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Multisite Commerce Scenarios

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With online commerce, you might want to create multiple sites to increase your revenue or to maintain your market share. Learn several typical situations in which multiple sites are important to the success of your company's business, as well as the best way to create and manage these sites.
This chapter is from the book

Key Concepts:

  • Create multiple sites to fill essential needs of an online business
  • Create multiple sites for different scenarios; several typical scenarios have emerged
  • Customize such aspects as presentation, products catalog, pricing, marketing, and inventory of each site
  • Observe that there are similarities among the different multisite scenarios

We begin our exploration of multisite commerce by investigating situations in which multiple commerce sites are necessary. From a business point of view, such scenarios must be viewed based on how critical multiple sites are to a company. In some cases, having multiple sites can help a company improve its profits but is not critical to the business. On the other hand, in many situations multiple sites are an essential part of a company's commerce business.

For example, let's imagine a company that has a profitable business selling kites. From a marketing point of view, the company might generate additional revenue if it created sites targeted to different kinds of needs. For example, it could create a site dedicated to kites suitable for children, or a site for stunt kites dedicated to the enthusiasts in this field. However, each additional site would require additional effort to administer it, such as designing the site, creating the content, and deciding which products it should have. Each site would also carry some cost. From the company's point of view, it is not clear that the benefits outweigh the expenses. Perhaps the company's owners are perfectly happy with their current business, and are not interested in the additional costs and complexities, even if they could generate some extra income from extra sites. Therefore, in this situation we would say that multisite commerce is either not necessary or at least is not essential to the company's online business.

By contrast, in many business scenarios, multiple sites are critical to successful online commerce. For example, let's say a company sells to both businesses and individual shoppers. Often the requirements of business purchasing are completely different from consumer shopping. The checkout process, the presentation of products, and even the registration of customers are all different in business-to-business situations (B2B), compared to business-to-consumer (B2C). If a company insists on having a single site dedicated to both B2B and B2C markets, it is most probable that either the consumers or the business customers, or both, will be faced with what they view as an imperfect and difficult-to-use site. At the same time, presumably the competition is not sleeping and is likely to create dedicated sites that make online shopping and business purchasing as convenient as possible for all its customers. In this case, the company that insists on a single site will likely lose its customers to the competition. Therefore, having multiple sites must become an essential part of the online commerce strategy of this company.

Thanks to the creativity of human enterprise and the diversity of business ideas, there is no end to scenarios that cause companies to create multiple commerce sites. It would therefore be impossible to give an exhaustive list of all possible situations with multiple sites. However, in the past several years, several common situations have emerged that involve the creation of multiple commerce sites. In this chapter, we describe such common scenarios, focusing on the situations in which having multiple sites is particularly important to the business.

Multiple Geographies

In today's global economy, many companies sell in several countries, and frequently a multinational seller can have presence worldwide. Selling in more than one country presents challenges that are difficult to meet with a single site because each country has unique market conditions, culture, and regulations. These country-specific conditions can affect not only the choice of products and the pricing, but also other aspects such as the presentation of the site and advertising.

To give an example of this scenario, consider the well-known Swedish home products retailer IKEA (www.ikea.com). This global retailer created sites for several dozen countries in different parts of the world. Each country site is designed so that the language, currency, advertising, and even products all correspond to the country's needs.

To appreciate the difficulties of serving multiple countries with a single site, we need to explore this scenario in more detail and look at some of the typical aspects that distinguish country sites from each other.

Pricing

Let's say that a seller wants to have worldwide presence. Even if the products sold in all the countries are the same, chances are that prices will be different. Price difference cannot be accounted for by simply looking at currency fluctuations. For example, if the USA price is $19.99, and the conversion rate to Canadian dollars is $1US = $1.22280CAN, by simple conversion the price would end up at $24.44. However, it is unlikely that in Canada the product will be priced that way, since this converted price looks uneven, ending with 44 cents rather than the usual 99 cents. Also, the business would probably want some stability in pricing so that it does not change with every currency fluctuation. The price also needs to reflect local costs. In this case, the Canadian price might be $25.99, to make sure that the price is both stable and profitable in the Canadian market.

