This is a question that challenges even the biggest retailers already trading internationally, yet despite it being the one that’s asked most frequently it’s the one question that I’ve seen answered so incomprehensively in so many cases.
I’m still amazed to hear British retailers planning launches into markets like the US or China based purely on the fact that they are the two biggest eCommerce markets in the world and the board have simply decided that these are strategically important markets that will enable them to say they have a truly global brand. I’ve also heard of companies selecting their next international markets based on the CEO originating from that country which is a pretty unsophisticated strategy, but maybe it works!
Despite the obvious attractiveness of huge international markets like the US or China, so often brands fail to answer the most critical questions of all before launching into them – is there actually demand for our brand in this market and do we offer enough of a point of difference to be successful there? Plenty of brands have had this question answered far too late in the process, with the resounding ‘No’ having cost them millions.
From an eCommerce perspective the starting point for me is understanding whether you have any organic demand coming from the market you’re interested in (i.e. seeing an uplift in orders on your UK site from this market) then if you do trying to gain more insight as to why that’s the case. It might be that you offer a brand/product that is currently exclusively only available through you to shoppers in that market or that your price is temporarily far more attractive than your competitors, as is currently happening due to the weaker Pound. Both of these can change relatively quickly and easily so ensuring you have a sustainable competitive advantage (be that superior, unique products, a strong brand or a amazing customer loyalty) is important to understand when deciding if the opportunity is a strategic long-term one or more of a short-term, tactical opportunity.
Organic demand I have found to be a great indicator – if customers are buying your product only off the back of word of mouth and no brand marketing and they’re doing it despite a very poor localised website and delivery proposition then it certainly shows that your brand has potential in that market. A very simple way to see if your brand has potential in China is to search on Taobao and see if anyone is selling your products – if they are (fake or not) then it’s definitely worth investigating China in more detail as it shows there’s interest in your brand or products.
The next step we take is to then analyse and rank (using the chart above) those international markets where we’re seeing organic demand in terms of size of market opportunity versus the complexity of selling cross-border into them. Of course this ranking will vary by retailer, by your preferred entry strategy (traditional retail, cross border, wholesale etc) and by your business readiness for localising and scaling up your business in new international markets.
To tackle the complexity you’ll need to understand and start removing the key customer barriers in your chosen market, which of course will vary in relative importance. In the more complex markets you’ll need to offer local currency and payment methods as an absolute minimum, low cost, reliable delivery and ideally the ability for customers to calculate and pre-pay any duties, if applicable. We’ve found that by working with Global-e we have been able to remove these barriers without a big investment and are now stating to prove the business case in these markets to further invest in marketing, brand awareness and improving the customer proposition.
Additionally markets like China, which are notoriously complex, absolutely require you to work closely with local partners (be that logistics, operations or marketing) who truly understand the market, know what happening on the ground and can deal with much of the complexity for you. Going it alone in markets like that can be a huge drain on resource and budgets.
In terms of entry strategy, whilst most of my experience to date has been with the cross-border online only approach, increasingly international marketplaces (like Zalando in Europe or Tmall in China) offer an interesting route into new markets with relatively low investment and risk, certainly compared with launching your own localised website into a new market. If you really don’t have the resource to start localising your experience then launching on to a marketplace is an interesting potential short-cut, but again is only likely to be successful if your product and brand can stand out.
One final important consideration when selecting your next international market is language, and translation. Traditionally translation has been the first step that most retailers tackle when launching international websites, and whilst it is undoubtedly important it requires typically a big upfront and then ongoing commitment in terms of cost and resource. For us we run localised websites in Germany and France because they’re at a scale where it’s worth us doing that – we’re not yet at that stage in our up and coming markets like China and recent user testing there highlighted other factors other than language being the biggest barrier to buying from us from China for example.
In summary, selecting which international markets to target next doesn’t need to have a fully-costed 5 year business plan and require years of research and planning but it does require you to step back and think strategically about it. Once we’ve identified a potential market based on the criteria outlined above I find incredibly useful to then go and spend time in the market, meeting your customers, observing shopping habits and competitors and trying to establish if the opportunity you believe exists sitting at your desk in London really does exist once you’re there on the ground.
As I’ve advocated before you can now test, learn and fail fast in international markets much more easily than you ever could before, with very limited financial risk. Having said that if you’re only going to dip your toe in the water without them really backing up your activity in that market (through marketing and improving the localisation) then you risk never truly testing the potential of a market and losing support for that market before you’ve ever really given it a chance.
So which market are we targeting next?
China is the one we’re focusing on, knowing that it ticks all the boxes outlined above, with strong organic demand, an aspirational brand offering something different in the market (our customers words, not mine). Whilst we know it won’t be easy we definitely have a great base to start from and we’re committed to testing the market with initial investments before a longer term commitment if it’s successful.
Watch this space…
crossborderecommerce 