Despite the current economic headwinds, global expansion is having its moment this year. It increased by 45% this year compared to pre-pandemic figures, Signifyd data shows.
International expansion has become a necessity for businesses. Global ecommerce presents ample opportunities for merchants to tap into new markets and increase their revenue. But before attempting international expansion, there are certain questions every business needs to ask to bulletproof their strategy.
In an interview for Signifyd’s commerce report, Signifyd head of global financial services and EMEA marketing Amal Ahmed sat down with Chris Holley, commerce tools global director for independent software vendor partnerships to discuss the very important things a business should consider before taking that step. Here are the main takeaways.
Why am I expanding and why now?
The time has never been better for businesses to embark on cross-border expansion. That double-digit global ecommerce growth is more than attractive to ecommerce leaders looking to bring their game to the next level. The earlier you make the move and take advantage of the fresh global ecommerce market, the more you will be able to establish yourself and ward off competition once it comes along.
Apart from the time being right for most businesses, you need to consider individually if this is what will benefit your business the most right now.
“One of the questions that isn’t asked when it comes to global expansion is should you even do it? Sometimes you shouldn’t. Sometimes your product isn’t attractive,” Chris Holley said.
If you are a reseller of other people’s products, for example, it’s likely that you won’t have much traction in expanding such an activity. Other businesses, such as plumbing, will also have a hard time competing with the local plumbers in a new country. In that case, you should ask yourself if this really is for you.
“Everybody likes to think internationally, but sometimes it’s not the best idea,” continued Holley.
Where is the place to expand?
Pretty much any market presents you with an opportunity to expand internationally. But each market has its own characteristics that you need to consider beforehand, and one might be better suited for your product and target audience than another.
Think about where you have a cultural affinity? Above research and analysis is your individual business acumen and intuition which can help guide you in the right direction.
Then comes the strategic part. Identify the countries where you think you will be more successful in and create a list of no more than five. Order it by starting with the most attractive one and stop at three. These are your primary target markets with the best opportunities for cross-border expansion. Chris Holley advises expanding into one market at a time. It’s also important that the country you invest into has good macro-dynamics, including a job growth, educational growth, and a net positive growth.
How am I going to get there?
Once you’ve established your target market, it’s time to consider your plan of action.
Chris Holley suggests tasting the new market by expanding through a marketplace at first rather than selling directly into a new country.
While you’re going to have a higher commission cost, the marketplace will do the majority of the work and help you attract a new customer base, thus allowing you to focus on pulling data and analysing it to form your strategy. Then, try and sell five products on a marketplace in three countries for a year. If you’re willing to risk a certain amount of money, this is a great way to get a sense of who your customers are in the given market and what their purchasing behaviours are, so that you’re well-equipped to succeed when you start selling on your own.
Expanding internationally is not a rapid process with momentary rewards. It will take time until you see results, so use that time to test the new market and see what’s working best for you.
Asking yourself these questions will help your business step into the new adventure prepared and with confidence! Cross-border expansion is a game of trial and error, and the more you practise it, the better you will get at it.
