Introduction
In the era of globalization, expanding your business to international markets is an obvious choice.
However, transitioning from a local business to a savvy eCommerce SME with a global presence can be overwhelming. Where should you begin, and how can you ensure you’re entering the right markets? What measures should you take to maximize the likelihood of long-term success in new markets?
This step-by-step guide to internationalization will walk you through the seven crucial stages of global expansion, covering planning, research, shipping, distribution, and the ongoing management of your operations once you’re established.
Identifying your target markets
Formulate a preliminary list of targets
Begin by making a preliminary list of countries or regions to consider, focusing on factors relevant to your business. Consider macroeconomic aspects such as inflation, demand, and trade regulations. Evaluate how your business aligns with each country’s overall market.
Assess each target’s size
Evaluate each market by comparing the following:
- Consider the local economy, including factors like GDP, inflation, and labor costs.
- Examine the culture, considering factors such as receptiveness to foreign businesses and innovation.
- Assess institutions, focusing on the legal prerequisites and the simplicity of establishing a business.
- Examine infrastructure, including technological advancements and storage facilities.
Evaluate market opportunities
Next, evaluate opportunities by researching the following:
- Reports from the government on popular markets, trends, and industry changes.
- Reports from industry experts and analysts.
- Surveys directly from consumers.
Analyzing your competitors
Now that you’ve pinpointed your main target markets, it’s time to evaluate your competitors.
Knowing your main competitors is vital for defining your uniqueness and position in a new market. Examine similar businesses in your target markets to figure out:
- Size and how much of the market they have.
- What products do they offer, including price, performance, and any overlap with your products.
- Their marketing efforts, advertising spending, and distribution channels.
- How quickly they respond to customer support, flexibility in payment terms, etc.
- Any factors that give them an edge over your business, like distribution or supplier partnerships.
As you review these factors, think about how they will impact your business when entering the market.
After completing your SWOT analysis, you’ll have a list of strengths, weaknesses, opportunities, and threats related to your expansion plans. This will help you identify areas where you can enhance your offerings compared to competitors, providing better service to customers.
This step is crucial for assessing your readiness for the next phases of international expansion or if you need to reassess your strategy.
Setting goals
Make sure you know and comply with the rules and regulations for exporting to various countries.
Market share
Establish objectives for your competitive standing in every market you intend to enter, drawing from your earlier market research. For instance, while aiming to be a major player in your local market, consider setting a more realistic goal for a foreign market with robust local competition—perhaps a modest market share that ensures sustainable profit margins.
Market penetration
Expanding into a new market involves more than just offering your products globally. Outline goals for enhancing brand recognition and boosting sales through marketing and advertising strategies. Upon launching, track your monthly outcomes by channel, enabling you to pinpoint areas where you’re meeting your key performance indicators (KPIs) and areas that may require a reassessment of your tactics.
Costs and profitability
Most businesses need extra funds when expanding globally. Create a budget for international growth (this aids in securing future funding) and establish a path to profitability. Having a plan ensures you can repay any funds obtained.
Partnerships
Building partnerships in foreign markets is crucial for cost efficiency and smooth business operations. Aim to have a local supplier in each region or find a domestic customer support partner. Track the success of these relationships to assess your expansion goals.
After defining your expansion goals and KPIs, establish a realistic timeline aligned with your available resources and budget.
Understand the process of selling to different countries
Make sure you know the rules and regulations for exporting to various countries.
Export rules for your products
Exporting products from your home country varies based on what you sell. Ensure you comply with local regulations by checking the rules.
Requirements of the importing country
Check local regulations to understand the specific requirements for importing based on the types of products you sell and the destination country.
Free Trade Agreements (FTAs)
Trade agreements (FTAs) aim to lower trade barriers between two or more countries, but terms may vary. Ensure you grasp the details of the trade agreements between your home country and the international markets you’re dealing with.
Apply for export permits or certificates
Depending on your location and the nature of your products, you might need export permits from your local government before exporting goods abroad.
Navigating legalities and finance
Consider these four important factors when you’re ready to begin international trade.
Laws
Be aware that your legal responsibilities and trading regulations may vary for each market you engage in. Make sure you understand:
- Local customs, import, and export laws.
- Confirm the validity of your existing contracts and trademarks or update them if necessary.
- Understand all regulatory requirements for traders in each market.
Taxes & duties
Local tax and duty standards can vary significantly between markets, so utilize government resources in each new market to discover:
- Check for sales taxes like GST or VAT.
- Determine who is responsible for reporting sales tax.
- Identify available tax exemptions.
- Assess whether customs duty or similar taxes apply.
Pricing
Research the pricing of competitors in your target markets to determine appropriate charges. Consider factors such as exchange rates, handling fees, and taxes when creating your pricing structure.
Cultural norms
Remember, every culture is unique, so it’s crucial to grasp local customs and distinctions to establish a strong reputation in international markets.
Develop a comprehensive business plan
To get funding for growing your eCommerce business globally, start by developing a business plan.
Expanding your sales and operations globally requires more than just applying your existing business plan to new markets. Once you’ve pinpointed the key markets to target and devised a strategy for international expansion, it’s essential to create a specific business plan tailored to your overseas ventures. Include the following in your business plan:
- Brief overview
- Overall vision and objectives
- Roadmap for global expansion
- Research on foreign markets
- Evaluation of potential risks
- Strategy for each target market
- Plan for international marketing
Your business plan is a crucial component of your SME toolkit, providing a framework to transform your expansion strategy into actionable steps.
