Kick-start your international expansion


Kick-start your international expansion now - a simple guide to cross-border sales

With 70% of European online shoppers buying products from international retailers[1], selling cross-border seems a compelling proposition. And there is further good news: selling to an international audience has never been more straightforward. What might once have been a daunting and complex challenge requiring significant investment has turned into an opportunity, which is much easier to manage and too lucrative to be missed.

Cross-border sales in numbers

Worldwide ecommerce sales are growing year on year. Estimates forecast that they will equal $4.479 trillion by 2021[2], with Asian companies currently at the forefront – China was responsible for 67.1% of all ecommerce sales worldwide in 2017[3].

In Europe, the UK (€178 billion), France (€93.2 billion) and Germany (€93 billion) represent the three biggest ecommerce markets, accounting for over two-thirds of the total European turnover[4].

Cross-border ecommerce turnover in Europe increased by 11% in 2017, making it worth €534 billion, with early indicators suggesting turnover reached over €600 billion last year[5].

A study by DHL[6] found that businesses that start to sell internationally boost their sales by 10 – 15%. Even BREXIT, which – according to a survey by Global-E[7] – over 50% of retailers in the United Kingdom believe will make cross-border trading more complex, cannot wipe out the benefits of selling abroad: Last year, 38% of all cross-border online shoppers in Europe ordered goods and services from sellers in other EU countries[8].

How to prepare for cross-border sales – 8 key steps

1. Consider a shortcut

A UPS study from February last year showed that 96% of online shoppers globally have purchased from marketplaces at least once, making such global and local online-stores an obvious choice and a money saving shortcut to kick off cross-border sales. Platforms such as Amazon, eBay, Alibaba or Wish offer retailers access to a high volume of potential customers from the start. Equally importantly, they give newcomers a taste of what selling to a particular market is like without needing to invest the time and money of setting up their own website and business in a country.

2. Invest some time in market research

Determining whether people in other countries will buy your product is the first step to deciding whether a cross-border expansion will be financially worthwhile. With a plethora of market and consumer data available online, it is not difficult to assess market relevance and demand for a product, using search engines and key word research. A very helpful and free online tool in this context is Google Trends, which lists trending topics, shoppers’ ecommerce searches and other data for geographic regions or for individual countries.

3. Localise your ecommerce website

Often, businesses planning to expand internationally will already have a website. However, the use of local languages and local currencies are key to winning new customers outside of the company’s home market. Over 48% of retailers surveyed by Payvision (2014) reported that offering multi-currency options has boosted cross-border sales.

Equally, language is a deal breaker or maker. While English is indeed the most commonly used second language, UK companies need to acknowledge that Internet users in other countries generally do not feel comfortable using shopping sites in foreign languages. A survey of 3,000 online shoppers from ten countries[9] found that 75% want to buy products in their native language, while 59% of the respondents said that they rarely or never buy from English-only websites.

Help is at hand: For retailers planning to sell their products via their own ecommerce website, service companies such as SAP and Magento make setting up online stores or extending existing online stores for target audiences in different countries with different languages more straightforward and cost a fraction of what companies had to spend in the early days of cross-border sales.

4. Offer diverse payment methods and local currency payments to gain trust

Retailers selling abroad will also need to take widely differing payment preferences into account. The “Global Connected Commerce” study from market research firm Nielsen[10] shows that online shoppers in the US (66%), Canada (81%), Japan (76%) and Korea (79%) prefer paying with credit cards by a wide margin, while 86% of Chinese respondents said that they pay for online purchases via digital payment systems. This was also the most widely cited online payment preference in several European countries, including Germany (68%), Spain (56%) and Italy (55%).   

Hence offering customers a wide variety of payment options will put them at ease and also appease their fears of fraud, helping boost sales. “Equally, ecommerce websites should show the prices for products in the local currency,” Nick Pedersen, Head of FXmicropay at NatWest Markets – a product that instantly prices goods, services and invoices in both the customers’ and suppliers’ local currencies while helping to reduce currency exchange costs - points out. “This significantly increases shoppers’ trust in the seller by taking away the risk of unknown conversion rates and fees that might be charged by the customers’ issuing banks,” he explains.

5. Check online databases for IPRs and patentability

Selling goods across borders could potentially infringe individual property rights (IPRs). While IPRs are largely protected at national level on a country-by-country basis, there are some mechanisms for protection of rights across multiple jurisdictions. For example, in the EU, it is possible to obtain a EU-wide trademark (EUTM). There are a number of firms offering patentability and freedom to operate (FTO) searches for a fixed price. The European Patent Office provides a free service to check for published patent applications and registered patents via its platform Espacenet. The database contains more than 100 million patent documents from around the world.

6. Partner with shipping firms to make shipping smooth and taxation manageable

Ecommerce surveys published each year emphasise the importance of competitive shipping rates and shipping options. Shipping costs in particular lead to high cart abandonment rates if consumers deem them too high.

Businesses selling primarily on global or local marketplaces can take advantage of their fulfillment services, which include handling of import fees and customs-based clearance on behalf of the seller. For retailers selling independently, the easiest and fastest way to start delivering products to new countries is by using third-party shipping services such as DHL, FedEx or UPS, who not only take care of duties and tariffs, but provide smooth handling of product returns too.

7. Become social media savvy to avoid high marketing costs

Expensive offline advertising campaigns to position a product have gone from “must have” to “nice to have”. Much brand building and advertising now takes place via social media. Alongside global channels such as Facebook, Twitter or Instagram, plenty of local social media networks provide quick and easy access to consumers abroad. Researching the most popular networks for each country helps to identify the product relevant channels, while smart content tools such as “Answer the Public” provide ideas on how to create content that resonates with particular consumer groups or markets.

Using so-called influencers or bloggers to tap into existing audiences in new markets extends the trust and popularity those influencers enjoy to your product. Influencer marketing platforms such as AspireIQ, TRIBE or Speakr help to find influencers in foreign markets.

8. Partnering with NatWest Markets for your cross-border sales strategy

While international expansion can be very profitable, you need to ensure you can manage your cash flow effectively. NatWest Markets, which provides financing, risk management and trading solutions for corporates and retailers across the world can not only provide the right financing for your expansion, but can also help with payment solutions that support over 100 currencies.


 

Footnotes
[1] Ecommerce News, February 2018, [2] eMarketer, July 2017, [3] Core dna, November 2018, [4] Ecommerce News, July 2018, [5] Cross-Border Magazine, July 2018, [6] DHL, February 2017, [7] Global-E February 2017, [8] Eurostat, December 2018, [9] Common Sense advisory, April 2014, [10] Nielsen, January 2016.


 

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7th March 2019


 
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