In most retail markets, local favorites have a decided advantage over newcomers. People who live in the area grow to trust certain small retailers, understand regional brands better and appreciate home-grown business. But in an increasingly digital world driven by e-commerce, there is plenty of space for global suppliers to gain a foothold and challenge established hometown brands.
This isn’t to say consumers have completely abandoned their local favorites and flocked to e-tailers abroad – according to PricewaterhouseCoopers, local brands still command regional business. However, the study found that international multichannel e-tailers are attracting more and more consumers away from domestic brands. In China, four foreign brands made consumers’ top 10 favorite multichannel retailers. In Turkey and in Germany there were three in the top 10, while in Brazil there were two in the top five.
In 2012, it seemed retailers were having difficulty breaking into foreign markets, according to Harvard Business Review. HBR pointed out that Wal-Mart was forced to withdraw from Germany and South Korea even though it succeeded in Canada and Mexico. Indeed, even in 2016 there are obstacles that may prevent massive corporations like Wal-Mart from finding success in certain regions. Each case is different, but in the years since 2012 more e-businesses have managed to stake a claim in international markets. Here’s what an e-tailer should consider when trying to carve out a niche in a foreign market.
Proximity makes a difference
Geographic location makes a difference because consumers in nearby markets may be more comfortable and familiar with certain national customs or languages. In other words, an e-tailer from Canada seeking international presence may be better off starting with U.S. and Mexican consumers than, say, Japanese or Egyptian ones. For example, German consumer electronics retailer MediaMarkt enjoys just as much popularity in the Netherlands as it does in Germany, according to PwC. By playing off nearby markets, e-tailers may begin to grow their consumer base.
However, that shouldn’t deter e-tailers from seeking a foothold across the world – just to start with their own neighborhood and gradually expand as they identify new potential consumer bases.
While it isn’t difficult to calculate accurate exchange rates across any international currency, e-tailers are better off providing the option of paying in a customer’s home currency. This advantage will play out in two ways:
- Customers will feel at ease working with their preferred currency. Familiarity is one factor that keeps consumers with their local businesses – offering products or services priced in the country’s main currency will help to alleviate the feeling that this e-business is foreign.
- Paying in foreign currency may induce unexpected fees and higher costs. Prices can be easily skewed during the conversion process and consumers may be left paying more than they had anticipated.
To compete with local players, foreign e-tailers should make the buying process as smooth and comfortable as possible. Leveraging a logistical software platform and infrastructure can give e-businesses a way to provide clear, accurate, and speedy currency exchange options.
Be prepared to invest
Any foray into an international market should be a confident move. Once an e-business has done its due diligence by researching the markets and assessing the competition, its expansion should be decisive. A big part of that is developing a robust advertising campaign to build up excitement among local shoppers and compete with existing retailers.
There is also the infrastructure to consider: A business has to be able to get its products from Point A to Point B, even if that means shipping a package halfway around the world. To that end, it helps to leverage an independent team of e-tail logistical support with the expertise to handle the rigors of international shipping and fulfillment.
Consumers want a brand they can trust. If an e-tailer is coming from another country, it must establish that dependability right away. Backorders, delays, botched currency exchanges, poor customer support and confusing returns processes can all undermine that relationship. By entrusting logistical support to a third-party company and powerful software platform, foreign e-tailers can burst into new markets with confidence.