How to Successfully Expand Your E-Commerce Business Globally
E-commerce businesses can be scaled globally with ease, yet many U.S. small businesses are missing out on markets ripe for acquisition.
U.S. exports totaled roughly 1.3 trillion in 2016, yet only 10 percent of these exports were from businesses with fewer than 49 employees, according to the U.S. Census Bureau. In the past, complicated taxes and high shipping costs have made expanding sales overseas a major challenge for SMBs, but new technology has lowered the barriers for small businesses looking to take advantage of untapped markets.
“We have a customer that sells wallets here in Brooklyn, they opened up the Japanese market and now 70 percent of their revenue comes from Japan,” said Ryan Powell, senior director for North America at e-commerce shipping platform Easyship. “[There are] these markets that you never even thought to consider – you start using a free tool, and all of a sudden you’re finding these types of markets are some of the best.”
Expanding into new markets can seem daunting, but there are several tools and strategies that can make it a manageable process. The overall process involves assessing market opportunity in new markets, considering implementation strategies and developing marketing plans in those regions. All the in-between work – translation, taxation, distribution – can be handled by third-party companies, sometimes for free.
“People internationally want U.S. products,” Powell said. “They want that original product … [There’s] much more interest, a lot more money, more people buying online than in the U.S. Everything about it is better for brands.”
The first step to deciding to expand your e-commerce sales abroad is understanding whether people in other countries will buy your product. Shannon Roddy, Amazon specialist with Marketplace Seller Courses, works with small business owners and individuals looking to learn more about how to expand sales both domestically and abroad. He said companies can try and assess market relevance by doing high-level search engine optimization and keyword research, and then considering the competition within the industry.
“For every marketplace you’re expanding into, you have to take a few things into consideration,” he said. “One is, ‘What is the demand?’ That does require some SEO keyword research, essentially, for each country you’re going to be selling in. A product in the U.S. may not be popular in Germany for a variety of reasons.”
If you’re interested in getting a quick idea of how your product could fair in another country, you can check out Google Trends. By searching the generic name of your product – not your brand name – you can break down overall search volume by country. Another good resource for understanding how customers are thinking about your brand is Answer the Public. This site populates questions searched for on Google and other search engines related to your keyword. Both of these services are free.
If your e-commerce site is built with a provider like Shopify or Magento, you can analyze web traffic and understand where it’s coming from. Powell said that if 6 percent of traffic is coming from another country like the Netherlands, for example, converting even half of that percentage off the bat can be worthwhile.
Regardless of how you approach the situation, it’s important to do your homework to assess the potential demand for your product in another market.
Entering new markets
Once you’ve decided it’s worthwhile to test out a new market, there are three basic concepts to keep in mind: shipping, taxation and marketing. These aspects will vary based on which country you’re targeting. Roddy said that businesses selling primarily on Amazon can take advantage of fulfillment by Amazon services, which means you can partner directly with Amazon and accept its shipping rates to transport your goods to customers in hundreds of different countries. Depending on your relationship with Amazon, this could be ideal.
“You decide how much product you want to send into Amazon warehouses that is shipped to FBA,” he said. “Amazon tells you where to ship it and you can purchase deeply discounted shipping from most services.”
To handle taxation and translations, you’ll have to partner with third-party companies to get accurate product descriptions, establish regulations and work on currency conversions. Depending on the level of service, these companies may charge a fee. Examples (if not necessarily recommendations) of these companies include AMZ Europe, which can help with translations and marketing, and Pan European VAT, which can analyze taxes and regulations.
This type of offering is primarily only for businesses that have a strong Amazon presence, or are looking to expand abroad using Amazon as its only avenue. If you’re a business owner with an established e-commerce website, you can partner with other companies to handle the shipping and taxation aspect of your emergence into new markets.
Easyship, the leading Shopify shipping app, populates shipping costs and various courier services when a customer reaches the checkout screen on their shopping cart. The company handles all taxation and regulations, and they provide warehouse resources like warning labels and shipping label information.
Powell said that small businesses can enter new markets using a variety of channels, and can use EasyShip as the primary shipping and taxation solution for free.
“The average checkout [internationally] is about $200 versus $40 domestically, so you have a higher checkout, it costs nothing to do it, your marketing capabilities are much greater, the cost of acquisition is lower … it’s kind of a no brainer,” he said.
With shipping and taxation, it’s crucial to partner with other organizations and companies as the minutiae of different international laws can get very complicated.
“There are companies out there that will help you be able to do the registration, do the reporting because it’s not something you want to do on your own,” Roddy said. “It’s not something you want to spend your time trying to figure out.”
Marketing can be trickier than shipping and taxation. Oftentimes, marketing approaches are highly specific to each business and market, so it’s hard collect generic tactics that apply to all businesses and industries. The bottom line is it’s important, so make sure you brainstorm some different strategies.
“Once you understand that the product is viable, that it has a chance on the Amazon platforms, it is very important to do marketing,” Roddy said.
You can work with online marketers, but if you’re looking to keep costs low there are a few tips you can follow to try and drive conversions abroad. Roddy suggested using video advertisements, as these can be easily scaled and adjusted with subtitles or text of varying languages. Explainer videos and clips of your product showing its value can be powerful regardless of who is viewing it. He also suggested affiliate marketing. This method can be a good way to get your product seen by a new audience without having to worry about having the right context – partnering with a blog or popular writer in the industry means they can handle tailoring your message. Overall, Roddy said to treat it as a branding opportunity.
“If you have a product that does very well in the U.S., the chances are if you don’t sell it on these other e-commerce platforms, specifically Amazon in a global sense, other people will and you’ll find counterfeit and knock off products popping up quickly,” he added.
If you’re running an e-commerce business and are considering expanding your sales abroad, it’s important to look for help from other companies. If you’re selling primarily through Amazon, there are several companies you can work with to pump up sales. There are also some free solutions that can be applied to several different avenues into global markets, like Easyship.
If you’re skeptical of working with other companies, don’t be – untapped markets mean you may need to make new investments to convert new customers. After all, it’s all about promoting your brand in an age of connectivity and global economics.
“I see it from a brand owner standpoint and the opportunities are tremendous and, again, if you’re not capitalizing on it somebody else will, and typically not in a good fashion,” Roddy said. “It’s about protecting as much as it is growing e-commerce sales.”