It is undeniable to think that selling internationally is a bad time. With the trend of globalization over recent decades, it’s also best to understand the risks and rewards before going forth.
Why selling internationally is good for you
The global market size is a huge advantage you should consider as it involves selling internationally. This opens up a wide variety of options for you.
Statistics have shown that eCommerce across borders is expected to hit USD 627 billion in 2022. Reports mention how consumers are increasingly focused on global marketplaces for products that are not available in their local countries.
There are reasons why international shopping has been driven forth over the recent decades. For one thing, the lack of access to domestic goods is a big factor. To give an example, baby formulas in the Chinese market are quite short in supply, leading to a lot of local consumers seeking to purchase from overseas manufacturers.
Prices and shipping can also be relatively affordable which drives the big force of selling internationally, and this trend continues to show no sign of falling off.
Since selling internationally has been accessible over recent years, many suppliers are pushing to manufacture globally, pushing to grasp a wealth of new customers.
1. Choosing the market that applies well to your business
It is crucial to start off with research to identify key countries before selling internationally.
First thing’s first, do your homework and determine who your international customers will be.
PayPal’s research unraveled that cross-border shopping has been more prevalent than ever, with even more confidence among cross-border customers since the pandemic. It was also found that Chinese online shoppers have a very high preference for using smartphones to shop.
This reflects the major role of eCommerce in the global market. The research also mentions that Worldwide eCommerce will continue growing this year up to an estimated USD 4.89 Trillion in total online retail sales in 2021.
Making a choice on the ideal online marketplaces for international selling is important before jumping to it. It will require research and understanding which platforms are more popular for your target countries – all things to consider when being an international seller.
You will also need to figure out some key things. Whether there is demand for the things you are selling in that marketplace, the list of competitors you will encounter in that market, how often seasonal purchases occur and whether price adjustments are necessary.
2. Settling down on the appropriate channels
After settling on your target locations for selling internationally, the appropriate marketing strategy should be considered.
It’s quite easy to rely on Facebook and Google for local targeting. However, you will have to consider the channels which are more prevalent in your targeted countries.
China’s digital marketing strategies vary drastically compared to most countries, for instance, Baidu is the most dominant search engine there. While Reddit is a trending global platform for discussion on social media, Weibo is China’s equivalent, being less popular outside of China due to its nature of localized content and language.
When you start selling internationally, especially if China is your preference, it’s worth focusing on the mobile apps for your eCommerce store.
The trend for smartphone usage for eCommerce in China has always been a trend, the market is highly saturated where ease of accessibility exists. It was proven that smartphone shipments to China have amounted to 94.6 million units within Q1 of 2021.
While investing in mobile apps that are readily available in China, it’s quite important to focus on their more prevalent shopping apps like Tmall, JD.com, Taobao, and such.
3. Consider payment options
Online shopping carts are abandoned quite frequently, research has shown that fewer payment options on checkout pages carry a large factor for the missed purchase opportunities.
It is important to ensure that your payment methods are most preferred by the shoppers in your target countries.
For example, most European countries prefer Visa, Mastercard, and American Express for eCommerce payments. Meanwhile, Asian countries actually carry a strong preference for cash on delivery.
Other than payment options, you will have to also take local currencies into account. When displaying your prices, the customers will need to see the price conversions to see and understand how much they are paying.
4. Understanding tax rules and regulations
It takes more than knowing which countries are best for targeting before selling internationally. You have to comply with regulations surrounding cross-border eCommerce and also how it can potentially interfere with your products.
Finding out how tax duties affect shipping and landing cost, including your overall total for delivery helps you plan and know whether your customers would require additional fees up-front.
If that country carries a free-trade agreement, while your product category is under the covered sections, tariffs are likely to be reduced or possibly eliminated entirely.
An unfortunate spectrum of cross-border eCommerce is custom regulations. This means that international shipments require a customs form attached to the outside of the package for officials to understand its content.
For dropshipping fulfillment, it’s important to find the best dropshipping suppliers to ensure a smooth operational process within the countries you are selling internationally to. If you are interested in this topic, you should visit HKTDC Research.
5. Determine your international returns policy
For international selling, there comes a possibility of international returns. Legislations for handling such matters will vary depending on the market.
Your returns policy should comply with local laws and you should ensure that any restocking or return fees charged are communicated, in order to keep the local consumers well-informed.
To get the returns across borders cost-efficiently, you can contemplate having a local returns center. You can also consider partnering up with an efficient local logistics service that can offer a variety of returns options to consumers, providing a faster refund and simplification of the overall process.
If you are selling internationally on a new Amazon marketplace to fulfill orders yourself, you should familiarise yourself with their rules on international returns. For instance, you can automatically have local return addresses provided to you if you fulfill the company’s FBA program.
