TSH 20: How to take your ecommerce brand globalDec 04, 2023
Reading time 2 mins 30 seconds.
Have you thought about taking your brand global?
There's no denying the world is getting smaller, which means it is getting easier to sell into other countries
One of the advantages that being an online retailer has over being a 'bricks and mortar' retailer (a retailer with a physical storefront) is that you're not confined to the four walls of your store, and you're not limited to the foot traffic in your local area.
I would say that around 20% of sales from all the brands that I work with come from global markets - the opportunity is huge.
That doesn't mean it's easy to make it in a new market - it can be quite tricky, and there are a few things to remember before trying.
Read on for a couple of tips to make it overseas, as well as a few things to watch out for.
Here's the low down on taking your brand global:
A lot of brands rush into selling overseas, but here's the truth - Forced international expansion can lose you money for a sustained period of time.
If you're pushing into a new market, and you don't have existing organic traction, then you're likely to experience a few problems:
Higher MER (marketing efficiency ratio)
Essentially this means a lower return on your ad spend (ROAS). A reminder of how to set your marketing budget here. Basically, you need to spend more, to get the traction in a new market, you can't expect to get the same results as you do in your local market for quite some time. If your MER is 20% in your local market, expect it to be up to double when entering your new market.
Lower conversion rate
It's normal to see conversion rates in overseas markets be 25% or so lower than your home market. This is probably due to the fact that your brand isn't as well known in your new market, or there could be more competition - either way, crunch your numbers on a lower conversion rate.
Generally slower uptake in sales
It's normal for initial sales to be a little slower than expected, so if you're planning on international expansion to be an overnight success, you would be better of thinking of it as a slow burn, that could one day pay off in spades.
Lower overall profitability
All of this results in lower profitability in your chosen export markets in the short term - this doesn't mean you shouldn't try it, it's just important to go into cross border ecommerce with your eyes wide open.
How to ease into export
Thankfully using Shopify Markets, you're able to target international customers by accepting foreign currencies, and collecting local taxes and duties on your website. I talk more about setting up Shopify for international capabilities in my book, Shopify for Dummies.
Too many brands rush into building a new website with a new domain targeting each market - without knowing why. Sure, there are advantages to building a whole new website in a new country, like the ability to completely localise it - change the language, the banners, all the pages like blogs and shipping pages - but all that can come later. I tend to dip my toe in with an MVP model (minimum viable product), which is typically turning on Shopify Markets in my chosen market after seeing some organic sales come through (at least $5k - $10k a month) and then running some paid ads and monitoring the return daily.
Golden rules of selling internationally
- Wait for some organic traction - don't rush it
If you're going to spend money on paid media ads, and you're currently making less than 5-10k a month in that market, you're probably going to burn cash for a good 12 months at least. Paying your way to success is never a good idea. You may be surprised to know that good news travels, and plenty of good brands get international sales without really knowing how they're getting them, and this is a good sign you're getting some true organic traction with little to no effort.
- Address local currencies and payments
If you're planning to sell internationally, you'll need to be able to accept foreign currencies. This is now pretty straightforward, if you're using Shopify you can add foreign currencies with the flick of a switch in your settings, if you're not using Shopify, my go-to for solving this problem would be Reach Payments. When it comes to needing an international bank account, Airwallex is my go-to for solving that problem without needing a local entity set up in each market.
- Calculate your international pricing correctly
A lot of brands get this wrong. Some brands will simply change the currency symbol in front of their pricing, for example if I sell jeans for USD100 in The US, and then I sell the same jeans in The UK for GBP100. This often leaves a large disparity between currencies when the price is converted, and can be confusing for customers. The more common approach is to convert the price to the new currency, and round up for any taxes and duties. For example if there is a 10% sales tax in Australia, but a 20% sales tax in The UK, an Australian brand selling into the UK might convert their pricing to GBP at the current exchange rate, and then round up an additional 10% to allow for the higher sales tax.
- Fast, affordable shipping
If you're planning to compete with local brands, you're going to need offer a reasonably fast shipping service, and fair shipping pricing. It doesn't have to be free shipping necessarily but it does need to be on part with your main local competitors. When it comes to sorting our your international shipping, I use The Aggregate Co.
- Easy returns
It's one thing to send orders out quickly and economically, but it's important to remember that the returns experience can be equally as important. It's not a bad idea to use a local returns hub, or 3PL to process your returns, so that your customer doesn't have to ship them across country, or wait a long time for their return to be processed. When it comes to processing returns, Loop offers an international returns platform.
- Tackling taxes and duties
Depending on where you're planning to sell to, you or your customer could be liable for taxes and or duties. For example if you're selling into The UK or EU, there is a very low threshold for duties, so your order will get held at customs if you haven't paid them on behalf of your customer. There are two ways to send orders when it comes to taxes and duties. DDP: Delivered duties paid; which means you have paid the taxes and duties on behalf of the customer, so there is no delay to the customer, and DDU; Delivered duties unpaid, which means duties haven't been addressed, so the customer may get a phone call or email from their local customs, asking for them to pay. This causes an unpleasant experience and is a key reason why brands struggle to retain customers in countries where they have no duties solution.
When it comes to handling taxes and duties, I like Avalara, which can collect taxes and duties, and also remit them on your behalf.
- Target your native languages first
It's much easier to sell into countries where your customers speak the same language. Tackling a new country that requires translation is going to be a tough ask, not only do you need to translate your website, but you'll need to consider how your advertising and social media appeals to countries that don't speak the same language as you.
So when it comes to selling internationally, it's important to understand that it is easier than it was, but not necessarily easy. It's also important to not rush it. If you're home market is The US, you probably don't need to worry too much about export for quite some time, as your domestic market is huge. If your home market is Australia, where it's smaller, the larger ecommerce businesses tend to reach around the $20m a year mark in sales, and then switch to The US and UK markets, as they push to $100m. So the size of your home market does matter. If you're doing $2-3m a year in sales, then its unlikely that you're anywhere near the ceiling of your market, so you should probably focus on reaching your potential in your home market before investing too much in a new market.
As with most things in ecommerce, the opportunity is enormous, but the risk is also there, and we have to understand that selling internationally can be a little like launching from scratch again, in that it can be a little slow initially, but worth it in the long run.
Until next week,
If you want to work with me, here's how:
1. Take my Free Ecommerce Masterclass '90 Days to Ecommerce Success' here.
2. Ongoing advisory - Wait list - email [email protected]
3. 1:1 Coaching
4. Shopify Start - My online course that teaches beginners how to use Shopify
5. Ecommerce Start - My online course that teaches people how to start an online business and turn a profit in less than 3 months.
6. Ecom Nation - Digital marketing for your business
7. Buy my book, Shopify for Dummies
8. Pre order my book, Selling Online for Dummies
9. Speaking or conferences: Email me at [email protected]