Dynamic Export » Kylie Hargreaves

The channel you haven’t considered?

Kylie Hargreaves — Thu, 20 Oct 2011 22:00:34 +0000

Type in “define: eCommerce” into your Google search and the first line that might turn up is a definition from Princeton University in the US: “commerce conducted electronically (as on the internet)”.

But this doesn’t seem to go far enough these days. If you actually look at where and how people are shopping “online” you can quickly see that a more apt definition might actually be “commerce conducted via any digital means available and convenient for the consumer”.

24/7 convenience, time-efficiency, global choice, easy value-for-money comparisons, home delivery and good return policies; these are all reasons why “digital commerce” is a booming industry. They are also reasons why exporters need to think well beyond just an “eCommerce” strategy when considering their market-entry and/or marketing options.

A ‘digital strategy’ could include social media, email, sms/mms, RSS, online banner ads, digital displays and even “old” technologies like television. The best digital strategy is of course one that uses multiple techniques to “layer” the messages while also building up the database of knowledge on their customers.

Anthony Lye, President of CRM for Oracle, recently noted that businesses providing cross-channel processes and providing customers with flexibility to choose different ways to interact with the business will do far better than those trying to limit a customer to just one or two channels.

Let me give you a quick example which blends some of the various experiences I’ve had recently in the Sydney retail scene into a hypothetical scenario.

About six months ago I purchased a suit from a Sydney fashion retailer. At the time they asked if I’d like to receive a $20 voucher for my next purchase. For me to get the voucher I had to give them my email address, which I did.

They then sent me the voucher and asked if I wanted to know about their sales and if so, would I spend a few minutes filling in an online survey which would help them identify when to send messages to me. They asked if I’d like information delivered via email or a text to my phone. I opted for phone and gave them my BlackBerry number. About three weeks later I got a text message indicating this season’s suits (which matched my criteria) were going on sale in about a week. They also asked if I would I like to preview them at a special VIP sales night. I SMS-d an acceptance. At that evening, I was asked if I liked to order items online now that there was a track record in terms of my size and preferences. So I set up an online account with a full profile and I can now just order items online and have them delivered to my home or office.

In six months I have been into that store four times and bought outfits three times out of four. This from a store I’d never been into until six months ago and which I walked into just because I liked a suit I saw in their display window. So a digital strategy works nicely to build your customer base, loyalty and repeat sales. But my example still requires a physical “bricks and mortar” or “shop-front” set-up. Are there any other alternatives?

Interestingly, this is where television is making a comeback. Television retailing is big business. Thankfully, I’m not talking about cheesy, cheap infomercials peppering our favourite TV shows here, but rather actual dedicated television retail channels.

The biggest television retailer in the world is QVC. In fact, QVC is now the second largest television channel in the US after CBS – and it does nothing except sell things! In 2010 they had a turnover of almost US$8 billion. They broadcast live 24x7x364 days a year (Christmas is pre-recorded) to almost 200 million households on three continents.

They use numerous digital channels to service their customer base, including a website qvc.com and its international equivalents, as well as an integrated mobile/telephone support network. Their website gets 18 million visits from 6 million distinct visitors each month. They also have a very active community on Facebook, YouTube and Twitter.

The scale of QVC can be a bit mind-boggling when you think they delivered more than 158 million packages to their customers in 2008/09, who by the way, all recorded a 95 percent intention to re-order. That’s about seven or eight packages per annum delivered to every man, woman and child in Australia from just one business alone. One can’t even imagine that would be possible for a major Australian retailer like David Jones or Myer.

So it’s clear it’s a business model that works in the US and by the spread of QVC and competitors like it into markets like the UK, Japan, Germany and even India, it’s clear it’s a channel that works in other markets too.

If we look closely at QVC’s demographics and major product categories, you can pretty quickly see there is s natural, although evolving, focus on fast moving consumer goods. In 1998 over 50 percent of the items sold on QVC were household items. In 2008, this had changed to reflect a broader range of items but 45 percent of sales were still household items.

