If you’ve ever spent time with a financial advisor, chances are, you’re familiar with the saying “diversify your funds.” Smart investors know that to maximize returns, you must invest in different areas that would each react differently to the same event. Although no single tactic can guarantee against loss, diversification is an important component of reaching long-range financial goals while minimizing risk. The same is true for your business. Over-reliance on any one group of customers, whether you’re focusing on a certain demographic or geographic market, can leave your e-commerce business vulnerable.
Your online store’s revenue is more likely to fluctuate when you only sell to your domestic market. There are a number of reasons for this. Consumers’ tastes can change quickly; the brands and styles that are hot one season can be forgotten the next. An unexpected market disruption caused by external events is yet another reason. If there is one thing this global health crisis has demonstrated, it’s that change can happen any time and instantly. A sudden downturn in your customers’ fortunes, caused by economic upheaval, can impact demand for your goods, your pricing, margins, and bottom line.
As e-commerce continues to dominate, domestic retailers should consider the viability of expanding their roster of customers. They can do this by reaching into new international market segments, which in turn, increases revenue and ensures continuity should one market experience sudden interruption. By covering a larger geographic footprint, e-commerce merchants can stabilize revenue streams that have been upended by the public health crisis.
There are several key steps to take when considering the global expansion of your online store:
- Analyze your market. Assess your new audience’s needs, as well as the size and potential of the market. What categories are in high demand there? How do consumers in that country prefer to pay for things online? How much heavy lifting will be required to meet their needs? Understanding your target market’s shopping behaviors is a step you can’t skip. Keep in mind that there are several paths you can take to going global; your path will depend on what you sell and how international shoppers are already responding to your offerings.
- Consider your marketing strategy. Building brand awareness and trust will be crucial for entering a new market. Can your current marketing and consumer outreach be repurposed for the new sector? Or, will you need a new approach? Do you know which marketing channels show the best results in your target market? Does your brand’s current look and feel translate well into other cultures? Will your current social media strategies work in different countries? Many domestic retailers start their international business journeys by entering English-speaking markets first, such as Canada, the U.K., and Australia.
- Choose your priorities. What do you have in your inventory of products right now that could offer global appeal? Look at product categories that are rising in popularity due to current global events. For example, leisurewear and home goods are having a moment due to consumers spending more time at home. When you’re just starting out, it’s best to leverage your existing assets in terms of relevant experience and resources. This reduces cost and helps you explore new opportunities quickly.
- Get local. The best way to build trust and gain acceptance with global consumers who are unfamiliar with your brand is to meet them where they are. That means offering your goods via a localized website that reflects their preferences — language, currency, transparent pricing, product descriptions, clearly displayed taxes and duties, and clear policies for shipping and returns. If your brand’s domestic e-commerce website has experienced a surge in international traffic but that traffic is not converting into sales, localization will help by removing some of the most common barriers that global consumers face.
- Prepare your logistics strategy. Order fulfillment, shipping, and timely delivery in global markets are much more complex than domestic logistics. Smooth market entry requires a strong logistics strategy that will set your brand apart from competitors. A winning cross-border logistics strategy gives shoppers multiple shipping options and balances cost-effective methods with ones prioritizing delivery speed. This level of flexibility will require some decisions on the logistics model that best suits your business — for example, ask yourself whether you should take a cross-docking approach, or adopt a more direct, hubless shipping model? Supply chains and logistics can have a powerful impact on your brand’s reputation. There is little room for a misstep with cross-border e-commerce shoppers. One disappointing experience is all it takes for them to abandon your site and shop with a competitor.
Above all, your cross-border e-commerce strategy should give your brand the ability to retain end-to-end control over your products, pricing, taxes and duties, customs entry, logistics, and the complete customer experience. To truly establish your brand on the global stage, you’ll need to implement systems and processes that are scalable and address consumers’ pain points during cross-border buying. Especially now, it’s important for all e-commerce retailers to have a contingency plan, be open to changes in processes that will ultimately improve business outcomes, and increase conversion. Flow offers the flexibility and scalability that empowers e-commerce merchants to enter new markets seamlessly.
To determine your brand’s level of preparedness for going global, download our free International E-commerce Kit.