With the world shifting to a digitally focused society, more and more companies are realizing the importance of embracing the online world and utilizing online marketing to grow their businesses. Launching a foreign direct investment (FDI) into a website or online store to promote products and services is a great opportunity for companies to grow their brands globally.
To help fast-growing companies expand their businesses internationally and drive revenue online, many business angels and venture capitalists are stepping in with a new type of investment: digital nomads. One of the most successful companies in this space is Blue Banana, which opened for business in 2013 and now has offices in London, Berlin, and Tokyo. A few years back, the company decided to branch out of the United States and take advantage of the “silent” European market. They saw the potential to tap into the booming e-commerce market and make some extra cash off the back of a global platform.
“If you want to be able to sell your product or service to someone in Europe, you’re going to have to do it online,” explained Blue Banana’s co-founder and president Steve Sartor.
Sartor and Blue Banana work remotely, splitting their time between North America and Europe. The company has a customer base in 140 countries around the world. With the help of a small team in-house and a global network of affiliates, Blue Banana generates millions of dollars in monthly revenue.
The company began as a natural evolution of Blue Planet, the e-commerce venture Sartor co-founded in 2005. Blue Planet focused on emerging markets in Africa, where mobile phones were just becoming accessible. The founders decided to take advantage of this new technology and launched Blue Banana, a brand they believed had huge potential in Europe. But in an effort to keep costs down, they decided to keep things lean and managed to keep the price of their offering low.
“We looked at places like China, where mobile internet usage is expanding, but the infrastructure to support e-commerce isn’t quite there yet,” said Sartor. “What we found in Europe was the ‘digital nomad’ approach, where people were doing their shopping online, but the traditional retailers didn’t really know how to approach them. So we decided to help them out with that.”
The Rise Of The Digital Nomad
For much of the twentieth century, Europe was relatively insulated from the global economy, relying mostly on its geographic location to keep trade flowing. That began to change in the early 2010s, as several European countries implemented austerity measures in response to the global financial crisis.
Austerity measures limited the amount of money that companies could spend on marketing, advertising, and sales growth, which meant fewer luxury goods in store and on display. This, in turn, decreased footfall in physical retail stores, creating an opportunity for e-commerce entrepreneurs to step in.
The founder of one of Europe’s biggest online retail groups, Shopbop, which runs stores in 42 countries, predicted that the company would have to close up to 250 stores due to the pandemic.
“The Shopbop group is actually a collection of family-owned businesses. So instead of having one big company, we have a network of shops that extend around the world,” said Alexandra Marmorato, Shopbop’s co-founder and chief executive, in an interview with the BBC. “We have to streamline the business and reduce our overheads. We have to take cost-cutting measures to make sure we can continue.”
Marmorato and Shopbop worked remotely during the pandemic—the company’s leadership team is now able to split their time between Europe and Asia—but are slowly returning to brick-and-mortar retail as restrictions are eased. This year, they plan to launch an e-commerce platform in Europe, allowing them to scale back their physical stores and still offer quality goods and services to their customers.
In addition to providing an e-commerce platform, Shopbop also designs and manufactures its own brands of clothing and accessories, attracting a coveted millennial audience and dominating the retail landscape in Europe. Marmorato believes that the future of retail is largely online and that traditional retailers need to adapt or die.
Why E-commerce In Europe?
Despite all the challenges created by the pandemic, the e-commerce industry in Europe is experiencing unprecedented growth.
In 2022, e-commerce in Europe is expected to reach £147.5 billion, up from £136.8 billion in 2021 and £70.0 billion in 2019, according to market research company Research & Markets.
Much of Europe’s e-commerce growth can be attributed to new technologies that have made it much easier for companies to conduct business online. Enterprises now have the option of whether to conduct business digitally or in person, which has increased the demand for online stores.
“With so much focus on avoiding travel during the pandemic, digital nomads have stepped in to fill the gap, providing businesses with the flexibility to operate online,” said Mathew Jones, European Managing Director of agency Red Ventures. “However, as more and more individuals are returning to work, the desire to spend more in-person is also rising, so digital nomads will need to adapt their businesses to serve both consumer behaviors.”
The Opportunity For Global Companies
It’s not just European brands and retailers that have recognized the opportunities presented by the pandemic. Global brands and retailers that have a physical presence in Europe, or wish to expand their reach across the Atlantic, have also taken note.
Nike, for example, expanded into the UK market in 2002 and now has over 100 stores, employing over 5,000 people. They also operate a campus in London, and design and develop products locally. These stores, along with those of other international brands, provide a wealth of purchasing power for customers, creating high barriers to entry for local stores and entrepreneurs.
Some businesses, such as Burberry, operate a ‘label-holding service’ in Europe, where they distribute and sell other luxury companies’ clothing and accessories. This saves them the time and expense of having to set up stores in different countries, allowing them to focus on growing their business in the UK and Ireland.
The Rise Of The Affiliate Marketing Industry
Many of today’s leading e-commerce businesses, such as Shopbop and Nike, rely on affiliate marketing, which earns them a commission when a user lands on a merchant site from a link or ad on a third-party website, and makes a purchase.
Shopbop’s Marmorato admitted that when they first decided to enter the European market, they underestimated the importance of ensuring that their product was available to as many people as possible. Because of this, they looked to affiliate marketers to help power their sales. In 2020 alone, Shopbop made $50-$60 million from affiliate sales in Europe.
“We see the majority of our business coming from Europe and being able to offer our products across the globe,” she said.
Where Do I Start?
For a business looking to enter the online marketing space, there are several options. The UK has the advantage of having a highly-trained work force and a relatively open market. Companies like Blue Banana can provide guidance on how to navigate the different markets and regulatory requirements for businesses seeking to set up shop in Europe.