Most non-European brands, retailers, and web shops have no idea that their international shipping rates and shipping solutions lead to a dramatic drop-off in conversions of their European visitors. As a result, these brands and retailers miss out on getting their share of the huge European market (and the turnover and margin that comes with it). The unfortunate truth is, when a European consumer finally decides to take the risk of placing an international order with your web shop — only to be confronted with high shipping rates, slow transit times, and high clearance cost — it’s often easier to change his or her mind and cancel the order altogether.
Getting to Conversion
What contributes to this, you might ask? Why do European consumers abandon their products at checkout, even when your products are high quality? There are many reasons, some of which include:
- Shipping costs are often 2 to 3 times more expensive than the product
- Transit times can take from 7 to 21 working days
- A “surprise at the door” — additional and unexpected European import duties and VAT to be paid upon delivery of their items
- A different “second payment at the door” to the carrier chosen by you, and extra delays due to this second payment
- High (€ 18 — or more than $20) additional clearance costs
Another major factor is this: in addition to the inconvenience caused by the logistical costs and incorrectly-selected shipping options discussed above, non-European Internet retailers often lose conversions because of incorrect or inappropriate Unique Sales Points/ Propositions (USPs) — essentially their differentiator, which we will discuss more in just a moment. Too often, these companies choose to emphasize USPs that are not in line with the European market and European consumer expectations.
These USPs may work in a retailer’s home country, but are often not really distinctive and do not fit the European market. Most often their problem lies in the fact that they haven’t been thought through thoroughly to make them effective. The good news is: there are ways to fine tune your USPs to make them more effective for European customers. I’m here to help you learn how.
Who can benefit from better USPs?
Nearly any non-European retailer who wants to sell into Europe can benefit from improving their USPs.
Differentiating your non-European web shop in the current international playing field of commerce is challenging. Is a shipping solution the only thing you’re offering your customers, or are you truly interested in getting the European consumer to make an international purchase from you?
Are you relying solely on price? What if your product is not the cheapest? How about service? Are you confident that you’re prepared to back that claim up? And regarding quality — is your European competition so bad? Will customers REALLY get a better product from you?
Diving into USPs & UBRs
Let’s define the two terms we’ll be using to talk about what differentiates your company, brand, or web shop from your competitors: USPs and UBRs.
USPs — Unique Selling Points / Propositions — are the specific (“unique”) reasons people buy your product, as determined by your organization. USPs are an “internal” judgment made by the seller. UBRs are Unique Buying Reasons — the reasons people will purchase your products across borders — viewed from customer perspective. UBRs are an “external” judgment made by the purchaser. The reasons themselves may differ, but the important part is that they are unique — that there is only one — and your company or brand is the only one who can offer it. The word “unique” is often neglected, but it is the key to this process.
USPs can be communicated by internet retailers in different ways. Investing in a professionally-developed corporate identity package, including a matching website, can usually make your USPs clear. But marketing efforts can communicate USPs as well — for example, as highlight-extensions in Google AdWords or in Facebook ads.
Where does it often go wrong?
Some points that are presented as USPs have already become a standard in the market. Many non-European web shops have USPs that are not unique to Europe — or even distinctive from their competitors. Sometimes they are chosen thoughtlessly, or even copied directly from competition. It can be especially difficult for non-European retailers to differentiate themselves from large (local) European players (e.g., Bol.com, Wehkamp, Argos, Tesco… I could go on), since these big players can often offer a better price and faster delivery times.
Consider, also, that a USP for your home market might not be a USP for the European market. For example: next-day delivery. When a European customer orders something in your non-European web shop, the customer will not be expecting to receive it the next day. That customer has placed an international order with you for totally different reasons: your brand or products are unique, they are not available in Europe, they offer a price advantage — or perhaps for a completely different reason. Next day delivery and free shipping is not the standard in most international e-commerce, so don’t rely on it as a USP.
Developing strong USPs through the Kano analysis method
We are going to use the Kano analysis to create highly effective USPs for international e-commerce to Europe. First, a little background: Noriaki Kano, the founder of the Kano model, published a paper in 1984 that detailed a method for linking customer satisfaction to product development. Fortunately for us, Kano’s analysis model is also very useful for strengthening your cross-border USPs.
Take a look at the Kano model above, and you’ll see three prominent lines. These lines represent levels of customer need:
- Basic needs (green line)
- Performance needs (blue line)
- Delighters (red line)
These lines run across a playing field between a happy (returning) customer and an unhappy (lost) unhappy customer. They also run across features that you do not have and features that you do have. Performance needs are the properties you should have as a minimum (if you do not have them, your customer will be unhappy). We can also think about these as “more is betters” — the more you have, the greater your customer satisfaction will be. Basic needs, unsurprisingly, are something that you should not be operating without, and will not keep your customers happy on their own. Delighters are the qualities that ensure an excellent customer experience and are often unexpected. These are features are “nice to haves” — if you do not have them, they do not necessarily create an unhappy customer.
How does this relate to international e-commerce?
Let’s look at this model through the lens of international e-commerce. An example of a basic need is that your product is available for order. Sounds logical, but if you only have some of your products in stock in Europe, it will be very difficult for you to deliver — especially if the same product is available from your European competitor and you aren’t able to offer a good shipping solution via your .com website.
In your home market, free shipping on orders over $50 can be an example of “more is better”: the more value you get from something (or the faster you get it), the better the customer will find it. Free shipping on orders over $10 is better than free shipping on orders over $50. However, this is not the case in cross border e-commerce. As we discussed earlier, a European customer will order your products because they are unique, and/or are not available in Europe, and/or have a certain price advantage. That customer understands that free shipping is not a real reason to order from the US (or China); that customer is much more interested in a “delighter.”
“Delighters” are your real USPs. What can you do to delight your European customer? Here are some ideas:
- Offer a free gift with every order
- Provide access to an online community with extras and a loyalty program
- Partner with another company that will add value for your customer
Most importantly, make the effort to avoid any unexpected expenses for your customer. Offer an all-inclusive solution where your customer will not be confronted with the so-called “surprise at the door” and have to pay unexpected import duties, VAT and high customs clearance costs.
This is how you beat the competition
Use the Kano Model to critically look at your conversion rate, shipping solution(s), customer satisfaction rates, and the products you offer. Link your “delighters” to this, and use these as your USPs to stand out from the crowd. It sounds simple… right?
If you’re ready to get started — but but are not quite sure how — don’t worry. In my next blog I’ll go through a step-by-step guideline detailing how to start.
