International business expansion can be a daunting prospect, but there’s no denying that it is one that offers huge opportunities for success. In fact, with close to 2 billion digital buyers across the globe, if you’re limiting your reach to just your domestic market, you could be missing out on some serious sales.
But how exactly do you get started expanding your business internationally? And more importantly, what does it take to do it well?
Throughout this article, we’ll cover everything you need to know about global eCommerce expansion and walk you through some key considerations and best practices to help you succeed.
What are your options for expanding your business across the globe?
Let’s start with the fact that you can (and at some point probably should) create a localised website for each target country.
Assuming you’re new to cross-border trade, however, it’s likely that you will want to test the market and see where the demand is first, without too much initial commitment.
With that mind, your best bet will be to sell through an international marketplace.
Now while there are plenty of marketplaces available to list on – you can view a full list here if you’re looking for inspiration – one option is to expand through the sites you’re already selling on.
Take Amazon and eBay for instance.
Both marketplaces have a worldwide presence and if you’re already selling on either one of these, a relatively easy way to scale your business and reach an overseas audience could be by listing to their international sites.
Key considerations for choosing which international markets to sell into
While we’ll cover some of the key considerations for assessing a new online marketplace later on, the first thing you will need to think about is the actual country – or countries – that you want to sell into.
In fact, when it comes to expanding your business, the biggest piece of advice we can give you is to thoroughly research each of these markets.
Now that’s all well and good, but what exactly does this entail?
I should start by saying that there are many factors that need to be taken into consideration, but to help you get started we’ve listed some of the most common ones:
With around 6,500 languages spoken worldwide, language is one of the biggest barriers for businesses looking to scale across borders.
Now while you won’t be expected to accommodate all 7 billion people on the planet, you should be aware that as many as 9 out of 10 internet users do prefer to shop from websites in their native language.
That’s even in markets where English is a second language.
This means that in order to successfully sell internationally, translation is a necessity.
In fact, you may even find that your chosen marketplace(s) make it a requirement.
Listing translation isn’t everything though, so if you’re thinking of simply running your content through Google Translate, don’t.
Localisation is just as important as translation and you will need to be localising your product listings for the individual markets. This also applies to other English-speaking countries such as the US and Australia, where there will also be spelling variations for common products – jewellery/jewelry is a common one.
The good news is that there are many eCommerce translation and localisation services available to support you, including both InterCultural Elements and WebInterpret.
If you’re in the very early stages of international expansion and simply want to get an idea of demand in a market before you invest in translation and localisation services, do keep in mind that you have the option of making your domestic listings available for shipping internationally on certain marketplaces.
- Product demand and local buying trends
Understanding the demand for your products in overseas markets is crucial. Not only does it help you identify whether it’s a market worth pursuing, but it can also help you to determine appropriate price points.
Think about it.
Product demand often differs worldwide and a product that may be competitively priced in one market may justify a premium cost in others, if there’s a high enough demand for it.
But how exactly do you work out demand?
Well, to start with you need to research the competition. Don’t just limit this research to other international merchants though, you should also be looking at local sellers as they will arguably have the best understanding of customers in that market.
For more tips on how to find out product demand, we would recommend having a read of this.
eBay is a great place to look at to get an idea of product pricing – regardless of whether you intend to sell on the eBay marketplace or not. Looking at what prices similar products have sold for in the market provides invaluable insight that will help you with your international pricing strategy.
You will of course also need to look beyond eBay and at some of the other popular sites in your target market.
Despite needing to make the ultimate decision on how to price your products, do keep in mind that by selling through an online marketplace you won’t have to worry about things such as foreign exchange, currency conversion, preferred payment types and so on.
- Local laws, regulations and taxation
Understanding and complying with local laws, regulations and taxes in each target market is crucial.
Now while we would always recommend that you seek expert advice for your chosen market(s), to help you get started, we’ve covered some of the key considerations that you should be familiarising yourself with.
Firstly, you will need to think about duties and tariffs.
Customs duties refers to the tax levied on the import or export of goods in international trade. This won’t be applicable to all markets though, so make sure you do your research.
If you’re exporting from the UK to outside of the EU, we would suggest reading this guide from the Department for International Trade.
Next up, taxes.
