With global growth of 21% this year alone, cross-border e-commerce is booming like never before. When it comes to entering new international markets, there’s no time like the present – but is your business ready? And what’s the best approach for your specific company?
It’s not about putting a deadline on the calendar – or just about deciding whether to open a local office or run your international business from where you are. It’s about finding the right moment in your business plan for you to expand.
It all comes down to one key question: is it better to establish a stable local presence before expanding to new regions? Or should you launch your company in multiple different markets from the get-go? We take a look at the pros and cons of each approach.
The “local first” strategy
Approach: First tackle your domestic market and spend a few years generating a healthy turnover there. Once you’ve dominated your local region, you can look to expand abroad.
Example: Starbucks. Founded in 1971, the coffee giant now has branches in 83 countries – but that wasn’t how it started out. For over 20 years, Starbucks exclusively operated in the US, before eventually opening its first store in Japan in 1996.
Pros: This approach puts the focus on a single language and/or market. It puts you in a stable financial position, reducing the risk that the company will suffer if the expansion abroad doesn’t work out. For many years, this was the preferred method in business management circles.
Cons: The business is often so focused on a specific language/region that it requires a lot of time and effort to open it up to new global markets. The company website will often need to be redesigned from scratch in order to accommodate other languages, for example. This slows down the process of international expansion, and also exposes the company to competitive risks: local providers can copy your successful business model and dominate their home market before you’ve even had the chance to launch your product there.
The “born global” strategy
Approach: From day one, you’re expecting your business to be successful in multiple countries – and have designed things like your website accordingly. This might involve using flexible currency programming, for example, or an hreflang attribute for multiple languages.
Example: Uber. The multi-service provider has its headquarters in San Francisco, but began operating internationally very early on. Its services were localized for different markets from the very beginning, and new languages and regions were continually added to the app. Today, Uber is available in 71 countries and 48 languages.
Pros: The way is already paved for global expansion, which means that the process of entering new markets is much quicker. Your chances of success in a new region are also higher if you are able to test your product there early on.
Cons: The risks are higher, too. These include possible regulatory issues. Expanding into new markets too soon – before you’re fully operational in your home market, for example – runs the risk of multiplying the problems you face, as well as your potential.
Your approach will therefore depend on your goals as a company, as well as your set-up and financial situation. Taking these factors into account will help mitigate the risks. Translation and localization are an integral part of entering any new market, as everything from your website to your delivery terms and T&Cs need to be adapted to the local requirements. You can find out more about this here. The question of language isn’t only relevant when you’re expanding, however: no market is entirely homogeneous, and each region is usually made up of a blend of different cultures, languages and local quirks. This is evident in multilingual countries like Switzerland, and in large parts of the US where Spanish is spoken as well as English. In other words, the question of when and whether to localize your product might well arise even before you’ve left the domestic market.
But enough about strategy. How do you know if the time has come for your company to go global? There are a few indicators to look out for:
There is already customer demand
People might be contacting your customer service team to ask if your website is available in other languages, for example, or if you ship to other countries. Your analytics might show that your website is regularly being accessed from other regions. You might also recognize an increased demand for your product in a particular market by observing other providers. Expanding into new markets always works best when it comes as a natural development. To take a highly relevant example: worldwide demand for disinfectant, gloves and masks rose by 800% in the first quarter of 2020. As supply and demand grow, so does your market.
You are familiar with the market, the competition and your target group
You have your eye on one or more specific target markets where you are familiar with the local conditions, from current market trends to legal regulations to the cultural nuances of your customers. You know everything from the preferred payment method in your target region down to the local folklore – like whether babies are delivered by a stork or a giant peach. It’s also worth taking the time to learn from the experience of companies that have already expanded into your target market(s).
Your team is ready
You have the experience and resources you need to enter the international market – both within your company, for example in the form of a Head of Internationalization, and outside it in the form of external partners with knowledge of the local market. These include language service providers, logistics specialists and local contact partners. Your sales team also needs to be equipped to handle customer inquiries from the new market.
Timing your move right is helpful, but when it comes to achieving international success, understanding the impact of global expansion and how to adapt your product to the local culture and target group is even more important. As the Darwinian principle goes: it is not the strongest that survives, nor the most intelligent, but the one that is most adaptable to change. We are here to help you adapt – whenever and wherever you choose to take your first step into the international market.
Cover image via Twenty20