Tuesday, March 27, 2012

J.Crew Goes Global {online}

"Thanks!" to many of you in the "J.Crew Updates Website with New Arrivals!" post: J.Crew is shipping around the world now! Along with J.Crew's website getting a makeover (again!), they updated a lot of features, including new drop down menus, new catalog viewer, pin-it on Pinterest feature, and... shipping to 107 countries!!!

"Thanks!" to Elizabeth (in this post), who shared the following article from ZDNet (click here to read in its entirety):
J.Crew opens door to global e-commerce; uses tech to fuel ambition
By Andrew Nusca
March 22, 2012

This morning, U.S. apparel retailer J.Crew expanded its international distribution from 29 to 107 countries, spanning an astounding 41 currencies.

That’s quite a jump in a single day for the retailer, known for clothing everyone from Michelle Obama to, well, me. Businesses — even digital ones — just don’t scale that quickly.

But there’s a secret to how J.Crew did it: a partnership, and a whole lotta tech.

With a platform provided by New York-based FiftyOne, J.Crew is bringing its modern prep style to Asia, Australia, Europe, Middle East and South America. That means customers around the globe will be able to purchase the company’s entire collection from anywhere at anytime.

While the retailer was too busy to return my phone calls, FiftyOne — the name is a play on its mantra, “a bridge between 50 states and one world” — was more than happy to chat.

I spoke with chief strategy officer Kris Green, who said that his company’s tech helps American retailers “fulfill global ambition without having to create new assets around the world” — assets meaning distribution centers and brick-and-mortar stores.

Specifically, that means converting U.S. prices into local currencies, calculating duty and taxes, managing payment, protecting against fraud and fulfilling orders, via FiftyOne’s distribution center in Columbus, Ohio.

The idea is to help a largely American website appear international, he said. (Clients are a who’s who of suburban American favorites, from Cabela’s to Pottery Barn to Under Armour.)

“To do international by yourself, you need to place bets on what countries you think have the biggest opportunities for your brand, and spend significant dollars setting up shop there,” he said. ”We help retailers avoid needing to make those bets upfront.”

Traditionally, retailers have to attack new countries sequentially. FiftyOne’s platform allowed J.Crew — a very fashionable American brand among several different demographics — to open the floodgates immediately, without leaving American shores.

“Generally, U.S. retailers and brands are receiving global awareness whether they like it or not. And they’re also operating businesses in this country that are reaching a super-saturation point in this country,” he said. “Internationally, it’s growing at a much faster rate. Retailers are looking at their web traffic and seeing 10, 20, 30 percent traffic from international. The business case from monetizing the latent demand is compelling.”

He added: “If you operate brick-and-mortar stores, e-commerce is a good way to test markets before you make brick-and-mortar investments.”

Green, who hails from Canada, used his homeland as an example. “They’ve been conditioned to be excluded from U.S. e-commerce for decades,” he said. “When they see any price with a dollar sign in front of it [online], that’s probably a U.S. price. When retailers make Canadians and others feel welcome, it can have a significant influence on conversion.”

It’s also a safer, more conservative way to expand. By partnering with FiftyOne, J.Crew can keep its focus on its lucrative U.S. sales.

The Wall Street Journal’s Dana Mattioli touched on the topic Thursday morning: “The move marks a sea change for the brand and its CEO [Mickey Drexler], who previously had called overseas expansion a ‘distraction’ from domestic operations.”

“It always makes sense to partner, because no matter how big your international business gets, it will always be a fraction of your domestic one,” Green said. “So it makes sense, even at really big numbers.” Even when fulfillment is localized — because after all, you wouldn’t want to fly a cardigan sweater halfway around the world if you could help it.

For J.Crew, it’s a chance to bring its collection of turquoise ballet flats and faded oxford shirts to the growing overseas middle class. For FiftyOne, it’s another bridge to build.
Well, it is clear that J.Crew is trying to capitalize on its worldwide fame by shipping worldwide. I am all for it! I think the use of a partner in this case is a great move. Bravo!

I am just curious about pricing now. (Are the prices for J.Crew's merchandise super high because they have to also factor in additional costs?) "Thanks!" to Angela who shared the following answer to my question: "...I live in Australian and I just wanted to let you and your readers know that J Crew is now shipping to Australia (and other countries). Problem is, they've JACKED THEIR PRICES WAY UP for Australian customers (and probably all international customers). I can't believe it..." :(

What are your thoughts on J.Crew's international expansion? Are you surprised by how many countries they now offer shipping to? Are you surprise by the price-hikes?

