For ecommerce companies that have already experienced success domestically, expanding internationally is a logical next step. However, global growth is a complex endeavour, and requires careful planning to maximize the chances of success. In this article, we’ve put together a comprehensive checklist of the most important issues you need to consider before your global ecommerce launch.
We’ve split the list into two sections. Market strategy involves all the high-level questions you need to ask to determine your overall approach to the market. Business execution encompasses all the concrete elements you need to implement before you’re ready for launch.
The first step in any global ecommerce launch is planning out your market strategy. International expansion is a major undertaking, and you will have to make important decisions about which markets to target first, and how to penetrate them.
The three key elements to consider before investing in a market are customers, competitors & vendors, and the regulatory environment.
Your Ecommerce Launch: New Customers
International customers can often be very different from your regular domestic clientele. There are a few questions you need to ask about these new, local buyers:
- How many of them are there? Total population is only one part of this equation. To get the full picture, consider the degree of internet penetration, cultural acceptance of ecommerce, and the size of middle class.
- How much can they pay? Average purchasing power is a critical variable. In poorer countries, you might actually increase revenues by selling an affordable product to many people, rather than a luxury product to a select few.
- How much will they pay? Customer tastes and needs vary quite significantly. This applies not just to the perceived value of a type of product, but also to the importance of individual features and benefits, as well as the importance of branding vs. utility.
Competitors & Vendors
We must enter a new market as if it were a brand new ecommerce launch. Supply-side factors can be just as important to analyze as demand. These are the main factors to bear in mind:
- Who are our major competitors, and how dominant are they? The degree of market concentration will determine how tough it will be to enter the space. Generally, the greater the market share held by the top 3-5 players, the harder it will be for a new entrant to gain market share, due to incumbent cost advantages and brand awareness.
- How differentiated are the competitive offerings? The greater the differentiation between offerings, the higher the chances of carving out a unique, sustainable niche for yourself. In some cases, strong differentiation can allow companies to thrive even in markets with dominant incumbents, like how Zappos was able to beat Amazon in the shoe market.
- What is the availability of key vendors? If your products require locally sourced materials or specialized distribution and shipping channels, be sure to tie down key vendor relationships beforehand. In some less developed ecommerce markets, local vendors might not even be able to provide the services you need, so it pays to plan ahead.
Regulatory issues can often seem complicated, but they are absolutely essential to understand before an international launch. Here are the key issues to examine:
- Are any of our products restricted or illegal in this market? This is especially relevant in some specific product categories, such as food products, health supplements and medical equipment. But if you think any of your products could be controversial, it’s worth checking just to be sure. For example, not many people know that e-cigarettes are illegal in Denmark and Israel.
- What local regulations might require us to modify our business processes? The big one in this category is data security and privacy. With the advent of landmark privacy legislation such as the EU GDPR, regulators are exercising much closer scrutiny of ecommerce data practices. Make sure to vet both your internal processes and those of any third-party vendors that handle your customer data.
- What taxes do we need to pay? Global tax law is extremely complex, and you should not go it alone. Consult with an international tax attorney to determine the various taxes due, and the information you will need to track and report to local authorities. Be sure to factor this information into your financial projections as well.
Now that you’ve carefully designed your market strategy, it’s time to translate it into a concrete business action plan. There are a number of key pieces that must be adapted for the local market before you’re ready to launch your ecommerce.
The three main categories you will need to localize are your website, marketing and backend infrastructure.
As the most visible element of your business, your online storefront should be comprehensively adapted for local preferences and user habits. International shoppers have a strong preference for ecommerce websites that have been appropriately localized, as it makes the store seem more trustworthy. The most important components of website localization are:
- Professional Translations. According to a decade of research by Common Sense Advisory, 59% of international customers rarely or never buy from websites that are only available in English. To truly speak to local customers, you need to have high-quality translations of your website’s content in all the major local languages.
- Localized Currency and Pricing. All prices should be clearly displayed in the local currency to avoid customer confusion. In addition, adopt localized pricing of products wherever possible, as the perceived value of various items will differ significantly across cultures.
- Popular Local Payment Options. Credit cards might be the most popular online payment option in North America, but this may not be true in other parts of the world. For example, Alipay is a very popular payment method in China, as it offers additional security in a market with weak consumer protection laws.
- International Domains. You should try to secure the country-specific top-level domain (such as .co.uk or .de) that pertains to your brand. If that’s not available, the next best option is to operate under a localized brand name. For instance, eBay trades as Ruten in Taiwan and Tradera in Sweden.
Your off-site marketing efforts are another key piece of the localization puzzle. The general rule is to always speak to your customers the way they like, where they like. The main aspects of marketing localization are:
- Localized Content. Unlike straightforward on-site content like product descriptions and informational copy, the direct translation approach rarely cuts it for marketing content. That’s because your content has to cover topics and issues local customers care about, and do it in a way that’s culturally resonant. Consider hiring marketing staff who are in touch with the local culture, or outsourcing the work to a local marketing agency.
- Local Social Networks. The best content in the world has no value if no one reads it, so make sure to distribute your content on the major local social networks. While Facebook and Twitter have come to dominate the social media landscape in many regions, some countries have their own popular social platforms. Important examples include Vkontakte in Russia and QQ in China.
- Local Search Engines. The search engine market is considerably more concentrated than social media, with Google being the dominant presence in almost all regions. But there are still some major holdouts, such as Russia’s Yandex, China’s Baidu and South Korea’s Naver.
While localizing your front-end presence is undoubtedly important, it is just as critical to prepare your back-end infrastructure before your big ecommerce launch. There are a few important building blocks you must have in place
- International Payments Infrastructure. Accepting global payments involves an additional layer of complexity, especially with respect to security and compliance issues. For instance, credit card transactions are a lot less likely to be approved if the issuing and acquiring bank are not located in the same region, so you might have to secure a partnership with a local acquirer, or use a global payments platform that is supported by such partnerships.
- Shipping & Distribution Channels. Cross-border shipping is expensive and can easily destroy your profit margins. For many companies, it will make more sense to store inventory locally and ship them from local warehouses. This requires you to leverage local shipping and distribution channels, especially in emerging markets where strong regional knowledge is key.
- Localized Support Services. As with your domestic customers, international customers will often run into issues with your website, products and billing practices. You’ll want to offer strong customer support services in the major local languages, that are accessible during regular local business hours.
Yes, a Global Ecommerce Launch Is Still Worth It
As you can probably tell, an international ecommerce launch can be a major undertaking, and comes with quite a few unique challenges. But daunting as it may be, global expansion is one of the biggest opportunities in online business, and can be well worth the trouble. Thoroughly planning out your strategy and execution will maximize your chances of success, as will partnering with a provider that truly understands global ecommerce.