What should brands consider as they enter the global eCommerce marketplace for the first time? As a follow up to our interview with the Japanese Marketplace, Rakuten, I asked them to share their insights on just that. Their expertise is incorporated below. And make sure to check out the video from my visit to Rakuten earlier this year.
Start by asking the right questions
For brands or retailers who want to start selling overseas for the first time, the first thing to do is ask questions:
- What is the demand for your products in that market?
- Can you expect to influence that demand through marketing?
- Who are your local competitors?
- Who are your international competitors who might already be in that market?
- What kind of sales target would you have to hit in order for the market to be successful for you?
Once you have the answers, you’ll know how to proceed.
Tip 1: Determine What Type of Marketplace is Right for You
There are B2C marketplaces, like Amazon, then there are C2C marketplaces, like eBay. There is also a hybrid approach – something Rakuten calls their “B2B2C” marketplace model. That means that they provide the marketplace platform to businesses around the world, and those businesses can use the platform to sell directly to customers. Rakuten doesn’t carry or sell inventory themselves, so they’re never engaged in any B2C activity that would compete with their merchants/B2B relationships.
Tip 2: Research Logistics Considerations
Once you have a relatively clear vision for what your business looks like, start sizing up operations. Can you do this in-house or do you want to start identifying suitable service partners? It might come down to the complexity of your unique business and operating requirements – for example, if you’re a new brand vs an established one – whether you have a large or small catalog, how regularly or precisely you need to manage inventory, etc.
The Rakuten cross-border eCommerce model can simplify things for those selling to Japanese customers. Basically, the customer can view a US merchant’s products in a virtual store on Rakuten in Japan, but the physical merchandise sits with the merchant in the US. When an order is placed through the marketplace, the order data gets transmitted from Japan back to the merchant in the US. Then the merchant ships the merchandise directly to the customer in Japan, the same way they would if the customer had made a purchase through the merchant’s US website.
The cross-border model enables these kind of transactions by relying on a process called “personal import.” That means that Japanese customers purchase goods directly from an overseas merchant for individual or personal use. Because the purchases are for personal consumption and not commercial import, the merchant does not have to register a business or products in Japan. The fully-landed cost is paid by the customer, including any duties or taxes. Most carriers offer DDP (“Delivery Duty Paid”) options so the customer can pay the full amount at checkout rather than being assessed additional costs later.
In the Personal Import model, the duties are de minimis, below which value merchandise should be exempt from duties and taxes. The de minimis value in Japan is 16,666 JPY, which means customers do not have to pay duties on any orders below that value. That’s a big incentive which encourages a lot of cross-border shopping.
Tip 3: Identify Partners
Rakuten is one marketplace that has partnered with several eCommerce support companies in Japan to assist US merchants with end-to-end eCommerce operations. Partners are third-party companies, unaffiliated with Rakuten, but trusted to provide expert operational support to help their overseas merchants succeed in Japan. Basically, a US merchant can think of a service partner like their local team in Japan. You really want someone on the ground in the local market to field customer queries, contribute market knowledge to design decisions, and execute marketing strategies. If you’re not ready to develop those capabilities in-house, an outsourced service partner is a scalable way to fill in the gap.
Tip 4: Brand Your eCommerce Site
Large foreign brands like Adidas, Bose, and Clinique have designed custom brand stores on Rakuten to extend their brands in Japan. Often times, brands choose to design Rakuten stores that match the design of their standalone websites, to create a consistent customer experience. The shopper can access these stores through the Rakuten top page, either by search for a specific product or brand, or browsing by category, or recognizing an attractive offer in a banner advertisement.
For newer brands, these customized storefronts are a powerful way to introduce the brand to Japanese customers. Rather than just listing products in a static marketplace environment, custom brand stores let new brands tell their story, and explain to customers what their brand is about. Brands like Bulletproof Nutrition and MD Factor have used Rakuten’s marketplace to launch their brands in Japan for the first time. Japanese shoppers love the marketplace’s “long pages,” or content-rich product descriptions with a lot of backstory, lifestyle images, and technical detail about both products themselves and the brand behind them.
Tip 5: Time Your Launch
Finally, plan a launch timeline. It could take anywhere from a few weeks to several months to get up and running, depending on how complex your business is. Make sure the launch timing coincides with any special events or seasonality that would impact your sales. For example, if you’re a skiing brand and you start exploring options in October, line up your operating requirements in November, and decide to greenlight your project around Thanksgiving, you might not get your store online until February or even later, so you’ll miss your strongest selling window.
Not every category is that seasonal, but every launch campaign should include planning and promotions to make sure the traffic is available when the store goes live. Rakuten works with all merchants carefully to make sure new sellers are positioned for success. As a marketplace, their success depends on their merchants’ success, so they smartly offer high levels of consultation to both new and existing sellers.
By leveraging online markets like Rakuten businesses can reduce the localization build-out and set-up investment in comparison with developing their own in-country site and/or optimizing their current home-market site. Often SMBs find the most challenging aspect of “getting to global” is understanding consumer expectations in foreign markets. Rakuten, and marketplaces like them, leverages its massive data in-take to help you identify opportunities and test your strategy.
I would like to thank Reid from Rakuten for his contributions to this article. You can connect with him on LinkedIn here: https://www.linkedin.com/in/reidwegner/
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