It seemed like a perfect fit, then, when officials creating fashion e-tailer boo.com Inc. decided last year to launch globally, with sites tailored for shoppers in 18 countries. Not surprisingly, developing and launching sites in multiple languages from a London data center proved tougher than expected.
Testing and scalability problems led boo.com to delay its worldwide debut five months. But by November, the strategy paid off.
The startup walked onto the online fashion retailing stage, having met its goal of outfitting shoppers throughout Europe and North America. In January, boo.com was named the top-performing e-tail site during the holiday season by Credit Suisse First Boston Corp.'s Retail Group, outperforming Amazon and eToys, among others.
"We wanted to take advantage of the fact the Internet was a global platform," said Jay Herratti, president of boo.com North America, in New York. "We had a global customer segment, a global market and a global platform. Our idea was to marry the three together."
In theory, the Web can reach the world. In practice, US e-commerce sites have largely limited themselves to North America. But that's about to change as the use of the Internet matures in markets throughout Europe, Asia and Latin America. As a result, formulating a global e-commerce plan is becoming increasingly important for dot-coms and traditional corporations alike. Gaining a global foothold, though, involves more than just translating content. Companies must decide which countries to enter first, how they will update and manage content globally, and what is the appropriate mix of central control and local flexibility. They must also decide whether to build a global Web presence alone or develop tight partnerships with companies based in their targeted foreign markets. Developing such strategies is critical for ensuring that a global effort leads to sites that are relevant to the consumers and businesses e-tailers want to reach, whether those customers are in Amsterdam or Hong Kong.
The sooner the better
E-commerce is poised for rapid growth outside the United States. While the United States will account for 69 percent of all e-commerce revenues generated this year, its share is expected to diminish by almost 10 percent by 2003, according to e-land Inc.'s eMarketer, a New York market researcher.
The demographics of Internet users is shifting even more quickly. In a flip-flop of current patterns, the majority of Internet users will live outside the United States by 2003, predicts International Data Corp. Companies that want to succeed on the Web can't ignore the global shift, said IDC analyst Anna Giraldo Kerr.
"Once a company decides to have a Web site or presence, in the same second that crosses their minds, they need to include a globalization strategy," Giraldo Kerr said. "[People] are going to find you no matter what. Globalization of a Web site can't be an afterthought."
Unfortunately, although e-business leaders at most companies recognize the need to develop a global strategy, many so far have not yet put one in place. The first step they should take, experts say, is to determine which global markets make the most sense for the products or services they provide online. A logical approach, Giraldo Kerr said, is to first target regions and countries in which a company already has online customers. One way to identify those is to track the country domains from which current users of a US-centric site are visiting.
By analyzing such site visitor data, managers at VerticalNet, a collection of business-to-business content and transaction sites, noticed about a year ago that a growing proportion of hits were coming from outside the United States, even though the company didn't have sites for foreign regions or countries. By February, the proportion of non-US visitors reached 43 percent across VerticalNet's 56 vertical-industry sites, said Mario Shaffer, vice president of business development and international at VerticalNet, in Horsham, Pa.
"It was frustrating that we did nothing on our domestic sites to cater to that [international] audience," Shaffer said.
Knowing the changing demographics of its visitors helped VerticalNet decide about a year ago to begin mapping out a global strategy. It also allowed the company to pinpoint where to concentrate its global efforts: Western Europe and Japan. This year, VerticalNet put together a series of deals with international partners to launch global B2B sites. VerticalNet teamed with British Telecommunications plc. and Internet Capital Group for VerticalNet Europe, which will develop and launch vertical trading communities throughout Europe. Vertical Net and BT also created VerticalNet UK Ltd. for the United Kingdom. In Japan, Vertica lNet and Softbank Commerce Corp., a subsidiary of Softbank Corp., created Vertical Net Japan Kabushiki Kaisha.
VerticalNet sites for other countries should go live in coming months with news and trading in a variety of languages and with local editorial staffers adding content tailored to markets, Shaffer said. Data on which vertical sites are receiving the most visitors from foreign countries will help determine which industry sites in other countries to target next.
Analyzing Web server logs isn't the only way to determine which global markets to attack first. Established global companies may need to look no further than their overseas offices to help determine the languages and countries to target for their Web sites. With employees in offices throughout Europe, GE Global Exchange Services (a business unit of the GE Information Services arm of General Electric Co.) began hearing from customers that they were not using the company's GE TradeWeb online service because it was only offered in English. TradeWeb, a Web-based EDI (electronic data interchange) service, is targeted to global companies that want to trade online with small and midsize suppliers and partners. Many of the users felt more comfortable completing transactions in their native languages.
