8 questions to ask yourself before selling products overseas
Want to sell products internationally? Start by asking these key questions.
Maybe you’ve found yourself shipping more orders overseas? Perhaps you’ve been contemplating global expansion or simply want to learn more about global e-commerce, which is projected to be worth £4.51 trillion this year?
Whatever industry you’re in and whatever the size of your business, scaling beyond your borders is a big step. International expansion offers the promise of new customers, new markets, and revenue growth. However, without proper research and preparation it’s also fraught with potential pitfalls.
Major risks include legal and regulatory surprises, language barriers, logistic and customer-service issues, brand-reputation damage and, of course, financial loss
So, how do you know if your business is ready to scale overseas? Start by asking the right questions.
1. Which market(s) will you expand into?
Knowing who – and where – your customers are is an integral first step in any viable growth strategy. Many businesses make the mistake of arbitrarily choosing which countries to tackle first, says Cynthia Dearin, the author of Business Beyond Borders: Take Your Company Global.
She has seen businesses expand into new markets on the basis of receiving a few orders from that market or being approached at a trade show by a buyer from a particular country; “Or they’ve heard there was potential in a market, or they know someone else expanded there,” Dearin explains.
“Those are really bad ways to do it,” she says, adding that businesses should select new markets on the basis of data. “Finding the right market requires consideration of the opportunities, risk, and profit potential in each region - without data, you can’t accurately weigh these things up.”
"Without data, you can’t accurately weigh up the risks and benefits."
If you have the budget, consider commissioning research through an agency or law firm specialising in international business to determine which markets represent the biggest opportunities. Alternatively, do your own research – read media coverage, periodicals and reports – to investigate overseas markets, industries and potential competitors.
Simon Slade, the managing director of Doubledot Media and CEO of global eCommerce logistics platform Salehoo, suggests drawing up a list of potential export countries – starting with those that are most similar to your own.
“If the data supports it, begin with markets with similar cultural and language barriers to your current [country that are] easy to access initially, such as Australia to New Zealand or the United States to Canada. Having low-level regulations, no tariff or low tariffs and easy shipping access will help with timeframes and logistics in those initial phases of global growth,” he says.
"Begin with markets with similar cultural and language barriers to your current country."
Leading global self-tan brand Bondi Sands adopted exactly this strategy when expanding from Australia into overseas markets.
“In 2015 we believed synergies in the UK and Australia, together with Brits’ love of self-tan, made it a natural choice for our first venture into overseas markets,” says Jacob Muraca, Bondi Sands’ chief financial officer.
“Fast forward two years and we quickly became the number one self-tan brand in the UK. Once established there, we were ready to move onto the US.”
2. Is there ‘product fit’ in the markets you want to sell into?
‘Product fit’ is another way of describing market demand for your product. For example, there may not be product fit for thermal clothing in a tropical country like Fiji.
The key is to thoroughly research each new prospective market, and then identify your ideal target customer there.
“You need to figure out the demographics, psychographics and behavioral habits of your [new] target market,” says Dearin. “What are their challenges and goals? What are their desires? We often rush to assume the customer in Japan approaches our product the same way the customer in the US approaches it - but [this is often] not the case.
"Figure out the behavioral habits of your new target market.”
“One of my favourite examples is an Australian brand that made reef shoes using very soft rubber. They assumed their customers would only be in coastal areas for this niche product, but found they had a large Asian customer base who were buying them to wear as slippers around their homes – nowhere near the coast.”
You may also need to review aspects such as messaging and brand colours. For example, different images or colours can mean different things in different cultures: in many western countries, orange is a peaceful, happy colour; in Northern Ireland it tends to be associated with the sectarian conflict in the region.
The ultimate way to determine customers’ appetite for your product? Ask them. “You have to take the time to talk to prospective customers,” says Dearin, who explains that this can be done with focus groups, questionnaires, emails and social media polls.
Slade adds that running paid advertising campaigns on social media is a low-cost way to test new markets. He suggests creating campaigns featuring your bestselling products and targeting the ads towards audiences that are comparable to your existing customers – and then compare the conversion rates between the two.
“Is [the rate] matching your current conversion rate? Run multiple tests with different products and different audiences, to help narrow down your further research.”
3. Will you sell direct to consumer (DTC) or through a third party?
When it comes to putting your product in the hands of customers abroad, you can choose to sell direct to consumer (DTC) – through your e-commerce platform or through Clearpay'’s Cross-Border Trade programme – or via a third party such as a wholesaler or retailer who stocks your product and deals with the consumer.
Each option has pros and cons. Slade advises considering “how both options align with the overall vision and mission of your business”.