Having an established clear returns policy makes selling internationally a smooth experience, especially for the customers. It provides these shoppers a sense of security, seeing a well-thought-out returns policy can relieve their stress when attempting a returns or refunds service.
It’s also important to set up your eCommerce customer service platform. When handling consumer concerns from a separate timezone, you will have to consider how these issues can be handled outside of office hours.
For instance, you can create a ‘Contact Us’ section, for you to settle customer expectations with timely communication, without any concerns of the hour via personalized, automated messaging.
More importantly, selling internationally would mean that you need to have an integrated helpdesk at your eCommerce platform for ease of accessibility. hktdc Sourcing’s Contact Us section is a great example of not requiring customers and yourself to log onto different platforms when communicating with customers.
4 tips to selling Internationally with your online shop
Without a doubt, selling internationally can be a challenge at the start. However, there are ways to make this process simpler, the following will provide additional tips to get you started.
1. Checking with your payment providers
Payment providers have their own sets of rules and regulations within countries that you accept payments from. Visa, Mastercard, PayPal, and other payment processors will tell you where they accept payments from, different ecommerce platforms will work differently with different payment methods.
Ensure that your payment provider has a strong global reputation, this helps signal trust to your customers. Given the variety of different payment processing options available, customers can be reassured to commit to whichever method is readily available for them.
When selling internationally, your payment options are crucial deciding factors for your wide range of customers. It’s important to commit to research before opting-in for your preferred payment methods in foreign markets.
2. Estimate shipping costs
Selling internationally can be quite expensive due to shipping. This comes from the estimation of distance, tariffs, and taxes – making it quite important to calculate shipping and handling costs before ensuring your profitable outcome.
There are ways to reduce shipping costs, such as storing inventory closest to your customers, or even finding out that certain markets are not feasible. Unless you focus on increasing your average order value.
While reducing shipping costs, you can focus on partnering up with local shipping providers that are readily available in the country you are targeting. An example would be FedEx which is internationally available in a variety of countries across the globe.
Having the option to provide tailored shipping methods to your customers will benefit the shipping costs and how you charge. There is a lot to consider such as destination country, slow & expedited options, flat-rate shipping, real-time rates, or free shipping if possible.
3. Optimise your online store
We can’t deny that your store’s website is the major hub for your customers. When handling customers at an international scale, you will have to optimize your current website with a multi-language option.
This can mean creating separate landing pages tailored to visitors from certain countries or regions. As an example, many brands would sometimes add flag icons at the top of a page, helping international customers view the page according to their language preference.
It is ideal to create an easily accessible function for international customers to change the language and see the price conversions in their country, which provides them a sense of easiness and comfort when browsing foreign products out of interest.
4. Get a third-party fulfillment partner
Third-party logistics (3PL) partners will help you with digital fulfillment and shipping when taking the step to an international market. When you are committing to exploring 3PLs, you will have to ensure how their services and set up for you can efficiently and proceed quickly.
There is a variety of 3PLs that are readily available to provide worldwide shipments at an ease for new companies looking to step into an international market for the first time. Some examples are DHL, Kerry Logistics, DB Schenker, and more.
When looking to initiate your eCommerce growth strategy, international selling would require a reliable 3PL partner which offers fulfillment center locations and plans that help you expand to newer markets. In this way, you can reach your customers faster and track your entire fulfillment process in one central location – this usually happens by splitting your inventory across many locations.
4 challenges to tackle when selling internationally
Stepping into an international market will definitely raise certain issues. Aside from watching out for things like which products can be imported and the country’s local laws or shipping regulations, there are other challenges to watch for.
1. Culture and consumer behaviour
One common misconception is that potential customers face the same problems, wherever they live across the globe. While it is obvious that your product needs to stay relevant to attract a massive international audience if you’re selling abroad, the reasons and appeal for your product will vary for your customers over time.
When looking up the appropriate market channels, it’s usually not very cost-effective when selling directly. In such cases, you will have to collaborate with certain partners. It usually works best when sticking to a channel that is relevant to the local audience and customers you are hoping to address – do note that this set up varies a lot depending on the country.
When you are seeking to promote in a different country, their cultural norms and consumer behavior is a strong thing to account for. You will have to ask yourself, “Does this country have a demand for my product?” If you are selling basketball equipment, it may be popular in China but is it popular in countries such as India, Pakistan, or Mexico?
While basketball is widely popular in China, other countries favor their national sports. For instance, cricket is the national sport for India, hockey for Pakistan, and Charrería for Mexico.
This could mean that cultural favoritism matters depending on the country’s preference for sports. Understanding the market trend and cultural preference will help you make the right decision for what you should offer depending on the consumer’s behavior within certain countries.
2. International pricing
If you don’t understand the competition, it will affect your understanding of your target audience within your target market. Especially for newer companies, the world has probably not seen your product but is already living the same way they are. You would have to think broadly, consider how your product can contribute to solving a problem that you want to address directly – also, what other alternatives are already readily available out there?