"Companies wanted to use this, but their customers only spoke French," said Jeff Anderson, global product manager for GE TradeWeb, in Gaithersburg, Md. "For them to use the service in English was just not acceptable."
In late 1998, GE began internal technology development to help make the TradeWeb site more global. GE rearranged the content on the site so that no text, for instance, was embedded in a graphic. The separation allowed the company to build in multilanguage translation without having to rewrite code. By April 1999, French translation was added to the site; German and Italian followed soon after. GE TradeWeb should have a Spanish version this year.
Beyond analyzing site visitor data or getting feedback for overseas offices, companies should consider regions and countries where Internet usage is poised for high growth and determine if their products and services make sense there, analysts say. Europe -- especially countries such as the United Kingdom, Germany, France and Italy -- is an obvious first step. Asia, though, might have the greatest potential, said Nevin Cohen, an analyst at eMarketer. Along with having half the world's population, Asia should account for about 26.5 percent of world Internet users by 2003, Cohen said. Once a company knows which global markets it wants to enter, it must figure out how to get there. That means not just translating a U.S.-centric site into another language. Companies must consider cultural implications of site design. At the same time, transaction-oriented sites must account for variations in currencies, taxes, tariffs and laws.
To adapt a US-centric site to another language and culture -- a process called localization -- companies must first gain a deep understanding of the market. Doing so means either building some physical presence in other countries or forming partnerships, experts say.
Traditional multinational companies, such as GE and DHL Worldwide Express, often can have an edge when it comes to localization. They already have employees working in local offices worldwide with native language skills and a thorough understanding of culture, many of whom have some experience localizing offline products and processes. Even most multinationals, however, are reaching out to partners for at least portions of their e-commerce localization efforts. To launch multiple languages on TradeWeb, for example, GE turned to outside translation companies for the bulk of localization but developed a team of GE employees with the appropriate language and cultural backgrounds to review the work.
"[Translators] may not know the language of our business," Anderson said. "We wanted to be consistent with the language throughout the site."
Less well-established companies such as dot-com startups are unlikely to have offices worldwide and, more often than not, will need to partner to quickly learn the nuances of various markets, said IDC's Giraldo Kerr. Lycos Inc. three years ago, for example, began its global push by forming a series of 50-50 joint ventures with established overseas companies. The first stop was Europe, where Lycos in April 1997 joined with media powerhouse Bertelsmann AG. (The venture went public late last month.) About a year later, Lycos and Sumitomo Corp. partnered to enter the Japanese market. Most recently, in May 1999, Lycos and Mirae Corp., of South Korea, joined to target the rest of Asia, and Lycos and Bell Canada this year are working on Canadian services.
One exception to the partnership model was made in Latin America, where Lycos in October 1999 began launching and managing 14 sites itself. Why the go-it-alone approach in Latin America? Lycos could not find a good match with a partner and felt that the region was close enough to the United States to centrally manage from its Waltham, Mass., headquarters, said Stephanie Haag, international program manager at Lycos.
Who's in control?
Whether they choose to globalize through partnerships or on their own, e-businesses must also decide on the right balance between central control and local flexibility. Should content be generated and updated centrally or locally, for example? This is one of the most important and most difficult decisions in a global Web strategy, experts say. Companies that expand through partnerships may be tempted to hand over most of the control to the new international entities to take greatest advantage of the expertise of employees in the new markets. But turning over too much control could lead to a muddle of country-specific sites with no consistency and a scattered corporate message.
Most e-businesses should resolve that question by sticking with a mixed model of control. Decisions about brand representation and the technology used for the Web sites, should be made centrally, said Preston Dodd, an analyst at Jupiter Communications Corp., in New York. Meanwhile, there should be local authority for deciding on content and services best tailored for given markets.
"You don't want to reinvent the wheel each time you enter a country and have a different [technology] platform and software and have offices that can't talk to one another," Dodd said. "[But] if you stymie local creativity, then you could have a backlash."
The mixed-control model seems to be working at Lycos. There the central US operation provides the underlying technology services -- such as its search engine and Web creation tools -- and sets guidelines for the design of user interfaces. But the joint ventures have control over how the sites are managed in their regions. In Europe, for instance, decisions about what services to offer for the region are handled at Lycos Europe's headquarters in Germany, while the sales and marketing offices in seven European countries assist in the nuts and bolts of localization, such as language translation and creation of local content, Haag said. All the European sites are hosted centrally in Germany.
