Going Global: A World of Opportunity
July 11, 2019
Once commerce was local. But in today’s digital age, it’s abundantly clear that those who’ll lead both B2C and B2B sales will be global in outlook, reach, and delivery. The prize is an outsize market. Global eCommerce sales topped $2.8 trillion in 2018, and are predicted to reach $4 trillion by 2020, and $6 trillion by 2022.
As technology and globalization boom, geographical borders blur. Competition and consumption are increasingly borderless, no longer limited to local shops with scant assortments and inventory, and restricted business hours. The global eCommerce marketplace operates 24/7 with “endless aisles” of merchandise.
But should you go global? This is just one of many questions to ponder when considering expanding into new markets globally. How do you position your brand across the world? What will you do to generate demand in countries with unique consumers that don’t align with your traditional profile? How will you educate local audiences about your brand? If you don’t have the skills within your organization to develop global eCommerce from an operational and demand perspective, who do you plan to use?
The long tentacles of the World Wide Web allow brands to diversify the tools, channels, and platforms they use to reach global audiences. The numbers are astounding. There are 4.4 billion Internet users globally and counting, up more than 1,000% since 2000. Consider these tips to extend your reach around the world.
Do your research
It’s vital to understand if your brand story and products are transferable to new markets. Indication of this may come via data analysis or a perceived gap in the market, but this research should be rigorous. Brands must also size the market and survey the competitive landscape. Competition will differ by country, providing opportunities or threats, and will likely dictate the digital strategy needed to penetrate. Local macro and micro economic factors also need to be taken into consideration, which can impact costs, logistics, and consumer perception of foreign brands.
There are many organizations that can assist businesses on their journey to internationalization. Even the biggest companies in global business utilize local partners when they expand overseas. China’s Alibaba announced late last year that AliExpress is teaming with Moscow’s sovereign wealth fund and oligarch Alisher Usmanov to build out its presence in Russia.
Mail.ru, a local internet company invested in by Mr. Usmanov, has roughly 97 million active users potentially boosting AliExpress’ Russian customer base. Testing what demand looks like in another country via a third party can be a good tactic. Alliances and corporate synergies can be some of the best strategies to move beyond borders.
Once market penetration appears viable, brands need to examine their internal setups, and determine the team structure and organizational changes necessary to succeed. Does the business need to acquire locations, languages, or new expertise to make a success of international expansion?
And, in terms of internal processes, how will this new market be serviced, and which systems need to be in place to achieve this? This includes accepting payments in local currencies via local payment methods, meeting legal and tax regulations, delivering customer service, ensuring warehousing and delivery logistics are in place, and considering nation-specific data privacy, security, and translations.
Clearly, there are a lot of considerations when contemplating internationalization, and approaching them all at once can be overwhelming. Entering new markets puts huge strain on internal teams and processes and this shouldn’t be underestimated. A phased approach can make the transition more manageable.
Start With Familiar Territory
Brands may choose to start selling in overseas markets where they already have a level of recognition. U.S. companies should consider starting in English-speaking countries such as the United Kingdom, Australia, and New Zealand. In Asia, Hong Kong and Singapore speak English too, as does South Africa. In these markets where English is a dominant or important language it makes it easier to communicate with customers.
It’s worth testing international sales in a few key markets before expanding any further. By testing, tailoring and perfecting your offering in easier markets to start with, this will allow you to tackle more nuanced and complex markets going forwards.
Providing the digital gateways to connect with a local audience is vital. The cornerstone is an eCommerce platform that adequately supports international expansion. Brands also need to consider social media channels, and ensure their channels are optimized for the devices and browsers in local markets. Technology integrations and functionalities should all be rigorously tested locally before rollout.
Globalized eCommerce can put a strain on shipping costs and other fees as well as delivery times due to cross-border shipments. Affordable freight and speedy delivery are big issues today. About 35% of shoppers polled by PayPal say that delivery and shipping costs prevent them from purchasing cross-border, while nearly half point out that free shipping is a top driver when purchasing from international websites.
However, there is a balance. High-volume and low-margin giants are able to offer free shipping, whereas many consumers are prepared to pay for the delivery of quality goods from smaller overseas providers at competitive rates, as long as they receive good service and delivery times are transparent
Reduce Checkout Barriers
Getting it right with a simple system that is familiar to a local audience can be the difference between an abandoned cart and a completed purchase. The mantra is to offer safe and familiar payment options. Security is crucial for cross-border payments, where local consumers are more wary. Shopping and purchasing in local currency is always preferred but not essential. Confirmation emails and receipts are a must.
Identify Cost Efficiencies
A key to successful globalization is leveraging the production and shipment of products that are more competitive in one market than another. Labor and warehousing costs vary greatly across the globe. It’s about finding that competitive advantage. The fact is, eCommerce has a lower cost structure than many offline marketing channels and physical stores. In trading terms it has an inherent advantage.
Are You Ready?
Want to learn more about global eCommerce? Download our whitepaper, Beyond Borders: Embracing Global eCommerce.