.g. hreflang="ch-de" for German-speaking Swiss in and hreflang="ch-fr" for French-speaking Swiss). However, it is advisable to declare a general version that only deals with the language at the same time, e.g. in addition to en-us and en-gb also a general version en, in order to have this ready for language switching in the rest of the English-speaking world. If the language switch is activated, the user is not irritated by country codes in the URL.

Common shop problem: duplicate content

In addition to the reference to alternative language variants, it is advisable to use the "canonical" tag to indicate duplicate content in the case of different URL variants. This prevents a downgrading in the search engine ranking due to "duplicate content". Duplicate content can sometimes not be avoided, for example if an online shop contains a standard resource https://www.beispielshop.de/beispielprodukte.htm, but generates a new ID for each session, which is transferred to the URL https://www .beispielshop.de/beispielprodukte/?session_id=1234.htm. The shop operator can use the canonical tag in the head area of the website of the page that produces the duplicate content to tell search engines which of the two pages is the preferred one and should be included in the index.

In any case, you should secure the foreign domains of your own shop as part of the expansion, even if you otherwise operate the shop with a generic domain (usually .com for online shops). Otherwise you risk unnecessary disputes in the course of domain hijacking or domain grabbing.

Furthermore, the hardware of the shop should be tailored to the additional traffic that arises from opening up international markets. Due to the possible time difference between the countries and the therefore different "shopping times", reliable availability 24/7 is another important aspect. If you want to keep the access paths short, hosting by a local provider should be considered. High-performance solutions can be implemented above all if both the shop software and the operation of the shop come from one and the same provider.