We’ve recently teamed up with our partner, Brightpearl, to create a three-part mini-series about the secrets of global growth.
This series has covered several important aspects of growing an international business, such as the financial considerations, possible impacts on your products and inventory, and what you need to know for your ecommerce store. Here are some of the key points you need to remember from the series…
The Financial Considerations
If you’ve decided it’s time to expand your business overseas, then there are a number of financial considerations you’ll need to explore, including:
Initial investment: Expanding into some markets could cost you thousands, or even tens of thousands in market entry costs, while there are a number of other overheads to take into account, such as staff time spent on market research, website changes and new support cover. Thus, you’ll need to estimate whether your potential overseas sales revenue will recoup these costs.Landed costs: If your expansion plans involve buying goods overseas as well, then it’s important that your prices accurately reflect all of the costs involved, otherwise known as landed costs. Be sure to include things like freight charges, insurance costs, and import duty. You may need to increase your retail prices in order to recoup these costs.Other costs: You’ll also need to remember to calculate potential exchange rate gains and losses, increased unit production costs, extra inventory storage and marketplace fees, and try to recoup these costs through your retail prices as well.UK-EU sales: Once you hit certain tax thresholds, you’ll be liable for tax in any country you’re selling to. Furthermore, if you’re storing goods within an EU country, using Amazon FBA or a 3PL, you may be liable to pay tax in that country immediately. To calculate these taxes, your systems should provide you with access to an EC Sales List, as well as the ability to obtain data to complete Supplementary Declarations (SDs).US-EU sales: As above, once you hit certain thresholds, you’ll be liable for tax in that country. As an example, the threshold for selling to the UK is currently £85,000, while countries like Austria and Luxembourg are as low as €30,000. Ensure your business can support the potential increases in tax you may need to pay.
8 Questions to Ask Yourself About Your Products
We’ve identified these eight key questions you’ll need to ask yourself when considering launching your products into foreign markets:
Are you making the most of the market you’re already in? Check whether there are improvements you can make now to ensure you have efficient processes in your home country, before expanding and taking old habits overseas.Is your business ready for international growth? Think about whether you have accurate data on inventory availability, and whether you can see which countries have growth opportunities for your business. Will you become an indirect or direct export business? Indirect Export businesses rely on brokers to ship, market and sell their goods overseas for them, while Direct Export businesses manage the process and control the profit themselves. If you’re unsure which is best for your business, then you can obtain advice from your bank, foreign embassies, local business advice centres and the Chambers of Commerce. How will you localize your brand name? Consider how your brand name will be translated overseas, and how cultural differences may impact consumer perception of your brand. It’s recommended to find a native speaker to assess how your brand name will be translated and perceived overseas.Do you need a new pricing strategy? In order to adjust well to exchange rate fluctuations, you’ll likely need to rethink your product pricing strategies. You may need to increase product prices in order to recoup the costs associated with international expansion, and consider allowing your customers to pay in their local currency. Are your products right for the new market? You’ll need to seriously consider whether there’s a need for your products in the new market, and whether they need a few design tweaks before launching. Product design and re-launch are a key part of your market research, and in truly understanding your new customer.Can your business adapt to a different logistics and distribution infrastructure? Logistics and distribution infrastructure vary around the world, so you’ll need to heavily research how the new country operates and fit in with their processes and practices.How will you actually sell and promote your products? Check that you’re listing your products on appropriate international sales channels and marketplaces, such as Cdiscount in France, OTTO in Germany and Rakuten in Japan. Also, think about how you’ll advertise your products as well. For example, social media networks and how they are used differ across countries.
Your Ecommerce Store
When launching your business into overseas markets, there are some considerations you’ll need to make regarding your ecommerce store, such as:
In-depth data analysis: Use Google Analytics to determine exactly which regions are generating traffic, analyze the abandoned checkout metrics, and find out where customers are adding products but then abandoning their carts (this could be due to language, currency, delivery or price). Also, look at metrics away from your website; examine where you have the most email signups and data you can target to launch your international store. Multi-currency: Whilst language and currency are proven to affect conversion rates for international shoppers, true fans of your product will persevere. Consider trialling offers such as ‘Free International Shipping Day’ and analyze where the orders come flooding in from and what may be affecting your international conversion rates.Language: Language is key to increasing conversion rates, and there are multiple solutions, from automated IP detection and translation, to managing a storefront per language or currency. Ideally, you should dedicate a native language speaking country manager per territory. It’s not just your website that will need to be translated, but you must also consider all outgoing communications, such as invoices, delivery notes and marketing campaign materials. Currency and payments: Paying in a native currency and using recognizable payment methods is important for building trust with potential customers. Furthermore, different payment gateways will have different transaction fees, while some will have set up costs, or monthly costs. Investigate thoroughly and make sure high volume won’t damage your bottom line. International compliance: Different countries operate different levels of compliance regarding customer data, such as the new GDPR in Europe. There are also varying levels of PCI compliance that need to be achieved. Make sure you’re compliant, including your privacy and cookie policies, in each territory you wish to expand into, which could mean making changes to your T’s and C’s.Consumer trust: Language, content and country-specific payment methods will all help to build consumer trust. Display trust symbols clearly such as the Verisign or Mastercard logo, while clear contact and office details per country will also allay some purchase concerns. If you can’t offer a regional telephone, think about a chat facility during the shopper’s timezone. Also, make sure your policies are updated to include international delivery and returns times.
We hope this advice for building a global empire comes in useful. If you want to read the complete blog posts within this mini-series, you can do so now via the following links:
Read more: wemakewebsites.com