Contrary to popular opinion, television retailing is not the “back-water” of retail selling excess product or cheap, disposable items. QVC’s biggest movers are in fact high-end brands. QVC’s customers are predominately “above average income households”. They are however, predominately female; over 90 percent of QVC’s revenue comes from female customers aged 35-to-59. So if your product is designed for the more affluent, brand-aware and design-savvy female consumer, you might just want to look at market-entry options like QVC.

Of course, the hurdles to get selected can be significant and you have to be able to supply in large-scale quantities. It’s not uncommon for 2,000 units to be sold within minutes of a segment airing. You also need to be sure to keep your QVC airtime by delivering a regular schedule of new products, colours and seasonal items.

You need to train to present the product professionally and you need to work with QVC to set a price point that gives both parties the margins they need, while still appealing to the customer.

But there can be no doubt, if you’re selected as a television retail product for a channel like QVC and you manage to survive your first two airings, then most Australian exporters wouldn’t need to worry to much about any other channel to market!

–Kylie Hargreaves is Executive Director, International Markets and Trade, Department of Trade and Investment, Regional Infrastructure and Services (DTIRIS).

Online: www.business.nsw.gov.au

QVC: the channel-to-market you haven’t considered

Kylie Hargreaves — Mon, 19 Sep 2011 04:57:54 +0000

Let me give you a quick example which blends some of the various experiences I’ve had recently in the Sydney retail scene into a hypothetical scenario.

Quick Fix: Litter Kwitter on Marketing

Kylie Hargreaves — Wed, 11 May 2011 23:30:52 +0000

Jo Lapidge’s story about how she used her exposure on the David Letterman Show to land a big new account is a great example of re-using these opportunities not just for lead generation but for large contract negotiations.

“As I stepped of the plane in JFK enroute to a big presentation with a huge distributor for the east coast, my mobile rang and it was our PR company screaming, ‘Oh my god, oh my god! Guess what? Litter Kwitter was just been aired on David Letterman!’”

The segment itself was valued at a media equivalency of around $60 000, according to Lapidge, and reached an estimated 3.5million viewers. But even more rewarding was what she then did with that segment.

“I quickly purchased the segment,” says Lapidge. The cost was minimal and she managed to add it into the presentation she was to deliver later that same day to the potential new East Coast buyer.

“The buyer was most impressed and placed an order immediately, only to double it again by the time I had returned to LA two days later. We’ve maintained this brief in three export markets, with a little tweaking here and there. A quirky vision never fails to capture the media’s attention. Then I get to use it at the business end with our serious message about our product and close the sale.

Export marketing in a new market

Kylie Hargreaves — Fri, 06 May 2011 01:19:04 +0000

Many export businesses make the mistake of focusing their business plans and efforts on creating the best product or service they can in the hope that the offering will then sell itself. Unfortunately, this is seldom true.

So what should companies do?

The short answer is to make sure that marketing is just as important an element in your business plan as your production, logistics, financial management, sales and client service elements.

The long answer is a bit more complicated. If you read the text books on this, they indicate 4-10 percent of your sales turnover should be allocated to your marketing efforts. And in this context marketing is about lead generation, its about attracting new customers to your business and keeping existing customers engaged and hopefully buying more or just more expensive options.

But if you, like most Australia exporters, are actually a small to medium sized enterprise this sort of blanket percentage allocation can be almost meaningless. Especially if you are operating in more “expensive” markets such as the United States, Europe or Japan.

Far better therefore to focus on:

* Market segmentation Who are your most probable customers, where they are located, how and what else do they currently buy, who are they influenced by and what ‘need’ are you fulfilling?

* A well-rounded program Small businesses don’t have the luxury of putting all their eggs in one basket, you need to think creatively about the many different marketing options that exist.