Another factor that affects pricing is local competition. In our example, if this same product has more competition in Great Britain, the price there might be significantly lower than in the USA. So if the conversion rate is $1US=£0.5, the British price might be £8.89, which is less than you would expect by simply looking at conversion rates.

Another interesting complexity can arise due to differences in rounding rules. For example, in South Korea the smallest common denomination of coins in circulation is 10 won, so rounding is usually be done in increments of 10. This is different from North America and Europe, where rounding is done to the nearest cent, which is one-hundredth of the currency unit such as the dollar or the euro.

Taxes

In the United States, there is no federal sales tax (yet), but there are taxes imposed by individual states and by counties. With 50 states and thousands of counties, tax rules are quite complex and vary by such factors as where the product is shipped from, where it is going, and what kind of product it is. In some cases there are additional fees, which are similar to taxes, imposed by local governments, such as recycling or disposal fees. Fundamentally, however, taxes and fees can be calculated and shown as an additional charge on top of the base price of the product.

In Canada, taxes are imposed by the national and provincial governments and are also calculated as an additional charge for the product. Regulations require that each type of tax be shown separately. Depending on province, the price of each item must show either the combined added tax, or spell out the provincial and federal sales taxes separately.

All this is different from Europe, where the VAT tax is often figured into the price of the product. In other words, the price displayed to the customer already includes the tax, and customers are not explicitly informed as to the amount of the tax charged. Another variation is the case in which taxes are not shown initially, but at the end of checkout they are shown on the final order submission page.

Shipping

Typically on a site, buyers choose the shipping method that they want to use for the items they buy. Depending on the item and the shipping method, the buyers might need to pay different shipping charges.

Several shipping companies operate worldwide, such as UPS and Federal Express. Many shipping providers are unique to their locations, such as each country's national postal service. For example, if you purchase from a USA-based site, you might be prompted to select either UPS or the U.S. Postal Service as the shipping provider. If you purchase from the same company's Canadian site, the shipping options might also include UPS, in addition to Canada Post and Purolator.

A seller might have a warehouse in one country that serves many other countries. In this case, the shipping provider would not depend on the country of the site, but only on the location of the warehouse. To make this situation more complicated, some providers might also drop-ship their orders directly from their suppliers, while some locations allow B2B customers to pick up items directly from the warehouse using their own trucks.

In other words, shipping rules can be quite complicated and are specific to the geography where the selling company operates.

Even for the same products and the same shipping provider, each country can have different shipping charges. For example, if a customer in England orders a product to ship to London, the shipping charges are likely to be different than if a customer orders the same product from the French site to ship to Paris; and this would be true even if UPS delivery is used for both purchases.

In addition, within each country there might be a unique shipping tax that must also be calculated and presented to buyers on the seller's site. Another aspect to consider is customs regulations. For example, the site may need to inform buyers of customs fees or duties that they may be charged, and shipping delays that can occur due to customs procedures.

Language

The most obvious difference in catalog display among different countries is language. In some countries, all information on the site should be shown in a single language, such as French in France or Japanese in Japan. In other countries, however, customers might need to choose their language or preference. Examples of this are Canada, where sites often give a choice of French or English, or Belgium, where Dutch and French are the languages that can be selected.

Even within what is described as a single language, there can be significant variations. In many ways, U.S. English is different from UK English. A news headline such as "Lorry driver forced into car boot" would sound incomprehensible and slightly funny to an American. An English reader, however, would not be amused at all because this is a news story describing the kidnapping of a poor truck driver who was stuffed into the trunk of a car.

Quebec French is distinct from French spoken in France. A classical example of the difference is within the name Office québécois de la langue française, which is the Quebec office of the French language. To a Parisian, this name seems incongruent at best, because in France the word office does not exist; the English office is normally translated as le bureau.

Therefore, the text of the site must be localized, not just for the language, but for the locality and culture served by the site.

Products

Language is not the only thing that distinguishes product catalogs in different countries. It is common that some products are available only in restricted parts of the world and are not even shown in other countries. For example, Home Depot is unlikely to sell snow blowers in Florida, whereas this product would be important in northern climates.

