6 Considerations for International Expansion
Due to the UK’s impending departure from the EU in March 2019, many UK retailers are seeking to expand their markets into mainland Europe. Beyond these companies, though, there are a number of important considerations that brands need to have top-of-mind before expanding the borders of their business. This article seeks to highlight some of the key considerations.
Opportunity
The three most challenging questions surrounding international expansion are “where, why, and when.”
Quite often, these key business decisions are made emotionally. A board member will have a hunch to launch in a new territory. There may be a wider business plan to showcase broader growth potential to investors.
Whatever the case, data needs to replace emotion as a driver of these decisions. Analytics will add much-needed insight. Outside your home market, where is web traffic coming from? Session geo-location won’t guarantee success, but it can inform an otherwise purely speculative decision. A detailed analysis of existing visitor traffic and behavior should really be the first port of call for any digital expansion plan.
Using other sources such as existing partnerships, marketplaces and similar retailers already in market can again provide additional valuable insight. In summary, expansion opportunities shouldn’t be measured by your “gut,” but with data, research, and ideally as much in-depth analysis as time and money will reasonably allow.
Localization
To translate or not to translate: that is the question.
All too often, this is seen as the only discussion when entering a new region. In all honesty, localization is so much more than just reaching for Google Translate or a vendor.
Depending on the scale of your international expansion, a translated site may not even be required for success. It can range from being a retail requirement – in particular, some affiliates won’t accept you in their territory if you don’t have a translated site – to something far more nuanced.
Your brand identity is more than language: it’s a concept. Even if you use the right words, does your brand identity translate? Do local markets resonate with your principals? Even a perfectly translated site won’t engage a market if there is no connection with your brand identity.
Furthermore, translations aren’t just a one-and-done tactic. As your site grows, it needs to be managed. Campaigns and other marketing assets will need to be translated. There is so much more to consider than the original translation: this language is a reflection of your brand and tone of voice.
Beyond on-site language translation, you need to consider many other areas: product ranges, pricing and taxation, payment methods, logistics and carriers, customer services, ease of returns, social media and wider digital marketing that makes sense for the new locale.
Marketing
Digital marketing is intrinsic to the success of an international launch. To simply rely on a site, even a well-localized one, without a focused digital strategy is a recipe for disaster. Never assume that, simply by providing a transactional website, organic traffic will magically deliver sales.
At a minimum, consider each digital channel that your current engages upon, and review how that will be best mirrored for the territory you are entering. On-site SEO is critical for any international site build, but PPC, affiliate, eCRM, display, social, and offline channels all need to have reflective strategies and budgets.
Logistics
There’s no point in selling abroad if you can’t get products to customers quickly and efficiently. Understanding local expectations and ensuring they are met is table stakes. It may seem simplest, for example, to ship from your home region to abroad, but this may fly in the face of consumer expectations. For example, UK shoppers expect next-day delivery for free. Can your business deliver this level of service?
On the flipside, ease-of-return is another crucial factor when considering expansion. Returns need to be simple and clearly inform customers when they can expect their new merchandise. Again, if your systems can’t enable solutions that meet regional expectations, it may not be wise to expand into that region until they can.
A localized logistics strategy can significantly improve customer satisfaction and revenue. Local logistics partners can play a huge role here and need to be vetted well before expansion.
Teams
International expansion is most successful when it is adequately and correctly resourced. Teams should not need to exponentially grow to accommodate international markets. In growth markets, this would severely harm EBITDA.
Expanding into new markets puts will put a lot on these teams’ plates. Translations and localization of content, management of local digital strategy including emails and affiliates, and, very importantly customer services will all require additional effort to get online and optimized.
This will force in-house teams to work a little harder and may require the introduction of local agencies. But to truly succeed, a savvy, local, internal team is the best way forward.
Technology
Technology should not be a limiting factor in international expansion, but expansion is a great opportunity to review the capabilities of your eCommerce architecture and whether it can support an international business.
It is not uncommon to get several months into an international launch only to find a key element, such as a back-office finance system, cannot handle new international variables such as currencies or tax logic. This means your review needs to be truly end-to-end.
It is also important to consider more foundational architecture such as hosting infrastructure, CDN requirements, URL structure, third-party integrations, and more. Any or all of these can cause issues during an international expansion, especially if that expansion is successful and business begins to scale.
The key factor here is to be prepared to support growth and to be ready with a technical plan that can quickly ramp up to support success.
Legal and Financial
The smallest print can have the biggest impacts when doing business abroad. Local tax law, local distance selling regulations, data protection and privacy laws will all require rigorous legal counsel.
For example, most EU countries will allow you to sell up to €35,000 before requiring VAT registration, with the UK allowing up to £70,000. You should always consult qualified legal or financial advisors to ensure you do incur unnecessary costs or fines.
Another key Euro-centric area of discussion is the EU General Data Protection Regulation (GDPR), which comes into action in May 2018. It aims to harmonize data privacy laws across Europe and allow citizens more say over how their data is managed and stored. A good resource to learn a little more about GDPR can be found here https://www.eugdpr.org/gdpr-faqs.html.
Summary
There are many aspects to consider when planning an international expansion. Success is born from detailed planning and smart engagement with trusted partners. When data drives the decision making, and your plans remain customer-centric, expansion is often a successful venture.
