With global eCommerce sales currently totalling $2.3 trillion and eCommerce growth projections predicting that this will reach a staggering $4.87 trillion by 2021, if you’re not already selling internationally then now really is the time to start planning for it.
After all, with the value of eCommerce continuing to grow at an unprecedented rate worldwide, so does the opportunities it offers in terms of reach, sales and business growth.
But how exactly can you capitalise on this rise in global sales? How do you find out where the demand for your products are? And ultimately, how do you overcome the barriers to successful international expansion?
Throughout this article we have summarised almost everything there is to know about scaling your business operations overseas, with expert advice from previous Linn Academy speakers Charlie Ruigrok (Department for International Trade), Scott Galvao and Jesse Wragg (InterCultural Elements).
Challenges companies face in entering global markets
Despite the evident opportunity for cross-border trade, there are of course challenges that come with international expansion.
Now while each challenge can (and often does) act as a barrier, preventing online sellers from taking the leap and selling into new markets, they shouldn’t.
Because the benefits of international expansion often outweigh the risks.
That said, to be successful you will need to understand and prepare for the challenges, which is why we’ve summarised some of the most common below.
Cross-border challenge #1 - Logistics
There’s no denying that the internet has come a long way in recent years, with customers from all corners of the globe now able to buy your products at the click of a button.
The problem, however, is that the logistics of actually delivering those products isn’t always as easy.
In fact, when you’re selling to customers half way around the word, physical distance can be a major barrier, particularly when you factor in high shipping costs and the ever-increasing delivery expectations of consumers.
Which raises the question; how are you meant to fulfil customer expectations regarding speed and cost, while faced with the time it can take to get the item shipped to the destination and cleared through customs?
And that’s before you even consider the poor delivery infrastructure of many international markets.
So, what are your options?
Well to start with, it’s worth noting that not all consumers expect their orders to be delivered quickly. This means that for certain markets it is widely accepted that parcels being shipped from overseas will take longer to arrive.
If, however, you are selling into a new market that has the expectation for a faster delivery service, you may want to think about outsourcing your fulfilment.
While you can take a look at a list of global fulfilment services here, the key thing to consider when using a third-party logistics (3PL) provider is that they are often equipped to handle your entire fulfilment process, from warehousing right through to international shipping.
With consumer expectations differing worldwide, this is something that you should be researching before deciding on your overall fulfilment strategy.
Do keep in mind though that if you’re using an international fulfilment service, you will need to consider possible tax implications, which leads us to the next cross-border challenge…
Cross-border challenge #2 - Taxes and import duties
One of the biggest barriers to international expansion lies in understanding the taxes and import duties for each market you wish to sell into.
What these are will ultimately depend on where you’re based, where you’re selling to and how much you’re selling.
Let’s say, for example, you’re a UK merchant selling into Europe.
As it currently stands – until March 2019 at least – you don’t currently need to pay an import duty, nor do you need to register for VAT in EU member states, unless you either hold stock in the country or exceed the thresholds.
Not sure what the EU Vat thresholds are? Take a look at this.
Charlie Ruigrok suggests that if you’re already close to the thresholds you might want to think about registering for VAT in that market sooner rather than later.
He also recommends preparing for a worst-case Brexit decision by understanding how much duty you may have to pay Post-Brexit.
To do this, you can look up the World Trade Organisation tariff rates and regulations for your products, using the European Market Access Database.
So, what about selling into the US?
While the US tax system is complex at best, if you are shipping from the UK to the US, it’s worth noting that you may be eligible for benefits under the current US-UK income tax treaty.
“If you are shipping from the UK to the US you currently sit within a loophole, as the US has something called a De Minimis threshold. This means that if your order is below $800, you don’t need to pay duty on it, as long as you have the right customs declaration on that package. You also won’t need to pay VAT on that product as it leaves the EU and because you are selling via an online sales channel, you won’t have a State Nexus which is a presence within a US state and therefore do not need to pay local sales tax”.
Charlie Ruigrok, DIT
Cross-border challenge #3 - Data policies
One word; GDPR.
Seriously though, data protection should be a key consideration worldwide and although GDPR impacts the European markets, it’s worth keeping in mind that countries such as the US and China have their own data protection policies you will need to comply with.
“GDPR covers us for the majority of regions, however there are some regions that have various data policies. China has a different data policy entirely, whereas data policies in the US are a slightly modified version of GDPR. There are others around the world that you will need to bear in mind”.
Cross-border challenge #4 - Translation and localisation
Language is perhaps one of the more obvious barriers to cross-border trade, but the mistake sellers often make is believing that translation is enough.
When translating your website and/or marketplace listings, you will also need to consider localisation, which specifically requires you to refine your message for the markets you’re wanting to sell into.
