The Hidden Costs of Not Using a Localization Company for Global E-commerce

According to forecasters, global e-commerce sales stood at $4.92 trillion in 2021 and are projected to rise to $7.38 trillion by 2025. These are significant numbers that open amazing doors to businesses around the world. To take your business to the next level, you need more than an online store — you only need to hire a professional localization company to attract international customers. 

65% of users feel comfortable with content appearing in their language, and a little over 16% close carts if they know the total order amount. The consequences may be epic if the content isn’t localized, from a lost customer service call to a missed sale. 

This article will help you understand what can happen inadvertently and how much is at stake for companies that try to enter the international market without localization assistance from an experienced company. The stakes range from short-term financial losses to long-term brand destruction. 

Costs of Poor Localization: How Much Is Your City Paying? 

International companies lose billions of dollars due to bad localization. Studies also show that 41% of customers face issues such as the product not being available for purchase due to bad localization. Cart abandonment costs U.S. retailers $111-136 billion in sales annually. 

• Direct Revenues Returned by Market Entry Failure 

Introducing a new market without properly localizing is a big win/lose gamble in the short run. 50% of users quit apps due to bad translation. If a company produces highly localized content, it is 1.5 times more likely to earn the maximum amount of money. 

• Customer Service Problems

These are the top localization woes: 

• 48% of apps are using the wrong words/ syntax. 
• 40% based on new local knowledge. 
• 38% containing misspellings.  

Such problems lead to more support and fixed needs, stealing customer time. 72% of customers will choose a brand that provides customer service in their mother tongue. 

• Long-term Market Share Erosion  

Companies always lose market share, while rivals who are better at localization gain customer trust. 55% of the world wants to buy in a local language, and companies with localized websites gain 70% of traffic and sales. Failure to avail of professional localization services would close half the global online sales markets in China, the United States, Japan, and Germany. 

Brand Reputation Damage  

A wrong location can sour a brand’s reputation. In fact, according to the brand crisis, emphases report from 65% of company executives. 

• Social Media Backlash Examples  

Companies have paid millions in reputational damage for social media mistakes. Dolce & Gabbana learned this the hard way when its ‘DG Loves China’ campaign went bonkers. The results were state intervention and market paralysis. Dove’s problems started when its ethnic transformation ad triggered boycotts of the company. 

• Cultural Faux Pas Consequences  

Cultural slips are branded as quick and dirty ways of falling short. 

Here are some examples:  

• The Chinese translation of Pepsi changed “Grow up with Pepsi Generation” into “Pepsi wakes up your dead parents.” 
• American Airlines fucked when it told Mexican travelers to “fly naked” to promote their leather seats. 
• Gap Inc. failed to sell jeans in China in 1969 because the terrible date was linked to the Cultural Revolution. 

• Recovery Costs and Timeline  

Brand reassurance after mislocalizations takes money and time, and businesses need crisis management funds. One survey indicates that 59% of visitors won’t buy from companies whose websites have poor grammar. Businesses also pay an outrageous rebranding charge. HSBC repaid $10 million for its mistranslation campaign. 

Recovery goes beyond quick fixes. For this to happen again, businesses must monitor customer feedback closely and respond to it through the media. That takes considerable investments in marketing and trust. 

Resource Wastage and Inefficiencies  

Companies who attempt to localize waste capacity due to bottlenecks. The fact that workers spend an average of 14 hours per month without access to the internet is documented in research. 

• Internal Team Burnout  

Localization teams are out of productivity. It has been reported that three-quarters of workers burn out at work. 63% of remote managers have mental health issues when leading remote teams. This burnout affects their ability to produce good work and meet deadlines. 

• Duplicate Content Management Costs  

Content management costs can be astronomical if you don’t have the right tools. Google fines companies for duplication. A study found that 45 percent of workers manually patch different systems, while 31 percent fight against outdated technology. 

• Technology Integration Failures  

Unscheduled tech integrations kill business in several ways: 

• 98 percent of the global workforce lost hours because of mobile device malfunction. 
• Teams are off 2 days a month because of integration issues. 
• 29 percent of employees do not feel data flows easily from system to system. 

Such technical snags send businesses right back to the old ham-fisted model. For example, 32% of companies list bad IT support as the leading reason for downtime. That delays delivery and increases prices. 

Competitive Disadvantage Analysis  

Research indicates that non-localized businesses will struggle to survive internationally. A second market player can earn only 60% of the first player’s market share. 

• Competitors Shutting Down Market Share in Local Area (Blowouts) 

Foreign companies just get snubbed by the competitors here, who know the culture and the market better. According to some studies, companies could lose up to 50% of planned sales when products are released late. 

The losses are multiple: 

• 12 % reduction in share price average after product outages. 
• Net present value discounts of 35% on late arrivals. 
• 71% of potential customers lose out because of subpar customer service. 

• Missed Partnership Opportunities  

Not good localization hinders key local connections. According to one study, 82 %of marketers worldwide know only “OK” local market data, which blocks them from finding and creating value-added relationships. Global organizations prefer foreign partners to national partners because they lack country experience. 

• Delayed Market Entry Consequences  

Late boarding harms a company’s edge. According to studies, third-market competitors often take only 36% of the market share of the first competitor. That number even lowers if companies don’t take localization seriously. 53 percent don’t want to buy products with language and cultural deception. 

Conclusion  

Localization errors can severely hinder businesses’ entry into global markets if they do not hire the right consultants. Translation and cultural aversion cost businesses nearly half of the online sales that might have come from significant markets. 

When done well, market research indicates that the success of localization can also benefit the business. Clients with localization services provided by a professional gain 70% more traffic and conversions. Companies that do not embrace culture will compromise their brand and lose cash. 

In today’s hyper-competitive world, localization errors will cease to exist. Late-breaking players hold only 36% of the first-mover market share. Cultural flaws fuel customer indignation and devastate reputation dollars. Professional localization is a value for us, not a price. 

Good firms partner with reputable localization vendors to secure revenue and brand. This shields them from common localization errors and prepares them for long-term success worldwide.