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Global Expansion: Get Your Business Ready for Transformation

Global Expansion: Get Your Business Ready for Transformation

Global expansion is a strategy for growing and accelerating a business. The decision of whether to expand online operations internationally should be a clear choice for many organizations. However, planning and launching an international expansion requires significant resource commitment, as well as long-term capital investment. Global eCommerce expansion strategies typically involve most operational areas of an eCommerce business, including marketing, fulfillment, shipping, finance, legal, and customer service.   

When thinking about new technology, processes, training, and challenges, it is easy to be unsure about where to begin.  

Begin by focusing on: 

  • Pursuing and ensuring organizational alignment   
  • Addressing essential functional areas  
  • Outlining global eCommerce expansion strategies  
  • Exploring how it impacts the organization 

Accelerating growth through global expansion 

Retailers and brands are always looking for new and innovative ways to grow their businesses. As retailers and brands realize they should take advantage of global expansion, many quickly recognize the need for help in building their business case. This includes assessing what they have, what they need, and the gaps they want to fill. Their global readiness often varies from department to department within the organization.

Retailers and brands are always looking for new and innovative ways to grow their businesses.

It Starts with Organizational Alignment 

  • Global eCommerce, for many, is perceived as an extension of domestic online sales. In organizations with established domestic eCommerce operations, the executive team often assigns global responsibility to the eCommerce team. While this may appear like a practical choice, it is critical to get executive buy-in. The overall strategic initiative needs to be driven from the top, from someone who oversees all departments. Whether this global champion is the CEO, COO, or another executive leader, this role needs to be fully educated and invested in the fact that global market entry is a company-wide project.  
  • Securing company-wide involvement: Global eCommerce involves careful consideration of several factors: which markets to enter, what to sell, how to handle fulfillment and shipping, website localization, and how to manage tax and regulatory issues. As such, it requires cooperation across the entire organization, as well as a solid understanding of the responsibilities of each department. 

Cross-functional audit of global eCommerce requirements and resources:  Assembling a cross-functional project team that assesses internal resources and operational requirements to help evaluate the various options for going global is recommended. The internal audit should be designed to evaluate the following areas: 

Internal IT/development capabilities: Evaluate existing eCommerce and backend systems to determine if they support international expansion. This should involve an assessment of whether the eCommerce platform includes capabilities for multiple sites, geo-location, etc. 

Logistics: Evaluate current supply chain and logistics expertise and resources to determine if the organization has the necessary internal capacity for global eCommerce logistics, or if it is essential to outsource parts or all of the logistics to a provider. 

Marketing: Assess current marketing resources to determine if there is the internal capacity to understand global markets and create initiatives that target local markets. Initiatives should include messaging that is compelling in different countries and using the most effective marketing channels in each market. 

Understanding Global Challenges 

The most significant challenges faced by retailers and brands in international eCommerce are technical and logistical. These include calculating taxes and tariffs in real-time and presenting these fees accurately to the customer, geo-targeting and translating messaging into multiple languages, and securing attractive pricing and managing time in transit.

A solid understanding of the following global eCommerce complexities and areas that need to be addressed determines the optimal strategy: 

  • Site experience: Depending on the global market entry approach, the eCommerce site may need to be customized to target markets, adjusting localized content, design, language, and currency. Therefore, it is critical to evaluate if the current eCommerce platform provides these capabilities.  
  • Marketing and promotions: Building brand awareness and demand in new international markets requires substantial marketing resources and careful planning that takes cultural differences and preferred channels into consideration every step of the way.  
  • Merchandising: Organizations should consider localized product assortment tailored to the demographic and demand of specific international markets. Also, communications, store layout, discounts, and seasonal sales may differ depending on the market.  

Merchandising in the international market depends on: 

  • Demographic 
  • Demand 
  • Communications 
  • Store layout 
  • Discounts 
  • Seasonal sales 

Building brand awareness and demand in new international markets requires substantial marketing resources and careful planning.