Localisation doesn’t just apply to language though.
You will also need to consider whether or not your products are suitable for the target market, whether your terms and conditions adhere to the requirements of the country, and even whether you’re using the correct information such as date format and sizing. This is particularly important if you’re selling items such as clothing.
While it’s not always viable to employ a native speaker, you should consider working with local market experts to support you with translation and localisation.
For more information about localisation, I'd recommend having a read of this expert guide.
Cross-border challenge #5 - Pricing, currency and exchange rates
While pricing, currency and exchange rates have always been a consideration when selling overseas, Charlie Ruigrok from the Department for International Trade believes that this is going to become a hot topic over the next few months as the UK leaves the EU.
With the Pound likely to drop in value again – just as it did following the Referendum – Charlie recommends setting up different EU and/or global bank accounts to mitigate against potential exchange rates.
It’s not all doom and gloom though.
If the Pound does drop in value, then you stand to be more competitive against international sellers.
Currency and exchange rates aside, you should also be thinking about your pricing model and payment methods.
First up, payment methods.
While this is only really applicable if you’re selling through your own website, it is an important consideration as failing to meet payment preferences in each market could limit sales.
Fortunately, if you’re opting to expand through a marketplace, you will be able to leverage their payment gateways and therefore won’t need to worry about this.
Regardless of which channel you’re selling through, you will need to consider your pricing model.
Identifying product demand is only one step in conducting market research and you will also need to consider how much a customer is willing to pay in each target market.
Let’s say there is a demand, but that the perceived value of your product is relatively low in a specific country. Once you factor in your costs, it might not be viable to expand into that market.
Alternatively, you may find that consumers in a different market are willing to pay a premium price for your products, in which case you can charge more.
Cross-border challenge #6 - Local-language customer service
We’ve already talked about listing translation and localisation, but you will also need to consider local language customer service.
Because not only is there an expectation for this amongst consumers in certain markets, but many marketplaces make this a requirement.
The problem is, it’s not always viable to hire a native-speaking customer service representative for each of your target markets, especially when you’re only testing the waters.
So, what are your options?
Well perhaps the simplest option is to invest in the use of a tool such as xSellco’s Helpdesk, which auto-translates your customer support responses. With this option, you can support customers in all languages, without the need for a multi-lingual team.
It’s also worth keeping in mind that some fulfilment services will provide customer support for the orders you’ve fulfilled through them, so if this is a route you’ve decided to go down, it could be something worth assessing.
Tips and best practices for expanding internationally
Now that we’ve covered some of the barriers to cross-border trade, and more importantly provided some solutions to tackling them head on, it’s important to think about what’s going to help you get the most from your international selling efforts.
The steps for successful international expansion
Intercultural Element’s Scott Galvao believe there are three steps that are crucial for succeeding internationally.
“Number one, building a strategy. It’s vital for figuring out which countries and which marketplaces you want to go to. Secondly, once you have that plan in place you want to implement correctly and expand intelligently. That specifically means localising to make sure you’re catering to a local audience, translating properly and not with a machine translation but rather with local people who know the language, and then lastly making sure that you have all of the translated data and that you’re trusting that to someone who really knows the marketplace in that country. Very often that’s a native”.
Conduct data centric market research
Making use of the data available to you is one of the best ways to research potential export destinations.
In fact, data centric research enables you to identify the right markets for your business and products, and more specifically the right marketplaces to sell on within those markets.
But where can you obtain this data from?
Well, aside from the free tools available to you – which we’ll get to in a moment – according to Charlie Ruigrok, the best place to start is with your own analytics.
If you have a website, can you see where your traffic is coming from?
Or perhaps you’re selling on eBay and enable international sales, in which case where are your sales coming from?
Without a thorough understanding of product demand, it’s almost impossible to succeed in any given market.
You should look beyond your own data though and leverage tools such as Global Market Finder, Google Keyword Planner, Google Shopper Insights, Google Consumer Barometer, PayPal Passport, Santander’s Trade Portal and the Department for International Trade.
Combined, these sites offer some impressive insights into consumer buying behaviour across the globe, along with preferences and search volumes.
Diversify on multiple marketplaces
While the prospect of expanding onto new international marketplaces can see a daunting one, there are several reasons why it’s so important.
To start with, it’s worth thinking about Brexit.
If you’re a UK seller, you should be asking yourself whether or not your business is prepared for selling into the US, Australia or Asia, in the event that it becomes more difficult to sell into the Europe.
That’s not all though.
If you’re already selling in other international markets, expanding onto new marketplaces may offset some of these costs, for example listing translations, VAT, market research and maybe even local language support.
