Does Every Merchant Need A Target Strategy?

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Target made news last week when it announced that it was setting up a separate site to accommodate the 50 million cross-border shoppers who were not able to buy from their U.S. site. But is that the only way that merchants can capture their share of the $300 billion cross-border pie? Ralph Dangelmaier, CEO of BlueSnap, shares his thoughts on Target, the complexities of serving a cross-border customer and the biggest abandonment problem that most merchants don’t know they even have.

There’s an old saying: “It’s what you don’t know, you don’t know that can get you every time.”

Never has that been truer than in the case of the massive online cross-border opportunity facing merchants today. That opportunity is expected to reach $300 billion by the end of this year and triple two years hence. Yet turning that cross-border opportunity into a treasure trove of new customers and new sales is one that many merchants will simply miss. Why? Because they never realized their online doors were closed to that very lucrative set of shoppers who visit them from another country.

Big name retailers like Target recognized that recently and began testing a new internationally focused eCommerce site to reach the 50 million consumers outside of the U.S. whom they said attempted to shop their site but couldn’t. Few merchants have those resources. So, if they don’t, are they doomed to miss out?

Not necessarily, said BlueSnap CEO Ralph Dangelmaier. Dangelmaier believes that with the right effort, resources and development merchants with a much less-than Target budget can still deliver a compelling cross-border customer experience. Platforms like BlueSnap’s use hosted pages and APIs to transform a merchant site into one capable of making a cross-border shopper feel right at home.

Yet he also acknowledges that challenges remain, especially when those shoppers are using mobile devices.

According to Dangelmaier, merchants must address a number of complexities when serving a cross-border customer. Those include calculating shipping for physical goods or download capability for digital ones, handling taxes to and from anywhere in the world, and ensuring that the checkout process, overall, is optimized to present local payments methods, currencies, and languages.

However, he says, the biggest pain point is one merchants know all too well but may not entirely understand how to overcome: abandonment.

There, Dangelmaier said, the merchant actually faces two issues: shopping cart abandonment, where a customer just gives up and goes away for whatever reason, and what BlueSnap calls checkout abandonment, when a committed buyer fills a cart but then leaves because there’s too much friction associated with the checkout process.

Dangelmaier said checkout abandonment is usually where merchants don’t even realize they have a problem. But that friction can rob the merchant’s bottom line of as much as 40 percent of sales.

According to BlueSnap’s data, less than 10 percent of merchants even track data related to checkout abandonment on a regular basis, meaning that they don’t have any way to measure how many customers are leaving because of checkout-related issues.

“When selling cross-border, merchants forget that people want to checkout in their language, in their currency and with their preferred checkout method,” Dangelmaier explained. “It’s actually quite easy to get those correct, but a lot of time merchants just quickly overlook those steps and assume people are going to buy the way they do in the U.S. Then they end up with a lot of problems as cross-border consumers are trying to checkout.”

Not only do many merchants tend to forget about the consumer experience outside of the U.S., but they also do not realize that how checkout is designed can have a huge impact on whether a customer’s payment is approved.

“One big mistake we see U.S. merchants make is that they send all of their international traffic or cards to one single U.S. bank — and that usually turns out to be not an ideal situation for that merchant,” Dangelmaier said, noting that this can cause many fraud alerts and declines to take place. And that, he said, only increases the level of friction if consumers are able to make it through the checkout process.

“Very rarely do merchants put those two concepts together. Once they do, they realize there’s a much better opportunity to create a frictionless checkout that allows all of the cards to go through and creates a really good customer service experience.”

Dangelmaier also pointed out the importance of ensuring fraud rules are in place to offer adequate protection, and also optimizing the tools used for fraud detection and chargeback refunds.

But let’s suppose a merchant has essentially done everything right, meaning they have localized for the cross-border shopper, optimized for the product, and made shopping an easy and frictionless experience. How do they really know it’s working?

As Dangelmaier explained, “the only way to prove it’s working is to measure and track to see how you’re doing,” which is one of the reasons that BlueSnap has invested in creating data analytics tools to help merchants understand if they really have a checkout conversion problem.

“Generally speaking, merchants selling cross-border should be in the high 80s for transactions going through with low checkout abandonment. If selling domestically, merchants should be in high 90s,” Dangelmaier stated. He added that if merchants are not tracking to those numbers, changes in the checkout process may be needed.

According to Dangelmaier, merchants can do something to capture the 40 percent of cross-border commerce that’s lost when they don’t know they aren’t open for their business. Checkout abandonment is a problem that can be easily remedied, he says, once merchants embrace a frictionless checkout experience. By simply addressing the importance of a meaningful and seamless experience, which includes understanding checkout preferences for a targeted consumer such as language, currency and payment method, merchants have the ability to overcome some of the cross-border pitfalls.