It’s no surprise that retail brands are increasingly looking to expand beyond their core market.
The opportunity to become established at an international level, engage new customers and ultimately, open up additional revenue streams is an enticing prospect for any brand with ambitions for growth.
British fashion label SuperDry has driven an aggressive growth strategy in markets including Europe, the US, Canada and Mexico and made it look relatively easy. With further expansion planned across Europe in the next 12 months and its recent step into China, the retailer is showing no signs of slowing down.
But, successful internationalisation is by no means simple. Performing well within your core market is not enough to guarantee success outside of it. There are many challenges associated with expansion, from understanding the cultural norms of a new market to adapting to individual preferences.
So, for retailers that want to follow in the footsteps of the likes of SuperDry and ASOS, here are the key tips to keep in mind when embarking on internationalisation.
Crawl, walk, run
A gradual approach to expanding internationally is most often the best, especially if you need to build a business case for a broader strategy.
As a first step, you can make international shipments available from your home market. However, at this early stage you will need to consider how you will ship your products, accept various payment methods, and comply with tax and other local laws.
One option is to outsource all elements to suppliers such as Borderfree – from getting your site ready, to currency conversion to accepting payments, through to logistics and compliance with import and local tax laws.
Using this approach will enable you to identify the potential of various markets and key challenges (e.g. differing tastes and merchandising, organisational realignment, new ecommerce platforms to support scaling) and allow you to adjust the strategy accordingly.
Set up a clear hub
Once the decision to go beyond direct-to-consumer shipment (from the home market) has been made, the most common next step is to establish a central hub to provide stability and foundation for further growth.
For US-based companies trying to enter Europe, the most convenient hub is often the UK as most of the underlying factors that make the retailer successful in the US will be closely matched. It doesn’t mean there aren’t differences, but factors such as language, culture and even preferences will be similar. This gives geographical presence in Europe, which brands can use as a platform to extend to other countries.
Alternatively, some companies have opted to establish a presence on the continent as an early hub; most common is Benelux, due to accommodating tax laws, their proximity to other European countries for logistics, and the presence of a future workforce with experience of building international businesses.
Rotterdam, a central European hub for shipping
Identify quick wins
Quick wins give confidence and create momentum, so once the hub is established, look for the relevant markets that are small enough to adapt to quickly.
Countries where consumers regularly purchase online from foreign brands, such as the Nordics, Benelux and Cyprus, should be considered for early success. For UK-based companies, other English-speaking countries tend to provide a more simple entry point.
Online traffic data offers valuable insight into where the customers shopping in your ecommerce store are based outside of your core market. Use this data to pinpoint where to go first. As they are already engaged with the brand, expansion into these countries should be more straightforward.
Additionally, ecommerce data will show previous purchase patterns and preferences, which must be used to create engaging offers for the local customer.
Recognise different shopping behaviour
Just as each customer has individual shopping preferences and demonstrates different behaviour, the same applies to markets.
One mistake many brands make when trying to expand in Europe is treating it as one whole market instead of many individual ones. Cultures differ hugely from country to country, and this is reflected in consumer shopping behaviour. Applying a one-size-fits-all approach isn’t going to work as the brand continues to grow.
Taking time to understand the consumers of a market at the start will serve you well in the long run.
For instance, whilst mom-and-pop stores enjoy a resurgence in the US, they have almost completely disappeared from the UK market. Catalogue purchases are still very popular amongst German consumers, compared with other European countries, and credit cards aren’t used so frequently with customers preferring more traditional methods such as pay by invoice or cash on delivery.
It is vital to understand the nuances, adapt on a market-by-market basis and realise that markets will require differing levels of investment.
2013 chart via Globalmaxer showing German payment preferences
Be flexible and ready to adapt
Internationalisation is not something that will happen overnight, nor is it always likely to follow the path originally set out. Approach it as a long-term investment and be prepared to act in an agile manner.
If your current strategy isn’t working you must be willing to change tack or, in some cases, step back altogether. The investment horizon will vary by market and some will take a lot longer to become established in than others. Keeping close to customer data will help detect developments in the market and identify where changes need to be made.
But with technology becoming more sophisticated, successful expansion is easier than ever to achieve.
For more on this topic, read Five golden rules when localising for international ecommerce.