Global Ecommerce: How to Expand into Foreign Markets
If you own a successful D2C brand, now is the time to think about foreign markets and focus on global e-commerce growth. You will have the opportunity to connect with millions of new consumers from different countries strengthen your brand's promise, and drastically increase your profits.
Gymshark has leveraged social media platforms, including TikTok and Pinterest, to help facilitate growth and become an expanded brand. In fact, 17.3 million Gymshark workout videos were watched during the company's workout-style campaign, ultimately helping increase awareness and boost sales for the brand.
When you initially started your brand, you probably sold solely to customers in a specific market. However, if things are taking off and you've had many people from other countries express interest in buying your products, you can begin reaching out to foreign markets and gaining new loyal customers across the globe.
If you're ready to broaden your reach to international markets, take the following actionable steps to see the most incredible results.
1. Identify international market potential
The first step to global e-commerce growth is identifying the international market potential for your business. You need to know if the possibility of selling to thousands of people exists to ensure it's worth expanding to other countries outside your country of origin.
So, how can you determine the potential to serve clients outside your country and in several other countries worldwide? Take the following steps:
Step 1. Start researching the market
Take the time to do extensive research on your niche and how people in other countries feel about the types of products you sell. Try to find out if you would have any possible competition in some of these foreign markets and then see what they're doing. You may notice a definite need for the products you're selling, with little to no competition to deal with in certain countries, which provides you with an excellent opportunity to reach those consumers and profit from selling to them.
Step 2. Select your priority markets
If you're looking to expand to several markets worldwide, decide where to start. You may notice that the demand for the types of products you sell differs from country to country, with consumers from some locations being more likely to invest in what you sell than others. Prioritize by market size based on your vertical for the products you sell and your competition. Keep in mind any friction involved in entering the market.
The European Market consists of 27 countries with a value of € 14.5 trillion. Some countries have a bigger market than others. For example, France falls in seventh place in the e-commerce market, valued at $66.9 billion, while the UK takes fifth place with a GDP of $3.2 trillion.
Once you've gathered enough information to give you an idea of what to expect when expanding to global markets, you can decide which markets are worth it and which ones aren't. Then, if there is a demand for your product in all the countries you've researched, you can begin taking the steps needed to experience global e-commerce growth.
2. Benefits of international expansion
The benefits of international expansion are great. However, these are only some reasons to consider going global with your business.
- Your e-commerce business can flourish - When you initially started your business, you may have dreamed of earning thousands of dollars each month while catering to the needs of millions of customers across the country and worldwide.
Cosmetic brand Lush, known for its amazing bath bombs, leverages the power of user-generated content on different platforms. Because 55% of consumers prefer UGC over any other advertising option brands use, Lush has decided to use this content to garner more interest in the products it sells. Customers make videos of themselves using the products, including Lush's signature face masks, and then tag the company, helping them generate more UGC than ever!
- You will have the opportunity to increase your earning potential - Selling to more people means making more money in the long run. With global expansion, you can increase your earning potential while making a name for yourself internationally.
- You can broaden your reach and connect with people from different countries - Expanding to international markets can help you reach more consumers. You can strengthen your brand, connect with new people from these foreign countries, and begin bringing your brand vision to these new markets. As a result, you can grow and strengthen your community while gaining recognition as a brand that cares about consumers by delivering high-quality products.
- You will run a more diverse business that will capture more attention from consumers worldwide - Expanding to international markets means running a more diverse and inclusive business. Consumers from other countries often feel discouraged when they learn that products they want to purchase aren't available to them because of their location 55% of consumers abandon their carts if they feel the costs are too high. This is often the case when expanding to international markets and shipping internationally, with shipping costing much more than it would if consumers bought locally. The average consumer expects to buy from companies that accept their local currency. By having a multi-currency e-commerce platform, you can cater to the needs of your international clients.
Because of these benefits, expanding to an international market makes sense and could be a genuinely profitable decision for you to make.
3. Challenges of international expansion
While there are many benefits of international expansion, this doesn't come without a few challenges you will need to overcome. The good news? The opportunity is big enough to make it worth it. Best of all, these challenges are simply roadblocks, but they’re not impossible to overcome if you prepare well enough.
These are some of the following changes that business owners typically deal with when working on international expansion:
1. Local regulations - You will need to learn about local regulations before you sell products to consumers in other countries outside your country of origin. Commerce regulations differ from country to country and typically lay the foundation for whether you can sell in a specific country or not. You need to find out critical information, such as whether you will need a VAT. You will also need to know if it’s necessary to open a local company and, if so, how long that will take and how much that will cost you.
It would also include the details you'd need to add to your terms and conditions to remain compliant. Because commerce regulations aren't quite the same in different countries, you will need to take the time to learn about the rules and regulations in each country you plan to serve. If not, you could run into compliance issues, which may complicate things and cost you in the long run.
2. Localisation - Connecting with an audience may seem challenging when the people you're reaching out to in other countries don't speak your native language. It's why localisation is such a big deal.