17 comments:

  1. Upside: Myabe they can finally clear out their sale section? Downside: Popula items will sell out so much quicker? Maybe they'll just produce more.

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  2. Ditto to Angela's comment. I am in Aus too and quite new to J.Crew (and to your excellent blog Alexis). I have purchased a few things from them via a mail forwarder. I was so excited to see they finally ship here, but that excitement quickly soured after seeing markups of 30 to 50 per cent despite parity in the us$ to au$. Not happy!!

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  3. Ditto to Angela's comment. I am in Aus too and quite new to J.Crew (and to your excellent blog Alexis). I have purchased a few things from them via a mail forwarder. I was so excited to see they finally ship here, but that excitement quickly soured after seeing markups of 30 to 50 per cent despite parity in the us$ to au$. Not happy!!

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    1. Apologies for the accidental double post!

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  4. It would be interesting to know how will they capture market share in all these countries.

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  5. I also have found that the prices are 30% higher in both the Australian dollar, Euro and British pound. I think it still might be cheaper to use my mail forwarding service even if it takes longer - especially when they start charging for postage after 30th April. It is like a lot of US products that are sold in Australia - Estee Lauder, Clinique, J Brand are all 50% more expensive here than in the US - do they think we are fools?

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  6. i am definitly very happy that jcrew ships to germany,even if i dont buy a lot,because of the prices.
    at least i have the option to get it and if i want\need something very badly i can order.
    i feel it gives me the opportunity to shop in the US and that is definitly positiv!

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  7. I picked this up while travelling. It reads like even more DL double-speak. During the introductory period, shipping , tax and duty are free. Since tax in UK and EU means Value Added Tax - VAT or TVA - which is built into the price before you pay rather than tacked on at sale like the state/city sales taxes in the US. If you are a US citizen and buy while travelling, you can get VAT refunded when you leave the country to return to the US. If not, you don't. Mustn't grumble.

    So let's say an item is priced at US $20. It should be priced at (this morning's rates) € 15 but with the (about) 20% TVA built in, it should show on price tag or in catalog or website as €18, if the base price is the same.

    I hereby add the Accountant From The Deep to the JC cast of characters.

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    1. rofl

      Hear hear or here here!

      Character added.

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  8. The problem is not so much the Value Added Tax that we expect to pay in Europe, but that it gets calculated on prices that start out higher than in the US.
    I believe that this is due to having to make up for the flat DHL shipping rate of about $16 which is ridiculously low, and to whatever they are charged by FiftyOne.
    So, while this current promo of free shipping and no customs dues is vey good, it won't last and I would be surprised if the global sales will do well, also because J. Crew is not so well known outside of the US.

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  9. Cris - exactly! If there were parity, you should be able to look at the US catalog/web, apply exchange rate, add 18 or 20%, and get the "abroad" price. You don't .

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  10. To be very honest, I don't think they're ready for expansion on this scale. I think making a leap of this magnitude was ill-advised and not thought through completely. There are so many things that should be happening / getting fixed that are core to the business before the business model gets replicated worldwide .... but what do I know? It will be interesting to see how it plays out.

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  11. OT - Alexis, congrats on 1600 followers!

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  12. If I remember correctly, Anthro used to use Fifty One when I first moved to Canada. It was outrageously expensive and I stopped ordering online. Then they changed to a different scheme and it is more affordable but still expensive at $20 to ship to Canada. At least there is an Anthro B&M here in Calgary if I want to shop in person. Some day J.Crew, some day.

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  13. This is very, very OT but apparently J. Crew (and other companies) "not only didn’t respond to questions [on Facebook] within two days, they actually deleted them, the customer service evaluation company STELLAService found." Awesome job connecting with customers, J. Crew.

    The entire article: http://moneyland.time.com/2012/03/27/many-big-retailers-dont-respond-to-customer-questions-on-facebook/

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  14. Yeah, I remember Anthro. used FiftyOne, it was sooooo expensive that it wasn't worth it. You get a real shock when you go to checkout. It usually works out to being double on checkout with all the markup/duties/shipping. I wonder if there have been any companies successful using FiftyOne. I see FiftyOne and I stay away.

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