Finally, there’s the risk of account suspension.
It can’t be ignored that if “you’re putting all your eggs in one basket”, you’re more susceptible to business failure.
“If you’re only selling on Amazon.de in Germany and all of a sudden Amazon says you can’t sell there anymore, whether you’ve done something wrong or their bots think you’ve done something wrong, all that money you’ve invested in translations, the product you’ve got sitting in Germany, the customer service guy that you’ve hired to deal with your German buyers, it all becomes for nothing. But if you’re selling on other German marketplaces as well, it won’t have been for nothing”.
Jesse Wragg, Intercultural Elements
So, with this in mind, ask yourself whether your business is stable enough to survive being suspended from a marketplace you sell on, whether that's domestically or internationally. If the answer's no, you should think about expanding onto new marketplaces.
Not sure which marketplaces to expand on?
Take a look at our comprehensive list of online marketplaces.
Alternatively, watch Scott and Jesse’s talk from Linn Academy 2018 for some inspiration and advice on which global marketplaces you should be focusing on in 2019.
Understand marketplace algorithms
While each marketplace will have varying degrees of competition, you should always strive to optimise your listings for maximum visibility and sales on each site you sell on.
The challenge, however, is that in order to rank at the top of any given search results page, you need to understand the search algorithms of each marketplace.
More specifically, you will need to understand how the search engine selects which listing ranks for which search term, and then how the algorithm determines the order in which they rank.
Does it consider price? Does it only display listings with an exact keyword match in the title? How important is your product or seller rating? Are there different account levels and does this impact search position?
Unfortunately, there’s no blueprint to each marketplace’s ranking criteria and while we have done our best to outline the ranking factors for Amazon, for other marketplaces we would suggest searching for products that you sell and analysing the listings that are ranking at the top of the page for related keywords.
Keep in mind that some marketplaces will offer resources to help you better understand how their search algorithms work. As an example, if you’re looking to sell on Newegg, we would recommend looking at their Newegg SEO guide.
Automating your business process
With one of the biggest bottlenecks for business expansion (whether that be domestic or international) being lack of time, it is important that you have the systems in place to ensure maximum efficiency and productivity.
In other words, consider the use of an automated inventory management system.
Attempting to scale your business whilst manually handling your day-to-day business processes not only limits your growth, but it also puts you at risk of human error such as overselling and the loss of control incurred by chaotic selling conditions.
To learn more about the benefits of using an automated order and inventory management system, have a read of this.
Consider using repricing tools for maximum conversions
We’ve already talked about how important your pricing strategy is to international success, but what we’ve not yet discussed is how prepared you are to compete against the prices of your competitors in these markets.
With competition rife on these marketplaces, the process of ensuring your products are listed at the optimum price point to attract potential customers, while satisfying marketplace algorithms, is no easy feat.
And that’s before you consider your own profit margins; price it too high and you limit your visibility and sales, but price it too low and you risk making a profit (or worse, fail to break-even).
The good news is that there are tools out there that can help with this.
These tools, specifically known as repricing tools, are able to automate your pricing based on a set of defined rules.
While you can learn more about the benefits of repricing here, the important thing to consider when using a tool of this kind is to fully understand your costs.
Invest in a paid marketing strategy
A paid marketing strategy can be incredibly effective when expanding into international markets, largely because it gives you a platform to increase exposure in a market where you will likely have very little existing awareness.
So, what are your eCommerce advertising options?
Well, ultimately this is going to depend on the site’s you sell on.
If, for example, you have your own eCommerce site, then it could be worth looking into Google Shopping Ads. You can see a full list of the countries Google Shopping is present in here.
Alternatively, if you’re simply testing the waters with international expansion, then it could be worth exploring the paid marketing opportunities that your chosen marketplaces offer.
Chances are, many of the international marketplaces you might be considering will offer advertising opportunities, so keep this in mind when assessing which marketplace to sell on.
Last but not least, it's worth researching social media marketing options such as Facebook Advertising.
“Not many people know this, but in the UK we are one of the most competitive digital landscapes in the world. We spend more on digital advertising than other countries. If you use something like Google Global Market Finder or Facebook Cross-Border Insights, it will tell you the recommended cost-per-click advertising price in different markets. Usually, it’s about the third of the price you will pay in the UK”.
Charlie Ruigrok, DIT
Regardless of which paid marketing strategy you invest in, you should, however, keep in mind that advertising comes at an additional cost, and should therefore be factored into your wider strategy.
So, there we have it
Almost everything you need to know about selling internationally, complete with proven tips and advice from the Department for International Trade and InterCultural Elements.
Have any tips of your own for expanding internationally? Simply leave us a comment below.