* A well-paced program The aim is to try to deliver your message to your target customer segment as many times as possible, given your budget. Using a variety of marketing channels, including many that are low cost or free, to frequently promote yourself is usually far more effective than doing one or two big, expensive marketing pushes.

* A measurable program Not everything can be quantified, of course, but you need to ensure you maximise the chances of knowing which techniques in your marketing mix are delivering results. So where you can, try to build in some tracking capabilities—even if it’s just to set up your Google Analytics or to ask each new customer how they heard about you.

Of course, all of the above is easier said than done. But if you want to understand and grow your customer base over time, it does need to be done. Thankfully with low cost telecommunications and the advent of the internet, it doesn’t necessarily have to be expensive. And once you understand your target segment, you can better target your marketing to reflect their needs, values, behaviours and locations.

5 tips to break into the US market

Kylie Hargreaves — Mon, 24 Jan 2011 03:42:28 +0000

Read Kylie Hargreaves of Industry & Investment NSW’s 5 tips to break into the US market for valuable pointers for accessing the lucrative markets of the United States.

Take a hard look at your business capabilities

Ensure your local operations are operating smoothly. Scaling up production quickly to meet increased demand ultimately requires increased investment for additional equipment, inventory, logistics, staff and marketing.

Research, research

Export homework should be rigorous. You need to understand the business culture you are going to operate in.

Identify your competitive advantage

US buyers are very willing to try competitive goods and services provided they can see the tangible benefits in switching suppliers. Find out what potential customers really want, and what their current supplier is not providing.

Select an effective sales channel

Employing a sales person or team in the US carries high overheads. Using a channel partner on the other hand, provides less risk and lower entry costs. Ultimately your decision-making should be based on how well you can best serve your customers.

Review the future

An effective plan is essential for developing a business in the US. The plan should include all the traditional components of a business plan: from market overview and assessment, customer and product evaluation, distribution, promotion and cash flow financials.

—Kylie Hargreaves is Executive Director, International Markets & Trade, Industry & Development NSW (www.business.nsw.gov.au/export-from-nsw).

5 tips to break into the US market

Kylie Hargreaves — Mon, 24 Jan 2011 03:13:36 +0000

Creating a business in the United States can be the single most rewarding outcome for any local producer. The potential is huge. The US is the world’s single largest market.

Developing a business in the US is the ultimate planning exercise. A common mistake is to assume that the US is one big market. It isn’t. The US comprises thousands of markets in different locations with different regulations and requirements.

These markets may differ greatly from one side of the country to the other, and from culture to culture. Working your way through this maze requires insight from people who understand how best to get ahead. Industry and Investment NSW has highly experienced operatives with long-time experience in assisting local companies promote their capabilities in the US.

Here are five tips from Industry and Investment NSW to get you started in your US export drive:

Take a hard look at your business capabilities

An essential first step is an honest assessment of your business. Developing export markets takes time: it is not unusual for producers to spend three years of focus, energy and expenses before gaining a first order. So while you are focusing on your export business, you need to ensure your local operations are operating smoothly.

Gaining export success can create volatile demand forecasts leading to overstocking or understocking as well as production variations that limit the capacity to complete orders on time. Exporters need to be aware that ‘niche’ and ‘small’ in the US is very different to Australia.

For example, if you win a contract with a ’boutique’ supermarket with 10 stores it might sound very manageable, but it’s not unusual for boutique” supermarkets to pull in over $300 000 a week in revenues.

Scaling up production quickly to meet increased demand ultimately requires increased investment for additional equipment, inventory, logistics, staff and marketing. Also, exporting adds an extra complexity to normal business cashflow management, particularly when costs outstrip export sales returns.

Research, research

Export homework should be rigorous. Discovering too late that a successful local brand cannot be used in the US can prove disastrous. You need to understand the business culture you are going to operate in.

What is water mapping?

Kylie Hargreaves — Wed, 17 Jun 2009 06:17:37 +0000

Water mapping is the latest eco trend sweeping the globe, with many businesses now tracking their water usage and taking steps to reduce their ‘water footprint.’