Every country (and even states and territories within certain countries) have different tax structures and wrapping your head around them is one of the biggest obstacles with cross-border trade.
For this reason, you should ideally be consulting a tax expert such as SimplyVAT, to find out the requirements for each of your chosen markets.
Taxes and customs duties aren’t the only things to be mindful of though.
Certain countries will prohibit the sale of certain items. Jewellery, for example, is not permitted to be sold in Australia, so it’s always worth finding this out before you invest too much time researching other things.
It’s also worth keeping in mind that while certain products may not be restricted, they may require additional paperwork and/or fees to export into certain markets.
There are also legal obligations around customer communications, consumer privacy laws and returns policies that you will need to factor into your research.
- Logistics and shipping
Regardless of product demand, high fulfilment costs and logistics issues can make even the most lucrative of markets unviable.
Because if the cost of shipping to certain markets becomes so high that the product will no longer make a profit, chances are it won’t be worth it.
That said, there are ways of getting around this, one being to make use of an in-country fulfilment centre or even the marketplace’s own fulfilment service, although again this might not be practical if you have low profit margins.
Ultimately, you should be taking the time to research consumer expectations around delivery options and speed, as well as the delivery infrastructure in that market. Additionally, you should also be considering returns rates, which can be higher in certain markets.
How to assess the suitability of international marketplaces
Once you’ve decided on which country to sell into, you will need to choose an online marketplace to list your products to.
Below we’ve included some of the things you need to be taking into consideration when researching your options:
- Site traffic
One of the biggest advantages of selling on an online marketplace is that you have instant access to an often-active customer base.
For this reason, it can help to get an understanding of the traffic each site gets. Do consider this number in relation to the number of competitors though.
As an example, Amazon UK have 304 million active users, but chances are they will also have a lot more merchants selling the same products than say another marketplace with fewer monthly visitors.
Again, you should always be selling on a site where there is a demand for something you sell, so high competition isn’t necessarily a bad thing if you optimise your listings well enough, it’s just something to consider alongside traffic.
- Fee structure
The fee structure of each marketplace will differ, and you will often pay either a monthly or annual fee, listing fees, commission charges or a combination of each.
Once you know the pricing model for each marketplace you’re considering, you will need to factor in your profit margins and average volume of sales to accurately judge which type of pricing model is better suited to your needs.
- Marketplace rules and regulations
One of the downsides of selling on a marketplace is that you have less freedom and control than you would selling on your own website. Therefore, understanding how much flexibility you do have over things such as design and pricing may help with your decision.
That’s not all though.
Most marketplaces will have their own rules around things such as feedback, returns and shipping, and you will need to determine whether you can meet their expectations prior to selling on their site.
- Marketing opportunities
When comparing different online marketplaces, take into consideration the support and opportunities they provide for marketing.
Several marketplaces, for instance, will offer promotional services at an additional cost. This may be on a cost-per-click advertising basis or a fixed fee for a bespoke marketing package.
If this is something you’d like to take advantage of, do factor in the cost to your overall expenses.
It’s also worth looking at what the marketplace does to market itself, as this can influence site traffic.
If you’re looking to sell internationally, you’re going to need to consider your inventory – both in terms of quantity and where it will be stored.
So, let’s start with quantity.
More sales means more stock and you will need to be equipped to handle the influx in sales that will likely follow international expansion.
Now while this relies on having enough items available at any given time to fulfil demand (without overstocking), you will also need to ensure your stock levels are accurate across each of your selling channels.
Here’s the thing – manually updating stock levels across each marketplace isn’t a viable option, especially not long term, and runs the risk of human error such as overselling, which can be extremely costly both in terms of revenue and reputation.
This is why you need to be considering the use of a multi-channel inventory management system.
Ideally, you also want a solution that allows you to control the amount of stock you have available to sell on each marketplace, as this can help with logistics.
Which leads me on to the next point – the location of your stock.
Ultimately, you have two options when first starting out – you can either hold your stock in your warehouse(s) and ship it each time you make a sale, or you can make use of a fulfilment centre.
Either way, to scale your business successfully and maintain full control of your business operations, you need to have complete oversight of your stock at all times.
To find out more about the benefits of using inventory management software and better understand if it’s a good fit for your business needs, have a read of this guide.
This is a guest post by Linnworks, a multi-channel order and inventory management software