All e-commerce companies, large or small, face obstacles when looking to scale overseas. Despite the challenges, international growth is the most successful long-term solution to building your e-commerce brand, market share, and profits. A few of the benefits:
- Reduces risk – your business will be more immune to downturns and fluctuations in the economy if you’re taking part in multiple markets at once.
- Increases talent pool – bringing in talent based in overseas markets will assist in local scaling, and adding more diversity, ideas, and traits to your workforce.
- Extends inventory – you can extend the lives of your “sunset” products by introducing them to other markets, saving money on inventory, production, and product development.
- Levels sales cycles – different countries have different purchasing and holiday seasons. An international calendar evens out your sales cycles for more consistent cash flow.
- Provides resources – new markets can also means new methods of funding, talent, and technologies to make your international scaling a success.
- Increases credibility – Scaling overseas extends your brand reach globally, making you more credible in both domestic and international markets.
But scaling overseas isn’t easy. You need to properly prepare your business and team – luckily Seller’s Choice have outlined five top tips to help you do just that.
1. Thorough market research
The American market is huge—but it’s not the only marketplace in the world. Despite its size, it can also be the most volatile and fluctuating market, which can leave your products and brands in the dust. Expanding internationally is often the best way to reach a new audience and mitigate the risks associated with the U.S. marketplace.
The most obvious markets to tap into are Canada, Mexico, Europe, and Japan. They’re the easiest in terms of importing, exporting, tariffs, and taxes. They also have audiences most similar to the U.S so your market research wouldn’t have to be as extensive.
Nevertheless, these markets are only just scratching the surface. They can also be highly competitive like the U.S. There are a number of other fast-growing, less-competitive markets to which you can also consider expanding.
But how do you know if this market is right for your business? How do you select the right country?
You need strong, comprehensive market research. Here are a few ways to conduct international research –
- Start with the Department of Commerce. It’s a strong resource for information about exporting U.S. goods and services to foreign markets. You can also take a look at the following pages:
- Confirm that demand exists in the country you’re considering. Is there an audience for it? How large is the audience? You can discover this with web campaigns and capture forms, physical surveying in the country, as well as a small test campaign in that market.
- Consider the infrastructure. You want to ensure that the country has accommodations that you’re used to, like roads, running water, and real estate. Even though you’re an online business, this infrastructure can be important for product delivery and target marketing.
- Research your competition in that market. What does their target audience look like? How do they alter their products for that market? How can you learn from their successes and failures? A great way to learn more about the competitive landscape is with international ecommerce conferences.
- Evaluate awareness level. How much will you need to educate this market about your product? If you’re introducing a new product to the market, you’ll likely end up investing a lot of time in consumer awareness. However, that means you’ll also be the first in that market, which can make you the authority and go-to. Consider how much you will have to—and how much you’ll be able to—commit to education.
Choose the new country or market based on the potential for growth as it relates to resources, talent, and market.
You don’t want to go in and “wing it.” One of the biggest mistakes that companies make is scaling too fast or too wide. Even if every country in the world could benefit from your product, you likely don’t have the capacity to scale a dozen places at once. Even the largest companies can’t scale at more than one or two countries at a time.
Plan your strategy with a slow and steady mindset.
You also want to strategize based on culture. Don’t assume that because one method works in America that it will work in other countries. Don’t ignore cultural differences that shape each individual marketplace.
These cultural differences will impact pricing, advertising, shipping, payment, production, packaging, and growth. You need to strategize and prepare for these differences.
If you’re prepared, you’ll best tackle obstacles and overcome with grace and profits. Outline a formal strategy ahead of time and it could end up being a gold mine for you.
You need a strategy that will address the following questions:
- How will our products be taxed and regulated in this country? How will we handle legality appropriately?
- How much capital do we need?
- How will we find capital?
- How will we need to adjust our product and advertising to this culture?
- How will we find talent and business partners?
You’ll need to build a pool of talent in the market in which you’re expanding. They can help your business learn and adapt to the culture, while also providing you with a ground-level marketing approach.
Creating a local team helps cross bridges and overcome cultural barriers to allow your brand to better relate to your new marketplace.
Some of the talent you’ll want to hire from that country or marketplace includes:
- Product developer/consultant
You can also consider working with a foreign distributor. Distributors will purchase your products at a wholesale rate and sell your product in their stores. You basically hand over the reigns to allow them to handle the reselling and profit-making in that country.
Because you lose some control, you want to make sure you find the right distributor who will deliver in accordance with your brand. You can find foreign partners and distributors in trade groups and foreign chambers of commerce. Be sure to check references and do your due diligence before partnering.
4. Production and marketing systems
Before expansion, you want every process to be as systemized and automated as possible.
With production, you want to ensure packaging and labeling are in accordance with the regulations of your new market. With shipping, you need to determine how you’ll get goods overseas and how you’ll keep track of packages. With marketing, you want to create a strong online and content plan that will gain impressions in your new market.
Ultimately, the more systems you have in place in the U.S the easier it will be for you to bring those same systems overseas.
Training systems overseas is much easier than building them.
One of the most challenging parts of international scaling is figuring out how to market to a new audience in a foreign country.
Seller’s Choice can help. We take your e-commerce store from a business to a brand. We’ll use market research to determine the types of content and advertisements your international markets want to see.
Expanding internationally requires financing. When you scale overseas, you can open up new avenues for funding, which can help grow your overall business as well.
The Export-Import Bank of the U.S. (Ex-Im Bank) is one of the most popular sources of financing for businesses that are expanding overseas. They provide working capital loans to U.S. exports, and they’ve helped finance more than $300 billion in U.S. goods and services since 1934. But you can also talk to other investors and VCs as well. Financing is especially easy today if you have a socially-conscious business.
It can be frightening to move money internationally, especially if you’re a small company. You need to feel you can trust your partners, your funders, and your transfer software.
Whether a small or large ecommerce business, you want to take care of your profits. You need to create a finance plan that will not only make funds available for use but will also safely and securely move those funds domestically and globally.
That’s where our partner OFX can assist with safe buying, selling, and trading globally. Learn more about how they work with small to medium sized online businesses here.
Do you have a plan to scale overseas? You can see international growth by utilizing thorough market research, a formal strategy, a collection of local talent, systemized processes, and a strong financing plan.
International growth is your next big opportunity. Is your ecommerce store prepared to scale globally?
This is a guest post by Andrew Maff, Director of Marketing and Operations for Seller’s Choice, a full-service digital marketing agency for e-commerce sellers. Seller’s Choice provides uniquely personalized marketing and managed services for digital marketplace sellers, e-commerce merchants, and brand builders worldwide.
IMPORTANT: The contents of this blog do not constitute financial advice and are provided for general information purposes only without taking into account the investment objectives, financial situation and particular needs of any particular person. UKForex Limited (trading as “OFX”) and its affiliates make no recommendation as to the merits of any financial strategy or product referred to in the blog. OFX makes no warranty, express or implied, concerning the suitability, completeness, quality or exactness of the information and models provided in this blog.