Thinking of expanding internationally but don’t know where to start? It can be overwhelming at first to envision all the details involved in cross-border e-commerce.  Brands that organize themselves from the start and plan ahead can have an easier time making decisions and avoiding operational headaches down the road. Here are four areas for brands to consider as they plan for new market entry.


1. Market Research and Due Diligence


First things first: do your homework on the country or region you are considering and assess your readiness to enter that market. For example, it’s important to understand if there is a market and consumer demand for your product in that region or locale.  Conduct research on trends of cross-border shopping to uncover your target audience’s willingness to shop cross border. Also, certain product categories may be more popular in different markets, so it’s worth researching shopping behaviors and consumer behaviors to figure out if there are potential customers for your product (several stats in the top 11 markets are available in our Global Research Report). Researching the competition in the local market can help you craft a competitive pricing strategy.  Alongside market research, businesses should also analyze their existing international traffic to their website as well as international sales from different markets.  If conversion rates are low but traffic from a particular market is high, this could make the case for exploring business expansion into that market.


2. A Dedicated Budget


Create a dedicated budget for each new market. This will keep you organized so you can decide which countries to enter and manage operations efficiently once you do. The first budget item to keep in mind is customer acquisition cost, which can vary greatly between markets. In countries where social media penetration is high, for example, businesses sometimes find that they can lower their acquisition costs by building an organic social following. When assessing paid channels, it is important to examine how these costs may vary.  Keywords on Google can cost several cents less per click in certain markets, and when operating at scale this can make a significant difference in your budget for that market.  

Another aspect to consider is the landed cost of the merchandise being sold into each market. As a refresher, the landed cost of a product is the price once it’s been delivered to the end shopper, which includes duties, taxes, customs, packaging, insurance, currency conversion, transport, crating, handling as well as the price of the product itself. If the retailer wants to provide free shipping for customers in foreign markets then that will need to be taken into account in the budget. Similarly, if a brand wants to subsidize duties for the customer, this must also be factored into the budgeting exercise. Brands must examine how they want to handle the different aspects contributing to total landed costs in order to make the unit economics work for each market they enter. 


3. A Localized Shopping Experience


Online shopping should be effortless for international customers and it should feel similar to the experience they have when shopping on websites of domestic brands. In order to feel local, brands need to localize the full e-commerce buyer journey including site content, product catalog, currency display, price rounding, taxes and duties, payment options, and delivery methods. 

When expanding into new markets, retailers must always consider their product offerings for that market. For example, merchandise offered in Brazil in January should be different from the catalog offered in the United States during the same month because the seasons are opposite in the two hemispheres. Similarly, excluding products from your catalog in certain countries is equally important, as some countries may have restrictions on products that can be sold there.  Planning your merchandise assortment for your target markets means taking into consideration these exclusions as well.

Displaying product prices in the local currency is important for shoppers so that they understand how much they’re paying without having to calculate with exchange rates. Rounding the prices can also differ from country to country. For example, consumers in some markets may prefer to see prices that end in .99 while others might be more accustomed to .95 or even whole numbers. Conducting research on local competitor sites can help shed light on customer expectations in that market, but retailers should also A/B test these variables to see if one format helps boost conversion rates over another. Similarly, offering local payment methods at checkout is another important factor to help increase conversion. Consumers in different markets use different payment methods and retailers would do well to research the norms in each market and then A/B test once they launch in that market.  

Duties and taxes are another area to plan for.  Some retailers may prefer to include all duties and taxes in the product price, while others might prefer to list these out at checkout. Either way, online brands should make sure they are prepared to communicate these fees and costs upfront to the customer so that the end user isn’t surprised with extra charges later. 

Shipping speed and cost are important to cross-border shoppers.  In fact, according to our Global Research Report, 54% of cross-border shoppers in 11 top markets agreed that the high cost of shipping is the greatest barrier keeping them from buying a product from a foreign retailer. Meanwhile, 50% of respondents agreed that slow delivery times are also a barrier to shopping cross border. When planning new market entry online brands must consider how they can meet consumer expectations when it comes to shipping. Additionally, brands must provide specific and accurate delivery windows so that their customers know when their products will arrive. 


4.  The Right Team of Vendors


Leveraging a cross-border solution, like Flow, can help manage and operationalize all the pieces involved in localizing a brand’s website for new market entry. Online brands must carefully evaluate a vendor to understand how they handle localization, user experience, price management and display, landed costs, local payments, shipping, and returns. While selling into  a new market might appear to have numerous complexities, a comprehensive solution that addresses all these areas will make it easier. Contact us today to see how Flow can help your brand expand into new markets anywhere.