By Michael Kliger, Managing Director EMEA at eBay Enterprise,
Technological progress, and the rise of ecommerce in particular, has helped to make more overseas markets accessible to businesses of all sizes. Thanks to the internet, companies have a wealth of information at their fingertips, while functions such as marketing, sales and market research are increasingly moving online, providing a gateway to a global audience. However, lower barriers to entry also mean increased competition. Furthermore, moving beyond your domestic market will always carry a level of risk. It is therefore as important as ever before for firms considering international expansion to do their homework and consider all the factors when making the decision to expand internationally.
The first important point to make is that no business should rush into international expansion. The firm’s initial focus should be on accelerating growth in established markets and testing brand strength and level of demand in any new ones before making the leap. One practical way to do this is through social media and online reviews. Studies show that 77 per cent of online customers use ratings and reviews when purchasing products, and social media analysis can provide an accurate snapshot of a company or product’s footprint in a new country or language.
Once the demand has been established through online research, it is equally important to know the impact expansion will have on your cost base. For example, for companies selling a physical product, the cost of shipping is a significant, and often underestimated, challenge. There can be significant variations even between neighbouring EU countries. While domestic shipping costs in Germany, for example, are some of the lowest in Europe, in France it can cost as much to transport goods across the country as it would to ship them from the UK.
It’s also important to plan for the long term, not the short term. There can be a temptation to take on too many new markets at the same time, leaving the business stretched. Instead, a phased approach is often a wise strategy. If you have an online store, research shows that you can access over 75 per cent of the European ecommerce market by operating in just two currencies (sterling and euros) and three languages (English, French and German). Companies that are strategic in their international expansion can do it at a steady, sustainable pace.
The logistics of international expansion can be quite daunting for many businesses, especially if there is a need to create new distribution networks to fulfil customer orders. One solution is to work with an established fulfilment partner, giving you access to both their existing networks and their local knowledge.
In conclusion, the process of international expansion can be done with little expense, if you are willing to take your time and do your research. Gauge interest and demand through online research and social media analysis, phase expansion to work at a pace that suits the company and work with a fulfilment partner to hit the ground running.