DTC
Pros:
- More control over your customer lifecycle; from marketing, quality assurance, customer service and support, plus any returns or exchanges
- You manage your brand representation; it won’t be diluted or sold directly next to competitors
- You can decide if/ when you want to offer sales and promotions
- All profits go directly to your business, as there are no ‘middlemen’
Cons:
- More time and internal resources required to manage customer lifecycle from start to finish
- May be more costs required to establish your own e-commerce platform or store (unless you use Clearpay's Cross-Border Trade Programme)
- Investment – in terms of time and resources – to build a customer base in a new market
Wholesale
Pros:
- Easier to get wider reach as your wholesale partners already have established networks
- No need to create a local e-commerce presence or deal with new currencies or regulations
- Retail partners will provide on-ground customer service in your local market
- Lower risk and investment than starting from scratch with DTC
Cons:
- Sacrificing control and visibility of customer lifecycle
- Requires internal resources to maintain brand guidelines and uphold consistency
- Smaller profit margins as the wholesalers will take a cut
4. How will you ship your product?
International shipping can be expensive, so it’s important to thoroughly investigate shipping costs before you expand globally.
There are several main ways to distribute products (if you are selling direct to the consumer); businesses can ship items themselves from their country of origin; operate warehouses in key locations around the world, or engage a third-party logistics company (3PL) to manage the shipping and delivery process.
Ultimately, your shipping strategy will come down to your product and cost. Are you shipping bulky, heavy goods such as refrigerators? Or lightweight items such as mascara?
Slade adds that it’s also important to consider customer expectations around delivery times.
Whatever approach you take to shipping, ensure you’re transparent with customers about expected delivery times and costs.
Find out more about shipping overseas in this dedicated guide.
5. How will you collect payment from your overseas customers?
Coordinating currencies, payment systems and language barriers can be complex, but when it comes to collecting money, the best thing you can do is keep it simple.
“Make it as easy as possible for customers to buy from you using a method they’re comfortable with,” advises Dearin, who suggests considering the cultural norms of the markets you’re expanding into. “In China, for example, [consumers] pay via their phone for everything and [free messaging app] WeChat is huge over there.”
“Make it easy for customers to buy from you using a method they’re comfortable with."
One way to avoid the complexities of international payments and currencies is to sell with Clearpay's Cross Border Trade programme. This allows customers in foreign markets to shop with you and pay with Clearpay (or Afterpay when abroad) in their own currency, while you the merchant are paid in your local currency.
5. How will you market your products overseas?
It’s one thing to make your products available to customers in other countries, but you’ll need a marketing plan to ensure new audiences are aware of them.
Before you expand, it’s important to consider how you will promote your brand – and remember that marketing channels that are popular in your home country may not be relevant overseas. For example, Meta-owned Facebook and Instagram are blocked in China.
Even when marketing channels are similar between countries, differences in languages and time zones can complicate advertising plans.
Some options to consider include investing in a local public relations specialist, engaging a global social-media agency, working directly with influencers, or reaching out to local media sources.
Discover more information about creating a global marketing plan.
6. How will you approach customer service?
One of the challenges of expanding overseas is fielding customer queries in a range of time zones. Before you launch into a new market, consider how you will respond to customers (and in what timeframe) if you don’t have a customer service team on the ground.
Options include:
- A chatbot
- An online customer service feedback form
- Real-time translation tools to translate customer messages
- Skype numbers that dial back to homebase with a country code
- A 24/7 customer support team
If your operation and international customer base is small, a dedicated customer support team in each new market may be unjustified.
“Building a strong team with local knowledge is crucial.”
However, as your business grows, adequate customer support resources are important. “Building a strong team with local knowledge across all facets of the business is the most crucial aspect of succeeding in international expansion,” says Muraca, who adds that “just because these team members are sitting on the other side of the world, you still need to ensure culture is strong, [that] they believe in the core values of the company, and they feel part of the wider team.”
8. Lastly, are there any international regulations that affect your product?
Expanding your business internationally requires complying with local tax laws, regulations, and customs requirements – all of which differ from country to country.
Overlooking these obligations – or taking shortcuts – could result in unhappy customers failing to receive products, legal action or major financial loss.
One way to identify any regulatory requirements is to search local government websites. However, if you’re expanding on a significant scale, Dearin recommends seeking professional advice. “You can start with Google but if you’re serious about it, a good lawyer with connections in the overseas market or a lawyer on the ground in the market you’re targeting would be best,” she explains. “The last thing you want is to be on a Zoom call where nobody is understanding each other and doesn’t know how the legal structure works.”
“You need to be really patient."
Dearin’s final piece of advice for businesses contemplating selling internationally?
“You need to be really patient, and not expect it’s going to happen miraculously overnight. Be really clear on why you’re expanding, do your research and always stand in the other person’s shoes.”
The Clearpay Cross Border Trade program enables your business to trade online with millions of Canada, UK and NZ Afterpay Group shoppers. Find out more and sign up here.
All references to any registered trademarks are the property of their respective owners. Clearpay does not endorse or recommend any one particular supplier and the information provided is for educational purposes only.
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