Product catalog differences can also happen due to companies rolling out products slowly in different parts of the world, where some products are made available in various countries on a different schedule. This difference is typical in the movie industry, for example, in which movies are often released several months apart in different zones around the world.

Variations in products can also be due to local regulations. For example, in some states in the United States, you can legally buy a radar detector that helps speeders avoid being caught by police. In Canada, however, this product is illegal and should not be shown on a commerce site. Similar restrictions can happen for political reasons, in which export regulations do not allow the company to sell certain products in restricted countries.

Page Layout

Aside from product, language, and price differences, often the sites created for different countries can look similar, with identical flow and page layout. However, there are also cultural differences between different parts of the world that can cause country sites to have different layouts. For example, in North America usually the home page of a site fits most of the information on one screen, requiring little scrolling. The tendency is for customers to click on various links to browse through the site to get to the products or the areas they are looking for. On the other hand, in China you often find sites where the home page is long, so customers can find many products by scrolling down the page. Customers can then use the browser search to find the product right on the home page, without having to browse through several pages of the site.

Another consideration for page layout is that it must be designed to suit the written form of the language. For example, most Western European countries can use the same page layout because their alphabets look similar. However, the page layout must be adjusted in China or Japan, where the characters are not alphabetic, and the translations might not fit into the layout designed for use with Latin-based languages that are written left-to-right.

Legal Differences

You should not underestimate the impact of different regulations that countries have on the structure of sites within those countries. We mentioned one impact, which has to do with which products are allowed to be sold in each country. However, a multitude of other legal considerations can affect the sites.

Privacy is one such consideration. Different countries have set up completely different privacy rules, potentially affecting such factors as how the company can make use of customer data for its own advertising. In addition, most sites have a privacy statement that must reflect the regulations of the country where the site operates.

For example, in the countries within the European Union, the privacy rules are governed by the EU Directive on Data Protection. This directive governs the storage and processing of personal data, and the liabilities and sanctions that would be invoked if a European company does not comply with the rules.

In the United States, on the other hand, privacy regulations are not nearly as universal with some regulations coming from the federal government and some from individual states. In the United States, more emphasis is on self-regulation, rather than on government-imposed enforcement in Europe.

Companies in the United States that have commerce business in Europe are supposed to become members of the Safe Harbor Framework, which is an agreement reached between the European Union and the United States to make it easier for U.S. companies to do business in Europe without having to deal with the full range of regulations in the Directive.

We thus see that depending on where the company is, and where it deploys its sites, it must comply with a different set of privacy regulations.

Privacy and advertising rules are also related to spam regulations. Frequently, companies would like to use customer profile data to send unsolicited e-mails to customers with advertisements. Depending on regulations, and depending on how the e-mail addresses were collected, such e-mail advertising can be illegal in one jurisdiction but legal elsewhere.

Another important difference is with regard to trade rules, such as shipping rules. In the United States, the Federal Trade Commission (FTC) publishes detailed rules on proper business practices. For example, according to FTC rules, payment for an order can be collected only after the order is shipped. Similarly, there are regulations on when to inform customers if their order is late or if it is being cancelled. In other parts of the world, as in Europe, Japan, or China, these rules can be different.

All these rules constantly change over time, and it is very important for each country's administrators to make sure their sites comply with local regulations.

Business Opportunities of Country Sites

With all these distinctions between countries, it is difficult to create a single site that can serve the needs of all countries at once. It is much simpler to create multiple sites so that each site is designed to satisfy the unique requirements of each region in the world.

Having distinct sites targeted at different countries is not only easier to implement but can also create opportunities to grow the company's worldwide revenue. It is well known that people in different parts of the world have unique customs and perceptions, and it is unlikely that a single message would be equally appreciated by different cultural groups. Therefore, from a marketing point of view, it is desirable to have marketing messages designed targeted to each country, which can be most effective within each region.

If a single site were to serve multiple countries, you would need to segment the site's customers by country to determine which marketing messages to show them. Doing so is technically complex and is not always possible. For example, it would be difficult to determine the preferred country of a new visitor who has no prior history on the site. On the other hand, having multiple sites makes it natural and easy to create separate marketing messages for different countries.

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