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How to create a winning strategy for global expansion

By Michelle McSweeney

The opportunity for retailers to scale their businesses through global expansion is nothing short of immense. Take China’s Singles Day 2018, for example. The holiday that was invented in the early 1990s as an antidote to Valentine’s Day broke records in 2018 (once again!) with sales reaching a whopping $30.8 billion in 24 hours.

In contrast, the takings for Amazon’s Prime Day on July 16th 2018 were closer to $4 billion. So it’s clear to see the extraordinary appetite of consumers in China. And they aren’t alone - did you know that the population of France has an average online spend of $1946 per capita, or that shoppers in Mexico spend on average 17.31% of their salary online?

Looking overseas is well worth the while for retailers looking to expand, and in this blog, we'll highlight the core things which need to be remembered when going international. Let's jump in.

Overview

The prediction that digital commerce sales are going to hit $4 trillion by 2021 is looking pretty accurate, and there’s plenty of success to go around so long as businesses can overcome the main obstacles standing in their way of global domination. Because there are plenty of roadblocks to navigate when it comes to going global, for example:

  • Logistics

- ​International warehouses, inventory distribution, order management...how can businesses even begin to establish a global supply chain?

  • Deliveries & Returns

- How will orders be delivered on time in international territories, (and even more mind-boggling - how will you manage returns coming from overseas?!)

  • Customer Experience

- Retailers who break into overseas markets often suffer from low conversion rates when there are gaps in delivering a personalised experience to customers.

  • Payment Methods

- Different countries have different preferred payment methods. How do you know what’s going to be the best fit for each region?

  • Legalities​

- Dealing with tax and VAT rates can be a struggle when you’re dealing with one market, let alone several! If you don’t get it right, you risk everything!

  • Localisation

- How is your website going to manage various languages, currencies, and dynamic content - does it have the capability to localise?

  • Promotions​

- There’s no ‘one-size fits all’ method when it comes to promotions in various territories. Do you have the resources to manage bespoke campaigns?

And while it’s vital to consider all of these moving parts, the single most important thing for any business that wants to break into new markets to do is to develop a clear strategy for expansion.

Throwing globe

Developing a Global Strategy

Going global isn’t something that you can dive head-first into and expect winning results, so before you do ANYTHING else - make sure that you have the resources, the time, the technology, and the budget to move forward! Without a well thought-out, clear strategy, you’re not going to travel far on the global landscape (*correction - you’re going to be eaten alive).

Spend time researching the markets that you’re interested in breaking into - gather industry and consumer data, pull together competitor analyses, familiarise yourself with the legalities associated with trading in each new market or territory.

Then, build a business plan specifically outlining your roadmap to growth in new regions. This should be built on the 5 key pillars of strategic planning.

The ‘WHERE’

Firstly, you need to determine what territories you want to explore. It’s certainly worth compiling a wishlist of all the countries you’d like to expand into based on the research you conduct relating to market share, as well as product availability. However, chances are that you also have an ocean of data at your fingertips that can act as your digital commerce compass for global growth.

- Look at your existing web traffic. Where are your online store visitors coming from? You may notice that there’s an existing audience on your online store in a country that you’re not currently shipping to.

- Use Google Trends/Answer the Public. Do some digging around the search volume for your specific product offering, broken down by country. This will give you a really good indication of where there is a demand for the products you sell.

Then, taking into consideration the markets that you’ve identified as most promising, you’ll need to decide how you want to approach them - i.e. do you want to start small and expand into one at a time, or do you want to go hell for leather and open up your online store to multiple markets while you’re at it? The answer to this will largely depend on the technology you’re using, as well as the resources available to you, but nevertheless it’s worth ranking markets in order of priority to your business. 

Map

The ‘WHEN’

Next step is to decide upon the timelines that you want to aim for in terms of launching into each new market. Here you’ll have to take into account how long the project will take from a technology perspective, but another factor that could influence when you should start selling into a new territory is peak shopping seasons.

Maybe you want to make sure that your products are available in specific markets when their peak season is about to hit, or perhaps you’d prefer to launch your online store into a new territory during a quieter shopping period, giving yourself time to build up some brand awareness and grow your audience before the busy sales season strikes.

The ‘WHO’

​Global expansion will require significant resources across multiple departments of your business, both internally and externally. Breaking into a new market(s) needs to be treated as a project, so it’s crucial to identify who the key stakeholders are going to be to get that project over the line. Typically, you’d be looking at your eCommerce managers, IT team, marketing team, and customer service team.

It’s vital to 1) make sure that all of these stakeholders buy into the project at hand and 2) that they have the bandwidth to deliver on the timelines that you’ve mapped out.

Team

The ‘HOW’

Now you need to figure out how you’re going to get yourself on the map! Create a go-to-market plan, outlining:

  • A full SWOT analysis
  • Sales and marketing channels to utilise (e.g. online marketplaces, social media, online stores, etc.)
  • Marketing channels
  • Customer service processes
  • Resources required (technology, people, time)
  • Budget required
  • Potential challenges (e.g. time, funding, technology, and organisational constraints)

You’ll also need to really take a close look at your product costings and margins, taking into account international shipping expenses, VAT and customs rates to accurately forecast revenue streams.

​The ‘WHAT’

Finally, you need to lay out your overall business goals - what return you expect from cross-border training in 3 months/6 months/1 year, etc. It’s the only way that you will be able to look at your efforts over time and be able to determine what has worked and what hasn’t. Nothing measured is nothing gained, so make sure you set clear business goals from the outset - those goals will undoubtedly change over time, but will ultimately be your barometer for global growth.

Forrester predicts that cross-border shopping will make up 20 percent of eCommerce by 2022. This opportunity is fuelling more and more brands to expand their offering into new markets, because, why not, right?! However, what’s undoubtedly going to set you apart from the pack is having a well thought-out strategy for global expansion - because without one, you’re essentially sticking your finger in the air and hoping that the direction the wind blows will somehow steer you in the direction of global success.

Michelle McSweeney, Content Marketing Manager - Kooomo

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