Globalizing E-Business Invites World of Pain
By year's end, nearly 60 percent of the world's online population will reside outside the United States, and that in less than four years 46 percent of worldwide e-commerce will be conducted off local shores. This report from International Data Corp. (IDC, www.idc.com) also stated that Western Europe represents a hotbed of e-commerce activity. E-commerce spending in the region will increase at a compound annual growth rate of 138 percent -- from $5.6 billion in 1998 to $430 billion by 2003.
But it seems the entire focus of e-business has been on the U.S. market, ignoring possible dollars -- or yen, franks or rubles for that matter -- to be made overseas. "To have a successful global e-business you need to understand how business is conducted across regions, and that includes culture," says Anna Giraldo, senior analyst with IDC's Internet and e-commerce strategies research program.
IBM Corp. is a good example of this practice, despite some early difficulties. "[IBM] did a lot of practice and were very candid when they talked about their struggles," Giraldo says. "Being as large as they are, their issue was inconsistency." In the end, Giraldo explains, IBM found the best approach was a centralized one. Overall business practices were set, and then individual regions build upon those as they pertain to the respective nations.
A good approach to global e-commerce, especially in the business-to-consumer space, is teaming up with a local partner that will endorse your company and that can open some doors, such as in distribution and marketing.
In the business-to-business space, the infrastructure is there in the form of the Internet and extranet. Global suppliers and consumers are more approachable when the cheap medium of the Internet is all they need to be a player. Giraldo explains this is why U.S. and Western European markets were the first to take advantage of e-commerce. Now other regions are catching up and can take part.
There are vendors that specialize in helping e-businesses become global in their appeal. Idiom Technologies Inc. (www.idiom.com) recently partnered with Bowne Global Solutions (www.bowneglobal.com) to produce a one-stop shop for e-businesses interested in going global. Bowne provides multilingual support and Idiom provides software and services for presenting the site.
Eric Silberstein, CEO of Idiom, says the process includes figuring out which products to ship in which countries, designing a site toward a specific culture and figuring out a payment system that works for each nation. Globalization doesn't necessarily mean the service is available everywhere. A company could choose to tailor its site only to the countries it thinks it can market to.
A company should also think about how to integrate globalization with the rest of the company. For instance, Charles Schwab & Co. Inc. (www.schwab.com) not only has an online site geared toward the Chinese, but a Chinese user can call up Charles Schwab and speak with a customer service representative that speaks Chinese.
Silberstein, who used to work in Microsoft Corp.'s Beijing office, says it's almost impossible to have one integrated system that can be slapped with a front end for what pertains to each region. There are too many differentiating factors from region to region. For instance, the pricing of a product can’t be a simple currency convergence, it has to be based on competitive prices for each region. Also, language translations need a human touch to be smooth and accurate.
Other vendors that help in this space include Global Sight Corp. (www.globalsight.com), Transparent Language Inc. (www.transparent.com), Uniscape Inc. (www.uniscape.com) and Weblations S.L. (www.weblations.com).
The biggest advantage of globalizing e-businesses, IDC's Giraldo says, will go to those companies that have international relationships in place, such as manufacturers who rely on suppliers from abroad. A global strategy has already been accomplished there.