Jan 10 2005

Online Retailers Look Overseas

Published by at January 10, 2005 10:40 pm under Web Globalization

Five years ago, ProFlowers, an online florist based in San Diego, pumped $500,000 into market and technology research that would, the company hoped, help it move quickly into Europe and Japan. Within just a few months, staying in the United States market suddenly seemed much more appealing.

“We naïvely assumed that everybody would look at the Internet and see it the same way,” said Bill Strauss, chief executive of Provide Commerce, the parent company of ProFlowers. “But consumer behavior was absolutely different.”

This year, though, the company is joining the growing ranks of online businesses that are ready again to dip their toes into foreign waters, as sales growth in the American Internet market begins to slow.

Analysts and Internet executives who have experience with foreign retail operations, though, warn that such forays remain harder than they may appear.

“Long term, international is the place to be,” Mr. Strauss said.

Sales projections easily explain why retailers explore such measures. Over the next five years, Ms. Johnson said she expected the European electronic commerce market to grow at an annual rate of 33 percent – more than twice the rate in the United States. The percentage of Europeans who are online continues to grow, whereas the United States, by contrast, is adding relatively few new Internet users each year because most Americans are already online, Internet analysts say.

The success of Amazon.com’s international sales efforts has also helped spur the trend of online retailers expanding globally. During its latest earnings announcement in late October, Amazon.com said that its North American sales had grown 15 percent in the third quarter compared to the same period in 2003. Meanwhile, sales for the company’s British, German, French, Japanese and Chinese sites were up 52 percent in the quarter compared to the same period a year earlier.

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