International Selling – Part 1 : Selling internationally in ecommerce

Tuesday April 19, 2016 | Posted at 10:23 am | By Dan Hawkins
April 19, 2016 @ 10:23 am

Selling internationally adds a different dimension to your domestic efforts, one that is potentially fraught with problems but also the key to long-term prosperity with the right management, experience and supporting systems.

An important concept in retail is customer lifetime value, often shortened to CLTV or LTV. When a customer first buys something from you, there is a possibility that they will become a repeat buyer, especially if you make it worth their while. Over time, and with volume, it’s possible to work out what a typical customer will spend with you over the lifetime of their relationship with you. As you might imagine, companies spending a lot of time and money calculating the lifetime value of a customer. They can balance the LTV of a typical customer against the cost of acquiring that customer in the first place and make some long-term bets on their growth and profitability.


What are the options

When it comes to growing your business, there are a number of options at your disposal. You can sell more to your existing customers, increasing the number of products on offer and coming up with engaging promotions and bundled offers to increase basket size. This involves developing remarketing programs which are carefully tailored to what your customers have bought before or have an interest in. If you repeatedly sending them offers they’re not interested in, you run the risk of turning them off and losing future business.

Alternatively, you can find and win new customers. Every brand new customer brings with them a potential LTV. You can find new customers domestically by increasing the number of places, sometimes also called channels or marketplaces, where your products can be seen and bought. ecommerce systems like Volo allow you to list the same stock across multiple channels and update stock levels across those channels as products are sold.

It might be, however, that the domestic market for what you sell is very competitive – saturated even. In this kind of environment it’s tough to find new customers. That being the case, you need to look to selling internationally new regions and new countries – where markets might be less developed, less competitive and less price sensitive.


How to master the ‘long tail’

Online retailers looking into selling internationally have a large advantage over their bricks and mortar counterparts, and that advantage is something called the ‘long tail’. When you look at a distribution curve for products with volume on the vertical axis and product range on the horizontal axis, you get a small number of products selling in high volumes, which is the ‘head’ of the curve. This tails off rapidly into the vast majority of products which sell in decreasing volumes, but this tail is very long indeed, as there is an almost limitless number of products that might only sell a handful of units.

Physical stores can only stock the really popular items; they don’t have room for the items that hardly sell. Online merchants, however, no matter how specialist their niche, can be found by and serve the global audience of customers for their long tail products, thanks to the wondrous communications mechanism that is the Internet. All you have to do is get the product to your buyers, so the smaller and the lighter, the easier. And if you’re lucky enough to sell products that can be delivered electronically, then the cost to you for producing, acquiring and delivering the product internationally is negligible.

That sounds great; the world awaits, credit card at the ready. But, of course, each new country you consider has numerous significant barriers to entry, each requiring knowledge and experience to negotiate. There are currency and exchange rate considerations, insurance matters, and legal & regulatory hurdles. There are language barriers, cultural concerns, shipping arrangements and returns policies to fathom. There is the customer service aspect to ponder. Then you need a plan of attack, which markets, which channels, what level of risk, what level of return, what time frame, which partners. All in all, selling internationally looks slightly more daunting now.

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