Consider your financial options
Setting up your business in a new market can be costly, but the good news is that there are various options available to secure funding.
Government grants
Several governments aim to encourage import and export activities by providing grants. Explore the official websites of your target markets to identify available grants and learn the application process.
Peer-to-peer (P2P) lending
In simple terms, P2P lending is a way to get funds from an investor through an online lending platform, bypassing traditional banks. This allows you to avoid standard market interest rates. Often, lending platforms can also connect you directly with an investor.
Private loans
Similar to P2P lending, private business loans come from investors rather than banks. Unlike equity investors, you don’t have to share ownership to get a loan. Private loans offer quick capital access but often have higher interest rates than traditional financing.
Banks & financial institutions
Bank loans are secure and low-risk, but they often require collateral, such as property. There are usually two types of business bank loans to choose from:
- Capital loans
Capital loans assist the business in covering its regular or periodic capital expenses.
- Lines of credit
Lines of credit boost your working capital to address requirements such as inventory, equipment, and general cash flow.
Identifying your sales channels
Make sure you embrace omnichannel selling. Providing various sales platform options improves the customer experience. Consider the following:
Your online store
Ensure your eCommerce store, initially designed for local sales, is optimized for international markets before expanding overseas. This involves displaying prices in local currencies, providing clear access to local shipping rates, and exploring the feasibility of online wholesale options for your business.
Online marketplaces
Expand your reach by selling on platforms like Amazon and eBay, reaching potential clients who might not be aware of your existence otherwise. Utilizing these channels can also reduce your international shipping and marketing costs. For instance, you can leverage Amazon FBA to handle your entire international process, from picking and packing to shipping and customer service, which is particularly beneficial if you’re short on time or facing challenges in selling internationally.
International distributors
Using a foreign distributor can bring various advantages, such as tapping into new customer bases in your target markets and having someone else manage customs formalities and paperwork. However, it’s important to note that selling through a distributor often involves offering your goods at a discount or paying a commission so that they can sell at the recommended retail price (RRP).
Affiliate sales
Depending on how you sell and the nature of your products, selling through affiliates could be beneficial for boosting sales and reaching a broader audience. However, similar to foreign distributors, affiliates often charge commissions that may impact your profits, so it’s important to research before making a decision.
Global shipping considerations
Selecting the appropriate international shipping solution is vital for minimizing shipping expenses and ensuring the timely delivery of goods to customers. Here are key factors to consider when picking a provider.
Ability to handle international freight
Choose a shipping provider that understands customs regulations, has the infrastructure to move your goods globally, and offers various delivery timeframes like express and standard for customer convenience.
Associated shipping costs
When searching for a shipping provider, find one that offers a good balance of cost, reputation, and timely delivery. Delivering products to your international customers punctually is key to building loyalty and future sales.
Handling logistics and fulfillment
While shipping providers usually offer automated label creation and postage calculation, you’ll need to handle packaging and labeling. Alternatively, third-party logistics providers (3PL providers) can handle the entire fulfillment process, from warehousing to delivery. Explore both options to determine which is more cost-effective and time-efficient for managing your international orders.
Connecting with your inventory management system
Ensure that whichever option you go for, be it a shipping provider or a complete 3PL solution, can seamlessly work with your inventory management system. This allows you to oversee all your operations from a central point. In the case of Qoblex, our inventory management system easily integrates with different providers and accounting systems. Additionally, we support custom integrations through our API.
Running your business
You’ve laid the foundation. Now it’s time to implement your plan.
Your team and resources
You’ll likely require additional staff to manage the added workload of selling in new markets. Hiring local staff may become necessary. Additionally, ensure you have the necessary infrastructure, including warehouses and technology, to establish your business successfully overseas. During the final assessment, consider these three key questions:
- Have I recruited the additional team members required to handle the expanded workload of my expansion?
- Is the necessary infrastructure in position?
- Are all my financial, legal, and logistical documents prepared and ready for use as needed?
If you’ve answered yes to all three questions, you’re on track and ready to go!
Effective business operations
Boosting efficiencies is crucial for any business owner, especially those operating in multiple markets. After launching, seize control of your growing business by overseeing all operations on a unified platform. With Qoblex, you can handle inventory, sales orders, shipping, finances, logistics, and more through a single dashboard. This provides the flexibility and real-time inventory visibility necessary to work more intelligently and expand your business.
About Qoblex
Since 2016, Qoblex has been the trusted online platform for small and medium-sized enterprises (SMEs), offering tailored solutions to simplify the operational challenges of growing businesses. Specifically designed for B2B wholesalers, distributors, and eCommerce ventures, our software empowers users to streamline operations from production to fulfillment, allowing them to concentrate on business growth. Qoblex efficiently manages inventory and order data across multiple sales channels including Shopify and WooCommerce, integrates with popular accounting systems such as Xero and QuickBooks, warehouses, and fulfillment systems, and boasts a robust B2B eCommerce platform. With a diverse global team, Qoblex serves a customer base in over 40 countries, making it a reliable partner for businesses worldwide.
