Greetings fellow sellers! Are you ready to take your e-commerce business to new heights by exploring foreign markets? Well, you’ve come to the right place. In this blog post, we will unveil eight essential steps for a successful Global Expansion of your e-commerce business.
But before we dive into these steps, let’s set the stage by reviewing some eye-opening statistics that highlight the importance of not limiting your business to a single country or region.
1: North American Market
2: European Market = 828 Billion
Global Marketplaces
Alternative Online Market Places
8 Tips to Expand Internationally
- Do your market research
- Do I Need to Set up a Company Overseas
- Know your Finances- Cost Analysis
- How to Increase Profits While Reducing Fees
- Be Compliant with Local Rules
- Where to store your goods. FBA/ 3pl/other
- Localize your Listings
- Think Global.
1: Do Your Market Research
No matter what business you are starting, Market research is always the first requirement. The same is the case with expanding your E-commerce business online. There are a few things/questions you should review when it comes to doing market research for the international expansion of your e-commerce business. These include:
- What are the needs of the online shoppers, that they would like you to meet?
- What product would easily sell online?
- How do the EU/UK buy products?
- Do I need to create a website in each EU country?
- What are the typical customer Avatars?
2: Do I need to set up a Company Overseas?
Whether or not you need to set up a company overseas when expanding your ecommerce business depends on a number of factors, including:
- The size and scope of your business
- The countries you are expanding to
- The local laws and regulations in those countries
- Your budget
In general, if you are a small business and you are only expanding to a few countries, you may be able to get away with selling your products through a marketplace or dropshipping. However, if you are a larger business or you are expanding to a large number of countries, you may need to set up a company in each country. This will give you more control over your business and ensure that you are complying with all of the local laws and regulations.
3: Know your Finances-Cost Analysis
Just like with any other business-related activity, Global E-Commerce Expansion also requires finance. And that’s where most sellers fail, as they tend to pay low attention to the finances and focus heavily on marketing. This leads to them attributing either too high a budget which leads to wastage or too low a budget which results in a shortage of stock. Here is how you can avoid making the same mistakes
- Put together your overseas budget beforehand
- Do a product cost analysis.
4: How to Increase Profits While Reducing Fees
This seems like the dream of every seller, Online or offline. Everyone wants as too pay as low fees as possible and wants to get the highest possible profit. Well here is a way online sellers who are expanding internationally can make save costs and increase profits.
- Transfer your overseas revenue back home: When you receive payments in different currencies, the fluctuating exchange rates can result in additional costs through international transaction fees. By transferring your overseas revenue back home, you can avoid these fees and also minimize the risk associated with currency fluctuations.
- Save from Amazon fees: Amazon charges a fee of 4% for each inter-currency transaction. However, there are companies that offer more favorable exchange rates and charge only around 1.5%. By using one of these companies, you can save approximately 2.5% on every transaction.
- Use the above savings towards your next inventory purchase: By saving on fees and currency exchange rates, you can increase your profit margins. You can then reinvest these savings towards purchasing more inventory, which can further boost your profits.
5: Be Compliant With Local Rules
No matter where you sell in the world, there will always be some local rules that you and your company will have to follow. This can be really important when you are planning a global expansion for your E-commerce business. So here is some advice that can help you be compliant with any local rules.
- Product Compliance (ie: CE marking for electronics, perishables.)
- Register for any import number
- Ensure that you hire experienced shipping and customs clearance agents.
- Register for Local Tax numbers.( VAT/ Sales Tax)
- Register for a trademark and brand registry
- Hire specialists in the respected fields
Here are some requirements for selling in the EU.
- A UK/EU VAT number in each jurisdiction where you store stock
- A UK/EU EORI number in order to clear customs
- Customs declarations (at import and export) and VAT declarations
- Indirect or Direct Representation.
6: Where To Store My Goods?
Storage of goods is always one of the main concerns of sellers around the world. So it is understandable that this issue would rise up when expanding a business internationally. There are 3 main ways of storing your goods when you expand to any new country, these include:
- FBA: An FBA seller is an e-commerce business that sells in Amazon’s store and outsources inventory management to Amazon through the FBA program. The seller sends products to Amazon warehouses for order fulfillment. Amazon stores the inventory until a customer places an order.
- Third-Party Logistics: Third-party logistics is a service that receives shipments of stock, stores and tracks warehouse inventory, and picks and packs orders to ship to your customers. Most 3PL warehouses serve many clients, sending orders for multiple eCommerce companies.
- Dropshipping: This is a business model that allows you to sell products online without having to own or operate the physical location where those products are stored and processed. This means you can start an e-commerce store and sell a wide range of products without handling inventory and fulfillment.
7: Localise Your Listings
If you’re planning a Global E-Commerce Expansion of your business, it’s absolutely crucial to think about localization. The rise of global eCommerce sites means that you can’t simply rely on an English version of your website and expect to capture a significant market share. To truly succeed, you need to be aware of the different languages and cultures of your customers in remote locations.
Here are some ways to localize your listing and make the most out of your global expansion
- Identify the target markets and languages you want to localize your listings into.
- Hire a professional translator or use a reputable translation service to translate the product titles, descriptions, and other important details into the target language.
- Ensure that the translated content is accurate and culturally appropriate for the target market, including local measurements, currency, and other relevant details.
- Test the localization by having native speakers review the content for accuracy and cultural appropriateness.
- Continuously monitor and update the localized content as necessary to reflect changes in the target market’s language and culture.
8: Think Global!
- “Build a Global Brand” mindset: Develop a strategic perspective that aims to establish and expand your brand presence across different markets worldwide.
- Have an Exit plan from Day 1, or build SOPs: This ensures scalability, operational efficiency, and the ability to transition or sell the business if desired.
- “Grasp your Customer Avatars & their specific Needs”: Gain a deep understanding of your target customers in different markets, including their demographics, preferences, behaviors, and unique needs.
- “Don’t forget the ‘CULTURE’ factor”: Recognize and respect the cultural differences and nuances in each target market
…and finally
- Don’t forget to pay YOURSELF: While focusing on business growth and expansion, it is crucial to ensure that you are adequately compensating yourself for your efforts and contributions
This blog post offers guidance for businesses seeking Global E-Commerce Expansion. It covers essential steps such as conducting market research, understanding financial aspects, complying with local regulations, optimizing profits, choosing storage options, localizing listings, adopting a global mindset, and ensuring fair compensation. The post provides valuable insights and practical tips to help businesses navigate the complexities of international expansion successfully.
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