This is the second post in our ‘Secrets to Global Growth’ series. You can recap on the ‘Finance’ post published earlier this month, or keep an eye out for the ‘Ecommerce’ version due to be published next month.
In our first ‘Secrets to Global Growth’ blog, we quoted Nielsen’s Connected Commerce Report, saying: “Shoppers are increasingly looking outside their country’s borders, as more than half of online respondents in the study who made an online purchase in the past six months say they bought from an overseas retailer (57%).”
That’s some serious slice of the overseas sales pie that ideally has your brand name on it. So if you’ve decided the time is ripe for international expansion, then we’ve identified eight key questions you’ll need to ask yourself when thinking about launching your products into foreign markets.
1. Are you making the most of the market you're already in?
Before expanding overseas, consider whether you’re already making the most of the market you’re currently in. Are you efficient? Do you have a fast time to ship record? Are you quick at invoicing?
By considering these questions, you’re able to check whether there are improvements you can make to ensure you have efficient processes in your home country, before expanding and taking old habits overseas that could impact your ability to meet demand.
2. Is your business ready for international growth?
Think about whether you have accurate data on inventory availability, and whether you can see which countries have growth opportunities for your business.
You’ll also need to be aware of product margins, including the extra costs associated with international expansion and how much it will cost you to ship your goods overseas. Check out the finance part of this series to find out more.
3. Will you become an indirect or direct export business?
When selling goods overseas, you’ll need to make the choice between whether you will become an Indirect or Direct Export business.
Indirect Export businesses rely on brokers to ship, market and sell their goods overseas for them, while Direct Export businesses manage the process and control the profit themselves.
If you’re unsure which is best for you, your business and the market you’re launching your products into, then there are lots of organizations around that you can turn to for advice, including your bank, foreign embassies, Chambers of Commerce, and even local business advice centers.
Each of these organizations have different levels of expertise and knowledge that they can share with you, so it’s worthwhile speaking with each of them during the initial research phase of your growth project.
4. How will you localize your brand name?
Consider how your brand name will be translated overseas, and also how cultural differences may impact consumer perception of your brand.
There have been a number of companies that have re-used their brand name overseas and realized that wasn’t such a good idea (even large conglomerates).
They launched their product in China, only to find out that the translation of ko-kä-kö-la meant something like ‘bite a wax tadpole’. Whoops! Thankfully, they’ve since re-branded to be Kekoukele in China, which means ‘tasty fun’, and is much more suited to both their product and their brand.
If needed, find a native speaker within the markets you’re expanding into so that they can identify how your brand name will be translated and perceived overseas. Otherwise, you’ll need to do some extensive research yourselves before deciding whether to re-use your brand name or find something better suited to who you’re going to be selling to.
5. Do you need a new pricing strategy?
In order to adjust well to exchange rate fluctuations, as well as meeting local market needs, you’ll likely need to rethink your product pricing strategies ready for global sales.
Ensure you research thoroughly how your pricing will affect your profits when selling goods overseas.
Will you need to increase them in order to recoup costs spent on additional storage, extra staff or export prices? Or will you need to discount your prices in order for the consumers in your new market to be able to afford them?
Furthermore, should you consider letting your clients pay in their local currency? More and more consumers want to be in control of how they make payments, so it may be worth thinking about when you evaluate your current pricing strategies. Adyen is a good example of a business that lets consumers pay however they want.
6. Are your products right for the new market?
Re-wrapping your current items rarely works, unless you know that your popular, niche products are missing in that overseas market.
It’s often that different markets call for different requirements, and you’ll need to seriously consider whether there’s definitely a need for your products in the new market, and whether they need a few design tweaks before launching. You may even find that the newly designed products are better for other markets including your home one as well.
The company wanted to expand their Pampers Diapers into Japan. Initially, the diapers were large and bulky, but due to smaller storage spaces in Japanese homes, the Japanese audience needed more compact diapers. Thus, P&G reengineered their diapers to create thinner ones. Not only did they do well in Japan, but they also made it onto U.S. shelves as a more refined and better designed product.
Product design is, of course, a key part of your market research, and in truly understanding your new customer. When investing into international expansion, you’ll need to be certain that your product will be heavily desired in your new market.
7. Can your business adapt to a different logistics and distribution infrastructure?
Logistics and distribution infrastructure vary around the world. For instance, in India, major corporations like Coke and Nestle have to use non-traditional channels of distribution in order to reach the vast majority of Indian nationals residing in small towns and villages.
In order to get your goods in front of consumers, you will need to heavily research how that country operates and fit in with their processes and practices.
Therefore, you’ll need to identify whether your business can support this change in logistics and distribution, both from an operations perspective and regarding the costs involved.
8. How will you actually sell and promote your products?
When selling your goods to overseas consumers, check that you’re listing your products on the appropriate sales channels, and that you’re on the marketplaces the localized market are used to shopping on.
Some examples include Cdiscount in France, OTTO in Germany and Rakuten in Japan. Here’s a great list of ecommerce marketplaces around the world that you can use to map out your sales strategies.
Also think about how you’ll advertise your products to your overseas market as well. Social media networks, for instance, differ across countries, both in terms of which platforms are more widely used, as well as how they are used. Check out this guide to see exactly what we mean.
In case you missed our first post in this ‘Secrets to Global Growth’ series, you can recap on it here. And don’t forget to keep an eye out for our final post in this series, which is due out next month.