  • Logistics: Organizations must address how to handle global fulfillment and returns. There are several options available, including shipping from the home country, outsourcing to a third-party provider, or running regional distribution centers. Organizations should consider the costs and risks involved with these different options to identify the optimal solution.  
  • Payment processing: In most countries, credit and debit cards are the primary method for online payments. However, payment processing comes with regulatory requirements and compliance issues that vary by state. Some countries may have their own local types of payment systems or expect to pay cash on delivery. In addition, the final purchase price should include all shipping fees, including customs and taxes, to ensure there are no surprises.  
  • Fraud management: Fraud management inevitably becomes more complicated when selling globally. Organizations must have a comprehensive fraud management solution in place to ensure that payments are not made by unauthorized or stolen credit cards.  
  • Customs duties and taxes: Tax laws are complex and get even more complicated when operating in international markets. Every country has individual tax laws and customs duties for online purchases. In some countries, the tax is added to the total price, while in others, it must be displayed separately. Post-purchase, taxes, and duties must be handled on the backend to flow back to the appropriate tax collection and customs authorities in each country.  
  • Legal regulations: Depending on the country, there may be government regulations and compliance that affect the global strategy. Organizations that plan to ship internationally from their home country need to be aware of restrictions on certain products that may be exported and imported. It is also essential to be mindful of any custom clearing rules, documentation requirements, and potential licensing issues. 

 

Assessing demand and evaluating market opportunities 

  • When evaluating global market opportunities, the best place to start is to gain a solid understanding of current needs. As mentioned earlier, a large amount of existing site traffic may already originate from global IP addresses. If there is a pattern of international traffic from a specific region, it is usually a good indication that there is a demand in a certain area. Based on this insight, it is possible to dive into a deeper analysis of whether those markets are strong candidates for global expansion. Evaluating potential markets does not stop with market size, Internet usage, or dollars spent online. There are various determinants that must be considered, such as product demand, cultural differences, ease of entry, infrastructure, and logistics. 
  • Factors to consider when evaluating potential global markets are:  
    • Product demand- Gain a complete understanding of current products sold and order within the market.  
    • Current site visitors- Analyze current site visitors and their locations. Knowing from which countries website traffic originates determines if there is an existing demand for the products you sell.  
    • International competition- Analyze international competition. Look at where existing competitors sell, as well as potential competitors in new markets. Weigh the strengths and weaknesses of competitors to determine if the market is already saturated, and if it is possible to compete there successfully.  

    Analysis of the international market. Check for: 

    • Market saturation 
    • Possibility for growth 
    • Where competitors sell 
    • Weigh strengths of other contenders 
    • Judge weaknesses of the market 

     

    • Regulatory constraints- Assess regulatory restrictions for individual countries, such as online sales restrictions on certain goods that could potentially make it difficult to sell products in that country or require too much legal consultation and paperwork.  
    • Tax issues- Research specific tax issues and rules including sales tax, VAT, tariffs, collections, and disclosure.  
    • Logistical challenges- Investigate logistical and infrastructure challenges, including which carriers already ship there, along with opportunities to outsource to a regional partner or fulfillment provider.  
    • Marketing- Understand additional effort needed to promote the brand, site, and products. Some brands are already known in foreign countries and have demand. However, new retailers or brands should invest significantly in marketing and promotion to build awareness and application.  

    Carefully evaluating potential markets with the above factors in mind helps in assessing demand and market opportunities and defining a roadmap for the best regions and markets to focus on.

Ready to go global! It involves… 

  • Crawl, walk, run strategy.  
  • Right planning 
  • organizational alignment 
  • Competitive partners 

Some organizations can handle the organizational implications and take on the investment needed to jump straight into a fully localized eCommerce approach. They can leverage a single carrier for cross-border shipping while trying to manage the various import and export rules, regulations, and requirements on their own.   

The right global eCommerce solution provider increases speed-to-market and provides a seamless shopping and fulfillment experience for customers in international markets. While the costs of leveraging an end-to-end solution may be higher in the long-term, it can minimize the initial upfront investment and reduce the risks by delivering the technology and services required to ensure a successful international launch.  

The decision of launching and managing global expansion should be based upon a thorough understanding of the risks and benefits of the different options available, as well as the internal resources available. With the right planning, organizational alignment, partners, and a crawl, walk, run strategy, international expansion becomes less overwhelming and opens the doors to significant growth. 

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