Digital River Announces Results of International Commerce Survey

Digital River, Inc. (NASDAQ: DRIV), the revenue growth experts in global cloud commerce, today at the Digital River^® Globalocity^™ commerce conference in Los Angeles, Calif., announced the results of a survey of 250 senior decision makers from companies in the software, games and consumer electronics markets. The survey asked companies about their commerce plans for expanding into new online channels and geographies, their biggest online challenges as well as their expectations for revenue growth in the next two years.

“The survey reaffirms what we have been seeing for some time – that e-commerce will increasing shift to a multi-channel approach for commerce. Companies are looking for more ways to connect directly with their customers and offer them more choices when it comes to purchasing online – whether that be mobile, social, in app, subscriptions or other options,” said Joel Ronning, Digital River’s CEO. “The survey also pointed out the need for companies to reassess their global commerce readiness. Local is the new global today. We were surprised to see how many companies are still not vested in a fully localized online strategy. The growing generation of customers shopping online and across borders want to be greeted in their native dialect by a company that understands their local culture and norms. The ability to interact with the customer at this level, anytime and on any device is critically important to success in today’s online market.”

Similar sentiments were echoed in the remarks Ronning made during his keynote speech at Globalocity. The conference drew approximately 700 commerce professionals from the U.S., Europe and Asia.

Companies are Going Multi-Channel to Establish More Direct Connections with Customers
Consistent with the shift to multi-channel online strategies, the survey indicated respondents are increasingly connecting with customers via multiple touch points. Nearly 80 percent of respondents said they were currently using transactional websites, followed by social commerce (55%), app stores (50%), in-product commerce (50%), subscription sales (48%) and mobile commerce (48%).

Looking out over the next two years, 46 percent of the respondents said they plan to expand their commerce strategies to include mobile commerce followed by app stores (40%), in-product commerce (38%) for gaming and software sectors only, subscriptions (36%), and social commerce (34%).

In the next two years, respondents expect nearly a third of their online revenue will continue to be generated from their online stores, with nearly 20 percent of revenue coming from the mobile channel, which is the channel they also said they are most likely to adopt in the next two years. Despite social commerce’s heavy use at the present time, respondents expect their mobile revenue will outpace their social revenue in two years’ time.

The percentage of online revenue they expect to generate from other channels include: app stores (17%), social commerce (17%), subscriptions (14%) and in-product commerce (13%). To support their multi-channel expansion efforts, companies are prioritizing core commerce initiatives. Fifty percent of organizations report that security tops the list of their highest priority 2012 e-commerce projects, followed by customer relationship management (40%) and business intelligence (36%).

Companies are Falling Short on Global Commerce Readiness
The survey also points to some areas where companies selling into global online markets could be doing better and where customers stand to benefit from additional commerce investment or development efforts – including the area of global commerce readiness.

Only about half of the companies surveyed reported that their commerce offerings are fully localized for the markets they are serving. That includes 57% not having customer service options fully localized, 50% not having payment options fully localized and 44% not having layout fully localized.

“We know from our experience working with thousands of companies on a global basis that failing to localize store designs, languages, currencies and customer service can be substantial impediments to attracting and retaining customers through the online shopping and checkout processes,” said Ronning. “Companies everywhere are drawn to the promise of additional revenue, enhanced margins and new opportunities. What may not be so obvious – especially for companies that are expanding into new geographies for the first time – are the complexities that can waste money, cause delays and sometimes stop global initiatives dead in their tracks.”

According to the survey, the BRIC countries and Japan lead the list of geographic expansion targets for many companies in the next two years, with Russia (31%) topping the list, followed by Brazil (24%), China, (23%), India (22%) and Japan (22%). And while the BRIC countries and Japan lead the list of expansion targets, nearly as many respondents said they planned expansion in Germany (21%) and the United Kingdom (16%).

To learn more about the opportunities and the pitfalls of going global, readers can download a complimentary whitepaper on best practices for local approaches to global markets from Digital River’s website.

Companies Identify Their Most Significant Global Commerce Challenges
Some of the lag in adopting global commerce best practices might be because – even more than 15 years into the commerce era – companies continue to view commerce as challenging.

“The survey echoed what we continue to hear from client companies of all sizes as they prepare to enter the global online marketplace,” said Ronning. “Building, managing and growing an online operation on a global basis is a costly, time intensive and complicated proposition.”

Survey respondents reported that tax and compliance issues seem to have the highest “degree of difficulty” when it comes to commerce, with 65 percent of respondents rating it as significantly challenging. More than half of the respondents also rated several other commerce areas as “significantly challenging,” with 59 percent noting customer support, followed by global payments (58%), marketing channels (57%), language (56%), and the localization of the online store (56%).

About the Survey
The survey was conducted and compiled for Digital River by Vanson Bourne, an independent specialist market research company. The research company conducted 250 online interviews among companies in Asia, Europe, North America and emerging countries, including Brazil and India. Survey respondents represent the software, gaming software, and consumer electronics sectors with annual global revenues of $250 million or more. Survey participants included senior decision-makers in the marketing, sales, business development, business operations, and IT departments and were limited to organizations currently conducting some form of e-commerce, either outsourced or in-house, and interview subjects had to be senior decision-makers, and be involved in their organization’s commerce activities.

About Digital River, Inc.
Digital River, Inc., the revenue growth experts in global cloud commerce, builds and manages online businesses for software and game publishers, consumer electronics manufacturers, distributors, online retailers and affiliates. Its multi-channel commerce solution, which supports both direct and indirect sales, is designed to help companies of all sizes maximize online revenues as well as reduce the costs and risks of running a global commerce operation. The company’s comprehensive platform offers site development and hosting, order management, global payments, cloud-based billing, fraud management, export controls, tax management, physical and digital product fulfillment, multi-lingual customer service, advanced reporting and strategic marketing services.

Founded in 1994, Digital River is headquartered in Minneapolis with offices across the U.S., Asia, Europe and South America. For more details about Digital River, visit the corporate website, follow the company on Twitter or call +1 952-253-1234.

Forward-Looking Statement
In addition to the historical information contained herein, this press release contains forward-looking statements, such as statements containing the words, “will,” “plans,” “intends,” “expects,” and similar words. Such forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of Digital River, or industry results, to differ materially from those expressed or implied by such forward-looking statements. Such factors include, among others: Digital River’s operating history and variability of operating results; competition in the electronic commerce market; the ability of Digital River to support e-commerce operations and deliver reporting analytics; the market’s acceptance of such offerings; and other risk factors referenced in Digital River’s public filings with the Securities and Exchange Commission.

Digital River is a registered trademark of Digital River, Inc. All other trademarks and registered trademarks are trademarks of their respective owners.

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