Whether you put it down to climate change, water mismanagement or simply the growing needs of a more populated world, there is no doubt that water is one of our most critical resources—and it’s under stress.

Australians are perhaps more acutely aware of this than any other developed economy. The Murray-Darling no longer flows to meet the sea; we live with water restrictions as a daily part of life; we have desalination plants popping up around the country; and we also live with extremes of droughts, floods and other unusual water patterns.

Australia, unlike many countries, price and meter water, so there is a clear economic cost to its use. Yet we don’t label products by their water efficiency, and businesses don’t routinely map out the water used during their production process to lower usage rates.

Water mapping is the idea of mapping the world’s fresh water resources to identify where the resources are concentrated. Water ‘stress’ comes when water use in geographic areas outstrips supply and fresh water resources deteriorate. In a business sense, these water maps could be used to guide business decisions about where to put operations.

A report in The Economist recently estimated that Nestlé, Unilever, Coca-Cola, Anheuser-Busch and Danone consume almost 575 billion litres of water a year, enough to satisfy the daily water needs of every person on the planet. If water was a key influence in their investment decisions, which it could well be in 10–15 years, then a multinational like Unilever might think twice about locating to Australia, for example.

This scenario is already not too far from the truth. SABMiller have operations in Tasmania because of a ready supply of fresh water. A drought made operations vulnerable to rising costs on two levels: fresh water for production processes became more expensive, as did their energy bills because a reliance on hydroelectric power meant they had to source energy from the mainland during the drought. This energy came from coal-fired plants, meaning that while input costs were rising, so was their carbon footprint, with the potential of upsetting their consumer base.

While simplistic at present, it’s not unimaginable to think about a time when Australian jobs and our economic wealth could be threatened by investment and/or supply decisions being made around the issue of water.

The emergence of the organisational water map, and a possible water footprint label are both fairly recent developments that have emerged from the increasing focus on water issues. An organisational water map, simply tracks the amount of water used at each step of the supply chain, from paddock to plate, and plate to waste. A water footprint is the sum total of this map, and refers to the amount of fresh water a business needs to produce and distribute its goods and services.

Liquid asset

The European Union is home to some of the most aggressive policy, business and consumer action on climate change issues. Terms like ‘water mapping’ and ‘water footprints’ are commonplace, as are discussions around whether businesses should relocate their plants and manufacturing operations away from water-stressed locations and/or whether they should only source from suppliers demonstrating good ‘water ethics’. In the UK, water mapping and water footprints may be the next big ethical marketing issue facing businesses looking to target the increasingly savvy UK consumer.

While the potential application of a water footprint label is still under discussion, we are already seeing other ways that water mapping affects business decisions in the UK. Leading UK retailer Marks & Spencer has a public target to reduce their potable water usage by 20 percent by 2012. They have already introduced a range of water saving features in their operations, including percussion taps, use of rainwater and waterless urinals. They are also working with environmental organisation WWF and key parts of their supply chain to improve the efficiency of water use during production of the raw materials and products that go into M&S products.

The logic is sound. If it takes about 2,000 litres to make one cotton T-shirt, anything M&S does at their stores to reduce water consumption is really a drop in the ocean. If however, they can work with their supply chain partners to decrease fresh water usage by cotton farmers, then their impact is significant.

Pepsico is a multinational publicly committed to working with their supply chain partners to reduce water consumption. They have even issued guidelines to all their suppliers and agricultural growers about how they can reduce their water footprint.

For Australian exporters of water-intensive products/services such as tourism, hospitality, food and beverage, textile, pulp and paper, mining, minerals, steel-based products, this focus on the supply chain’s water use is an early warning flag. The trend isn’t going away, in fact the push to reduce water use within the supply chain is getting increasingly more vigorous in the UK, often in conjunction with a push to achieve a lower carbon footprint.