"The big advantage is those partnerships are right there in the market and are not missing out on all the new developments [there]," Haag said.
It can be a mistake, however, to give local country operations too much control over e-commerce sites. Just ask DHL, a highly decentralized company that, beginning in 1996, allowed its offices worldwide to develop their own Web sites. DHL officials soon realized, however, that they had a problem: The various countries' sites, which number about 60 today, lacked a common look and feel.
"Our objective was to have sites communicate information and provide service to customers online, and we didn't pay too much attention to consistency among the countries," said Etienne de Longvilliers, global e-business director at DHL, in London. "We have a number of countries which today have sites where the look and feel and content are pretty different."
To give customers a common look and consistent online services, DHL started making changes in mid-1997, imposing some central control. While local staffers continue to handle the maintenance of news and other local content on the sites, DHL is using common templates for the sites, which lay out more specific design criteria.
In addition, DHL has begun to centralize some of the technology used to develop the global sites. Where previously each country's offices hosted their own Web servers, DHL has moved the hosting into three data centers -- in London for the European sites; in Kuala Lumpur, Malaysia, for the Asia/Pacific region; and in San Francisco for the United States. More central hosting helps control costs because such elements as shared data can be updated and managed fewer times.
DHL plans to continue adding more consistency to its worldwide Web sites at midyear when it relaunches them with a new design and additional shipping services, de Longvilliers said.
In contrast to a model with a mixture of central and local control, Visa International has opted to focus on central management of its six worldwide sites. Visa, whose credit cards are not issued by the corporation but through financial institutions, focuses much of its energy on marketing its brand. No wonder the company doesn't want to allow local worldwide offices to have too much leeway on the content and services offered on the sites.
So Visa hosts and manages its information-oriented sites -- in English, Spanish, Portuguese, Japanese, Chinese and German -- from a central data center on the East Coast. While the regions have the ability to add promotions and content tailored to their markets, those changes must be cleared through corporate management, said Joyce Bustinduy, director of Web content management at Visa.
"We're trying to protect the brand throughout all these regions, but we realize we have to let them do some localization as well," Bustinduy said.
Really distributed management
Once global sites are up, the work of maintaining and managing them has only begun. Ongoing management can be the toughest part of a global Web strategy, experts say. That's because e-commerce managers must be able to selectively update and translate content globally on a nearly continuous basis.
A new group of software and services vendors has developed to address these concerns and build translation workflow and automation tools for multilingual Web sites. The group includes companies such as Idiom Inc., GlobalSight Corp. and Uniscape.com Inc. The software typically can integrate with popular e-commerce and Web content management software from vendors such as Vignette Corp., BroadVision Inc. and Interwoven Inc.
The multilingual Web site management software can work especially well for global sites with central management, said Lycos' Haag. That's why Lycos began using Idiom's WorldServer software for the eight sites in Latin America that the company manages on its own. The company's joint ventures are also considering whether to replace proprietary management systems with Idiom. The software helps Lycos specify the sections of sites that need updating and track and reuse translations and changes.
"If you've never gone through localizing multiple pages at the same time, you don't know the pain," Haag said. "It's a real nightmare."
Similarly, GE TradeWeb added Global Sight's Ambassador software to facilitate its creation of multilingual sites, to specify text for translation and to manage translation work done by multiple outside service providers.
Packaged software wasn't the answer for boo.com when it was preparing to hit the international online fashion stage, however. The startup did not want tools that were good only at managing the creation and updating of local content. Managers at boo.com also wanted to be able to integrate global fulfillment processes such as distribution and shipping into the same system that manages content globally.
The company developed a proprietary messaging system that uses EDI or Extensible Markup Language to tie into warehouses operated by key logistics partners UPS Logistics Group, a subsidiary of United Parcel Service of America Inc., in Louisville, Ky., and Deutsche Post AG, in Cologne, Germany.
With the system, a shopper from Spain, for instance, can order the latest Puma sports gear. The order gets dispatched to the German warehouse, where the system automatically recognizes that the shopper is ordering from a Catalan-speaking region of Spain. That leads to the creation of invoices, receipts and shipping forms in both the proper dialect of Spanish and in Spanish pesetas.
"We realized that to sell hip fashion, we had to serve global customers with a very customized experience," boo.com's Herratti said. "Our aim is to be a global style editor, and to do so, we have to remain on the cutting edge both with the clothes we sell and with technology."
After all, boo.com doesn't want its Web site to go out of style as fast as last year's fashions.
