eCommerce: The Dos and Don’ts of Global Expansion

Ecommerce is a rather attractive business model. Its business model is scalable, and there is an ever-increasing eCommerce presence in our daily lives.

If selling your product in your home market has been met with success, the temptation to branch out and offer your product to shoppers elsewhere around the world is natural.

As a seller, you’re not simply expanding your “territory.”

Each market presents a new set of challenges. It isn’t as simple as merely extending your current business configuration.

These are common mistakes that often get overlooked when it comes to global eCommerce expansion.

Not Researching the New Market

Savvy sellers would never begin selling on a foreign market without doing some solid research. Proper research helps you identify barriers and determine if the timeliness of new market expansion will be beneficial.

Focus on:

1. Consumer Behavior & Trends 

Ensure your product is in demand in the new market.

If there isn’t a lot of competition in the market you’re expanding to, there may be a reason. Lack of competition could be a sign that there’s not much in terms of demand.

Another important aspect is purchasing power. Even if you are certain that the lifestyle that goes with your product is present in a new market, your product could be too high end. This could limit sales.

2. Marketing efforts in a new market may include social media, Google AdWords, paid posts by influencers, and platform advertising systems like Amazon Sponsored Products. 

Advertising that works in your current market may not perform as well in a new market. Different countries have different social networking and internet habits and social networks unique to their country.

3. Legal Circumstances

To begin online selling in a new market without understanding potential legal barriers is unwise. Local taxes almost always come into play.

However, simply understanding VAT and GST is only the beginning. Law is not limited to tax law. Are there special regulations for the product you sell? Overlooking these laws is a huge mistake.

Offering Too Many Products

Say you have a mature catalog of 100 products. You didn’t begin with 100. What is your star product, the one that carried sales volume or whose popularity created exposure that led it to successfully “trickle-down”?

Your “star” product gained your additional products their exposure, resulting in more sales. This made portfolio expansion easier and helped identify additional star products.

Shoppers in a new market may be drawn to these star products. Additional products will only be taking up space.

Consider the 80/20 rule: Eighty percent of business revenue likely comes from only twenty percent of products offered.

Advice from a veteran

Test out your star products. Gradually introduce additional products based on the data and the experience you collect from selling in the new market.

Customers’ seal of approval goes a long way. When you are entering a new market, introduce products with the best pedigree first.

Too Much Inventory

Star products in one market don’t ensure success in a new market, though.

You are testing expansion with a certain amount of inventory. Beginning with your best-selling product allows you to assess future inventory on a more substantial level.

Start with a smaller batch of items in your new market. If they sell, you have proof of concept. You may lose some volume in sales, but you know your product sells. Going out of stock isn’t worrisome in this scenario. You likely have inventory being produced for your primary market, making it easier to reroute and replenish within the new market.

Not Consulting a Tax or Legal Expert

You already know that the legal aspects of global expansion are not a trifling matter. Doing initial research is crucial in determining if the expansion to a particular market is a worthwhile investment.

The next step should be to hire an expert. Hiring an expert who understands local laws in the market you’re interested in expanding to will give you:

  • Peace of Mind: Hiring a consultant alleviates any potential fear of making mistakes that lead to your store being shut down. An expert’s guidance can help you navigate legal issues while allowing you to focus on selling more products.
  • The Upper Hand: A capable consultant is a valuable asset. He/she can help you overcome hurdles you may never anticipate.

For example, filing for Canadian GST along with individual provincial taxes can be a hassle if you don’t know where to begin. Understanding timelines for filing taxes can be stressful. A competent accountant can significantly facilitate this process.

Furthermore, a consultant will know about special tax breaks and benefits specific to your type of product.

Neglecting Custom-tailored SEO and Listing Optimization

SEO and listing optimization makes or breaks an eCommerce business. Thinking “what works in my current market will likely work in a new market” is a knee-jerk reaction. However, expansion into new markets involves a new consumer base with unique demands.

For example, simply translating a listing in a market with a new foreign language will not do the trick. This thinking is lazy, as you know keywords play a vital role in both SEO and advertising. Constructing keyword and SEO research from the ground up for listings, product pages, and storefronts is essential.

Losing Profit to Conversion Fees

A lot of sellers consider this aspect once it’s too late.

Your customers pay for your products in their currency. To use your earnings, you will need to convert to your national currency. However, in a new market, you also have to pay taxes to that country’s government. Now, your earnings need to be converted from your national currency to the market country’s currency.

Furthermore, these types of conversions don’t operate on your terms.

The currency conversion fee for Amazon sellers is notoriously astronomical. You can lose upwards of 5% profit simply converting and moving money around.

Most sellers think this is their only option. Alternative solutions exist that help you keep more of your profits.

Consider PingPong.

PingPong allows you to convert your earnings at the lowest rate available and can reduce the number of conversions you make. A PingPong global currency account enables sellers to receive and convert earnings to their national currency at the lowest rates.

Simultaneously, earnings can remain in a foreign market’s currency. VAT payments can be made while double conversions are avoided.

It’s common for sellers to discover substantial savings in avoiding conversion costs too late. If you’re one of them, it’s best not to think about it. Now that you know, focus on how much money you are going to save in the future with solutions like those offered by PingPong.

Be mindful of the potential mistakes you could make when expanding your eCommerce business globally. There is no one size fits all expansion plan. The key to success is adaptability.

Taking risks is an integral part of being an entrepreneur; however, being a successful entrepreneur also means taking well-constructed and calculated risks.

The primary takeaway here?

Do your research, plan, and don’t be afraid to try new things.

Find out why over 30% of the top 1,000 Internet Retailers choose Feedonomics.

Milos is an expert Amazon seller and consultant. He writes about all things Amazon for PingPong. When he’s not knee deep in Amazon, you might run across him on a hiking trail in his native Serbia or exploring Renaissance landmarks in Italy.