Global expansion can be intimidating and overwhelming with the amount of time and money needed to invest and expand into new markets. We know you have a lot to consider, so to help we’ve put together a checklist of challenges you’re likely to face with international expansion. We have also asked our partners with international expertise to offer tips and advice on global success…
If a product sells well in your domestic market, there are no guarantees that this success will be replicated abroad. Before expanding internationally, it’s important to consider what will and won’t work. Some of this just requires forward-thinking – for example, electronic goods is a particularly tricky category to navigate because different regions require different plugs and voltages. Product selection requires a bit of common sense and local knowledge, as you need to consider cultural differences and tastes to deduce what products will excel and what won’t. Channels work differently across the various countries, so this is also something to consider. In the UK, eBay and Amazon are clear leaders in the ecommerce world, however it’s not as clear cut in mainland Europe. This makes it harder to crack into if your company’s experience lies solely with eBay and Amazon.
Perhaps one of the biggest things sellers overlook when expanding internationally is in their product listings. First you will need to decide whether you’ll be listing in English or the native language of the country you are selling in. If you’ve settled on the latter, you will no doubt need translation services. Nothing will turn potential customers away quicker than listings that don’t make sense – don’t fall into the trap of thinking that a quick Google translate will solve all your problems. Translation will also be required for any instructions that might accompany your products.
We spoke to Scott Galvao, Managing Director at Intercultural Elements, who shared his advice for sellers looking to go global. For sellers looking to cut corners and costs, Google Translate is the first port of call. However, Galvao warns against this: “If you wouldn’t trust a machine to create your ads in English, you probably shouldn’t do that in a foreign market.” The majority of sellers branching out abroad haven’t bought translation services before, so are likely to make common errors. Galvao advises opting for translation services with ecommerce expertise: “Let's say that someone has 50 varieties of a shoe, five colours and 10 sizes with the exact same description. If a company charges per word, there’s no reason for you to pay for that same description repeatedly.” Furthermore, some translators might not be aware of the copy specification platforms like eBay have. Galvao’s advice? “When you go for translations, definitely go for a company that really marries translation with ecommerce expertise.”
Other partners like WebInterpret can help you overcome these language barriers. It promises to ‘Localise and market your online store globally’ using translation technology that is of human quality. They deal with two of the key issues sellers are faced with when looking abroad: translating listings correctly, and then successfully promoting them on local search engines and marketplaces.
The language barrier doesn’t just stop at product listings, but also needs to be taken into account with customer service. Trying to manage foreign customer service issues in English will cause a whole range of problems, and is likely to lead to increased returns. If you are to be successful, you’ll need to manage customer service in the native language of the countries you are trading in. This is where partners like Intercultural Elements can help. Galvao highlights just how important customer service is abroad. He points out the differences in culture that make customer service even trickier for UK sellers, as feedback is very different in Asia than it is in Europe. Take the example of Japan, where there are three levels of politeness forms – non-native speakers are unlikely to select the correct level, and Galvao describes how the Japanese are “pretty quick to respond with negative feedback.” So you can see that it’s important for the seller to have native-speaking customer service in order to deal with all the cultural issues and language barriers (and even simple issues like the time difference) to provide customers with the best service possible.
Fulfilment is another area you will need to consider before taking your company international. There are so many logistical hurdles to overcome – you will need to nail down what country you will be sending parcels from and where your stock will be held. Luckily, there are a few outfits that can help with these issues. Amazon FBA can manage your fulfilment in a number of countries, and Pro.FS does a similar job of managing your end to end supply chain globally. Pitney Bowes also enables the sending of packages worldwide, however it only manages the dispatch part of the process and not picking and packing.
Customers want hassle free returns, and you’ll have to work that bit harder to deliver this on an international scale. You’ll encounter issues like expensive costs, and you may need to look at enlisting the help of a local service if you are serious about selling internationally. This service will help you deal with returned or faulty goods locally, something you are hardly equipped to do from another country. Amazon FBA is a particularly handy service to help with international returns.
Tax and compliance is a key issue that shouldn’t be overlooked when deciding whether to take your business global. Our partner Meridian offers some advice on what you need to consider before taking the plunge. Chris O’Shea, Channel Manager at Meridian, described the key pitfalls that many sellers fall into: “Often companies overlook tax, thinking that it’s the same as the UK. This is actually not the case – things change, and there are different rules and regulations across the European Union. Sellers who are moving on from their local market have to be conscious of this whole new field.”
O’Shea warns against the danger of sellers rushing into new markets without considering compliance. For example, in Germany if you sell above €100,000 worth of products in one year, you have to register with the German tax authorities and not with HMRC as UK sellers are used to doing. For other countries it differs, so it is critical you keep an eye on tax and regulations. O’Shea’s advice to sellers? “Take stock and understand what the tax implications are – instead of rushing ahead – selling and then having to unpick the problems down the line, be upfront and know when you need to charge the right VAT in the right country, and know when you need to register for VAT in that country. Then you can do it.” Although O’Shea warns: “VAT is rarely on top of anyone’s agenda but ignore it at your peril. “
Another thing to put on your checklist are intrastat declarations and invoices. Every VAT-registered business trading in the EU needs to declare certain information – so familiarise yourself with what information you are required to submit, and when to do so. On top of this, businesses need to ensure that invoices comply with the specific local regulations of the country you are trading in. Once you’ve got familiar with the process it won’t seem as daunting.
The final checkpoint on the list of things to consider when expanding internationally is the thorny issue of currency. Luke Trayfoot, Partnerships Account Manager at World First, accepts that too many sellers see foreign currencies as a: “Horrible dark art that no one wants to deal with, but actually you’ve got to tackle it front on.” Many platforms such as Amazon and eBay make it easy to ignore foreign currencies as they present everything in sterling, which means that many sellers don’t realise how they are being hit by foreign exchange. Trayfoot advises: “The first thing for sellers to look at are what the overheads are, and how that is going to affect you if the market changes.” Sellers should keep a keen eye on the relative strength of the pound sterling and euro as it will affect their sales. Trayfoot says: “There’s typically two sides sellers have to consider when going international: that is the value of bringing their money home (which can change very quickly), and also the value of currency when having to buy goods abroad to then sell online.”
When expanding globally, it is highly likely that sellers will have to consider opening local bank accounts. This is riddled with difficulties such as high costs, mountains of paperwork, and poor customer service. Partners like World First can help you set up international bank accounts to save you money and give you the flexibility you need as an international seller to manage your money. So perhaps the key takeaway when thinking about foreign currency is being more mindful when it comes to fluctuations, and understanding how it will affect you. Trayfoot’s key advice is: “Understand that when markets change it will affect your business in terms of pricing and profit margins.”
Jenny Shao, E-tailer Partnerships Manager at Currencies Direct, agrees with Trayfoot’s points and comments: “One of the most common oversights that sellers make when they start trading overseas is to ignore the cost of currency conversion.” Her three tips for sellers are: