Online Expansion Plans? Do Your Market Research!

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Do you retail or export internationally? If you wish to take your company to new markets, you should take a moment to find out whether these markets will not only boost your sales but create a long-term profit as well. Do market research!

More and more businesses are looking for new consumers beyond the borders of their country. In her article ‘How to Get Serious About International Trade‘ (Internet Retailer January 2013), Chloe Rigby highlights the pitfalls for retailers that are planning to take their products abroad.

Many retailers have been inspired to tap into new markets by the success stories of the likes of UK companies such as ASOS or cycling website Wiggle that have both acquired firm international positions. However, eCommerce founder Michael Ross argues that companies must think about why they want to expand before diving into an online foreign market.

A head-over-heels approach can be very tempting, but if a new market isn’t studied properly, profits can dwindle quickly because of logistics difficulties or high fraud rates. ‘I think you want to be less surprised, and the more research you do, typically the less surprised you’ll be,’ Niraj Shah, chief executive of US homewares website Wayfair says.

Companies should thus do their homework before taking their business abroad, use our e-Commerce translation service to give you a helping hand.

According to Rigby, this also means they should ask themselves and others specific questions, for example ‘Do the customers in the country in question want to buy these products and can the afford the products in sufficient numbers to make the investment worthwhile?

Wayfair, mentioned earlier, has done just this and has built a successful international business. Next to the US, the business is selling in four countries: Canada, the UK, Germany and Australia. Shah indicates retailers have to prioritise when it comes to choosing new markets: ‘there’s a few other things we’ve found matter a lot, to do with what customers expect from delivery and logistics,’ he says. Wayfair also looks at the available suppliers, as shipping products from the US is a costs a lot of time and money. Rigby says companies should also take local taxes, customs duties and legal issues into account when orienting themselves on new markets.

Market Research doesn’t stop when the perfect new market has been found; after the market has been chosen, it must be investigated to appreciate how it can best be entered. Rigby believes a great early step is opening up delivery to the targeted market. Later on, a country-specific website can be launched. However, there is a strategy that more or less falls in between these two options, and that is trading your products across a third-party marketplace.

In some countries, customers actually prefer to buy products via eBay or Amazon instead of turning to the supplier’s  official website. In addition, says  Andrew McClelland, managing director of IMRG, ‘A marketplace will have a lot of local connections and local partnerships that you can piggyback on the back of while you get used to and know who the mail competition and main supplier partners are.’ A number of brands have used the third-party market strategy to carefully test new waters to see if their products catch on. Whittingham adds that others use the marketplace to ‘test their own capabilities to support [the]  geography.’ Not a bad move then, to opt for this approach!

Online sellers should also consider opening bricks and mortar shops in the country they aim for. According to Tristan Rogers, chief executive at ConcretePlatform, an international branding company, says that success abroad will inevitably require local distribution centres and investments in physical buildings. Shops are great for cross-channel services such as returns and create brand awareness. Rogers: ‘[online sellers] will find that culturally their business is built around high street selling.’ By starting up franchises, companies can divide the risk they take by opening physical shops between themselves and other parties. McClelland agrees on the importance of launching stores on the high street: ‘If you’re a multichannel retailer you might test the water with a website but actually you might find that you get more brand impact by actually coinciding your website launch with a high street launch or an offline launch.’

online retail localization

As you probably know by now, localisation also pays a big part in the success of your business overseas – but Whittingham believes the amount of localisation needed differs per country. In France, for example, ‘a website has to appear as local as possible,’ while countries is Scandinavia are used to buying from foreign sellers and the need for localisation is thus smaller.

Localisation does not simply mean the translation of your company’s website into another language, but also offering the locally preferred payment method, for example. In addition, local customer service is also very important. Having to send return items overseas is costly and customers prefer to talk to your staff in their own language.

Rigby concludes her article by again stating that retailers should think before they act: expanding to foreign markets should make ‘business sense.’ This cannot be measured by turnover only: she cites Whittingham, who states that ‘the absolute measurement is profitability.’ In addition, every market should be judged on its own success. Ross: ‘You have to understand your delivery on promise, your customer repeat purchase rate, your basket abandonment rate. You have to measuring this by market to tell you if performances are what you want it to be.

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