Perhaps the most important pillar of our investment thesis is that technology knows no borders. Companies that operate digitally can instantly compete on a global scale, serving products and services to customers across the world. Successfully managing a global presence is not an easy task, however, and a number of factors come into play in every single case.
There are some elements that are quite straightforward, these include: currency and language localization, separate PR and marketing strategies, and abiding by local laws and regulations, including different tax and reporting requirements. In this blog post we’re going to do a short dive into some more interesting considerations:
Customer usage and behavior – on desktop and mobile
Much is often said about the differences in “culture” when it comes to widespread use of technology products. In this case, culture matters as long as it translates into a difference in customer usage and behavior as it relates to your website, application, or product. At times these cultural differences can be predictable and expected – for example, in lower-income countries phones and internet connections are often shared among many individuals. But at other times they can be unique quirks specific to each region.
Often, local upstarts that understand and embrace the local culture can beat multinational giants at acceptance. In China for example, the household names are not eBay, Facebook, or Twitter (the latter two because the government blocks them). Rather it is the local Chinese brands- Baidu, Tencent, and Taobao that have gained widespread acceptance. The Cairo-based company Wireless Stars is a beautiful example of the power of this localization happening right now – a location-based social network built by ex-Googlers, inspired by Foursquare but built from the ground up for the Arab community.
However this does not mean that the world is destined to be a fragmented patch-work of networks. In fact, successful local upstarts are often the best acquisition targets for top multi-nationals: with a strong base already established they can leverage their scale and best practices much more effective. This synergy has been borne out again and again in the rapidly growing world of e-commerce: for corporate giants from Amazon to Groupon, the Rakuten Group to LivingSocial, acquisitions have been the main and most successful method of market entry in geographies as diverse as the US, Australia and the Middle East.
Payment method support
For truly global companies, this problem is certainly at a much better state than it was 10 or 20 years ago, but the variety of options is still bewildering. For platform-based applications, native payment methods like Facebook Credits or the Apple AppStore dominate in terms of reach, ease of use, and conversion rates. For others, the leading payments gateways are PayPal, 2Checkout, Authorize.Net, etc. – each with mild variations in regions supported, so you may have to work with more than one. Providers such as Zong offer mobile payments capability which can often be much more widely available in emerging markets where credit cards are still scarce.
By and large, supporting local payment methods is the best way to gain local acceptance. Whether it is Boleto Bancario in Brazil or CashU or in the Middle East, it’s essential to operate with good knowledge of your targeted region in order to most effectively attract and monetize your customers. In many emerging markets, the most widely-used method of payment for e-commerce transactions is cash-on-delivery. Even for Groupon-like coupons which could easily be served digitally, the preferred method is for a motorcycle driver to deliver the paper slip and pick up the cash. Every time.
The implications of this are more than comedic: because the COD is typically handled by 3rd party logistics companies, payment can be delayed for months – a working capital nightmare.