There is often a local company already existing which you’ve never heard of. They could even carry a large market share of your target consumers, and positioning yourself against them could be your key.
Other than local competitors, your product pricing is another considerable factor. If you are looking to jump into selling internationally, you have to understand the local consumer’s average spending power. If you are based in Hong Kong, looking to sell in Ukraine, you will have to offer lower prices as the country’s GDP and per capita income is relatively low.
Shipping internationally will definitely be pricier too. This would also affect the consumer if you are selling an inexpensive product but the shipping costs would be higher than the item. In most cases, this leads to a higher cart abandonment rate leading to a lot of bounces as the customers would be surprised at checkout.
Do ensure to keep a close eye on your landed costs that factor import duties and shipping costs that decide the final price. Imagine if you have customers in Pakistan paying for a box of noodles for $20, and they have to add an additional $40 for shipping on top of that. These cases are quite common for international shipping which can be tough when planning out your international pricing.
3. Fulfillment costs
Optimizing your supply chain such as moving inventory and fulfilling orders is ideal if you are working remotely and selling internationally. Be wary of international fulfillment costs as they can accumulate quickly. One solution is to find a fulfillment partner that provides support and sets up international order fulfillment on either global locations or provides a relatively lower shipping rate, supporting your international eCommerce strategy.
There are case studies where working with fulfillment partners provides support to international locations and helps expand depending on your company’s requirements. It is quite reliable as fulfillment partners can tailor to your needs directly while attributing to your company’s vision.
In one case, Leonie Lynch, Founder & CEO of Jupsy, used a fulfillment agent called Shipbob. His experience with a fulfillment agent reflects a positive case of relying on a fulfillment agent, in his case, he ends up with transparent pricing which helps him utilize a more efficient and easy method in running his own business.
4. Laws, fees, and tax
Certain countries cannot import certain types of products, and this varies a lot. It can even boil down to a single material found within your goods. Even when your product is eligible to ship to another country, this doesn’t equate to affordable pricing.
Import duties are important to focus on especially when you search to sell internationally, import laws, taxes, and duties will vary for each country. When determining where you can sell legally, and how much it will cost to do so, you will need a lot of careful planning and thought processes to go through before starting.
If you are looking to sell and deliver your product to a foreign country, here are some pointers to pay attention to. To start with, international eCommerce orders would usually have to go through customs before entering a foreign country. In a lot of cases, the package or product delivered would have to go through various carriers when transiting to the pit-stops before reaching the final destination.
For instance, if you are shipping from the US to Germany, your product will have to go through USPS from America – and then transition to Germany’s local Deutsche Post. Normally this transfer can break order tracking or even cause a delay between transit times. Making it difficult to manage consumer expectations for delivery time.
In a lot of cases for customers, when unaware of upfront fees that they need to pay when receiving their package, they might even choose to not claim the goods. This can harm you since you will end up carrying liability for those packages that are held at customs. Delivery Duty Paid (DDP) shipping is usually more expensive, but you will end up at risk of getting your orders sent back and refunds.
DDP makes it easier for your consumers to receive their goods without worries of duties fee and having a reliable fulfillment partner can also provide their support in this situation. BAKblade as an example has tried to expand their offline presence in Canada, they were overwhelmed with additional taxes for order shipments to the US due to tariffs and tax duties required by the Canadian customs.
In return, BAKblade took the initiative to partner up with a trusted fulfillment partner who helps identify and establish a standardized shipping and customs fee. This helped BAKblade focus on their market expansion without worries of varied pricing to their customers as long as fulfillment order centers are settled in the foreign countries they expand to.
It’s never a bad time to start selling internationally, especially during the era of a pandemic where online shopping has been more prevalent than ever.
With the utilization of online shopping, smartphones have played a very strong role in the rise of eCommerce over recent decades. This exemplifies how selling internationally is very advantageous, especially in countries such as China where smartphone usage has gone to a very saturated point and various eCommerce apps in the Chinese market like Taobao, Tmall, and such have come into existence over the recent years.
When selling internationally, you will have to identify various things such as payment providers, shipping cost estimates, online store optimization, and having a third-party fulfillment partner. These are very crucial things to consider since they affect the flow and future of your plans to sell internationally.
While you may have solid plans and be prepared for different scenarios, there are challenges that may arise when selling internationally. There can be cultural barriers that revolve around the consumer’s behavior in your targeted country, expensive prices due to the country’s weaker purchase power, fulfillment costs that accumulate quickly & governing laws or tariffs depending on the country’s customs department.
There are key things you need to consider, utilize and tackle predictably in order to keep yourself in the game of international selling. It is very crucial to keep yourself updated and ahead of your competition, especially since international selling is focused on the aspect of global targeting – rather than a smaller group of local targets.