Language barrier is one of the biggest obstacles to overcome. 40% of global consumers won’t buy products from sites in other languages. You need to have a site that translates well for consumers from foreign countries. If it doesn't make sense in their language, they won't want to stay on your website, which can result in you losing the opportunity to build that connection with them and entice them to buy products from your site. Focus on localization to meet the needs of these consumers and show them that you've put forth the effort to build a site that translates well for them.
3. Logistics - Before successfully becoming an international brand, you need to figure out the logistics, including which service providers to use and how to get your items from your country to the next as quickly as possible. After all, you don't want to make your customers wait months to receive their merchandise, but you must also ensure you're following these countries' rules and regulations.
Learn the legal requirements of the countries you plan to ship products to and details about customs, with most packages from other countries going through customers before customers can receive them. Do your research to find the best way to ship these products to get them to your customers as quickly and efficiently as possible, and be transparent about shipping speed so that the consumers know what to expect before placing an order.
Consumers in the UK are susceptible to delivery times. 70% of UK consumers won’t buy from a brand if they’ve heard others share negative delivery experiences. In addition, carrier options are important. 87% of UK consumers agree that having different delivery options available to them is a deciding factor in whether they will make a purchase or not.
The key is to offer a delivery experience that matches with local delivery tendencies, whether consumers are used to receiving their goods in 24-48 hours or not. Keep in mind that shipping locally will cost less than shipping internationally. It can save you and the consumers up to 101%! Bigblue offers a convenient option for selling internationally.
5. Payment methods - Not all payment methods are created equal across the board within global markets. For example, while credit cards and digital wallets were considered the preferred method of payment for consumers in the United States in 2020, that wasn't the case for consumers in different countries, with mobile wallets such as ApplePay and PayPal taking the lead as the preferred method of payment for consumers in 2020. In fact, on a global scale, credit cards only accounted for 23% of e-commerce purchases. Because preferred payment methods differ from country to country, it's crucial to research and accept payment options that consumers in different countries will use and appreciate when buying from your business.
4. The 5 most attractive European e-commerce markets
The European market is massive, making it quite attractive. The European Market has a value of € 14.5 trillion. Luckily for you, the EU simplifies things so much in terms of regulations and currencies, that’s why localisation and adapting your market to the local languages is the biggest challenge. However, if your goal is to expand to some of the European e-commerce markets, these are some of the most attractive options.
The United Kingdom is home to 67 million people and has a massive economy worth € 14.5 trillion. Despite Brexit, the UK is a no-brainer option for brands interested in tackling the European market.
But what is it about the UK market that makes it so attractive? Not only is it massive, but UK consumers are highly sensitive to the delivery experience. These consumers typically have higher expectations, so if you can meet or even exceed those expectations, you can set yourself up on the right track for success and gain many new loyal customers.
There are a few other advantages of selling to the UK market. The UK has a simple taxation system in place, so you don't have to worry as much about dealing with taxes that have skyrocketed. The UK is known for welcoming businesses of all sizes, including international companies that sell to consumers on a global scale.
The UK market is a gateway to connecting with European countries and further developing your brand. Best of all, there is no language barrier for English-speaking brands. If you need more information, be sure to check out Bigblue’s step-by-step playbook that covers the details you need to know to open your e-commerce shop in the UK in as little as eight weeks!
If you're considering selling to a targeted audience in Germany, you're in luck because the country has the fourth-largest economy in the world and has an e-commerce value of US$ 141.20 billion. You would have the potential to reach millions of people with creative marketing campaigns that resonate with the German audience.
Known for its more robust economy, the average consumer in Germany earns a relatively stable income and would be more likely to easily afford the products you're selling. In addition, many residents of Germany spend more than consumers in other European countries.
France is another country with an excellent market to consider targeting with your e-commerce business. Of all the economies within the European nation, France is one of the largest, coming in at second place. It’s valued at US$66.9 billion.
France is a pro-business country with consumers who often take time to do research before buying products to ensure they're well-informed. If you can connect with this audience, you have the potential to build a loyal pool of consumers. Bigblue has four warehouses in France with unique processes for specific industries, including fashion, wellness, food, and beauty brands, and is capable of shipping to all European countries.
Spain's market size is massive, with a GDP of $1.390 trillion. The e-commerce market size is valued at $27.2 billion, meaning there is plenty of potential to reach your targeted audience by connecting with Spanish consumers.
The advantages of expanding to Spain's market are tremendous. It has a blossoming economy that remains strong, and it's also known for its excellent infrastructure. In addition, the people of Spain tend to appreciate, more than anything, the opportunity to connect with brands and businesses. Most Spanish consumers care more about the connection brands are willing to make with them, prioritizing that over the cost of a product.
Italy takes the eighth spot among the world's largest economies. While this may not sound like a big deal, Italy's economy is the fastest-growing e-commerce market in Europe, so it's worth targeting its consumers. More than 59 million people live in Italy today, many of whom are willing to buy products online from companies they believe they can trust, even if those companies are located elsewhere. It has an e-commerce market size valued at $36 billion in 2020.
Italy has a reputation for innovation, with consumers often willing to make online purchases if it means getting what they need at fair prices. If you can offer impressive products that benefit these consumers and provide them with reasonable rates, they will feel more inclined to do business with you.