Emerging markets are making the world a lot less easy to label

In the old days of global commerce, before the Internet, an international marketing director could focus on a handful of “strategic markets” and group all of the other countries into a “rest of world” (ROW) category. It wasn’t an elegant solution, but it fit the times.

And then along came the Internet. Suddenly, any market with a growing Internet penetration and disposable income broke through the ROW clutter. Ten years ago, the international marketing director may have focused on six or seven strategic markets. Today, there are typically no less than a dozen markets worth serious marketing attention. And this list will only grow as Internet penetration grows. For example, it is not a question of whether eBay will develop more than 50 localized Web sites, it is just a question of when.

I never much liked the ROW label because it lumped together countries such as Vietnam, Chile and South Africa, countries that are unique, growing, and worth getting to know in their own right. In the years ahead, it will be those companies that put aside the ROW mindset that will be best positioned to capitalize on all emerging markets, no matter how big or small.

In a global economy there is no Rest of World.

(Note: This was first printed in Global By Design.

Greg Josefowicz, CEO of the Borders book chain, has looked into the future and he sees India.

According to this article, the Ann Arbor-based chain is betting on international expansion to help it continue growing. The company already has stores in the UK, Australia, New Zealand, Puerto Rico and Singapore.

Currently, Borders has less than 100 international stores in the United Kingdom, Australia, New Zealand, Puerto Rico and Singapore. It plans to open a store this year in Malaysia. But it looks like the company is going to ramp up investments to accelerate the rate of store openings in selected markets.

Here’s a great quote that illustrates how quickly foreign revenues can grow from zero to significant…

In 2003, the international business made a profit for the first time of $100,000. The final profits for this year will be released Thursday, but the company has said it will earn between $4 million and $6 million and the expectation is that international stores will be as profitable as domestic stores by the end of the decade or sooner.

In 2003, Borders had total profits of $120 million, so the $100,000 profit from the international business was negligible. But this year’s profit from stores abroad will contribute significantly to the company’s earnings.

Josefowicz also noted that the success of their Puerto Rico stores may lead them to look at additional Spanish markets. And speaking of Spanish, I expect Amazon to launch a Spanish-language site for the US market within the next 18 months. This will be a nice complement to Borders Spanish-market efforts.