E-Commerce

Expanding abroad: tips for the international growth of your e-commerce store

Fatih-Kağan Taşkoparan

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The opportunities seem compelling, new markets beckon, the temptation is great - so why not tackle expansion abroad?

The pandemic has further accelerated the already steadily increasing sales growth in e-commerce. E-commerce platforms for retailers are becoming more and more sophisticated, offer more and more features and options and are becoming increasingly user-friendly. From this perspective, expansion is therefore an extremely inviting and convincing endeavor.

But what are the challenges and risks of such an expansion, which undoubtedly exist?

In order to become active in new countries and thus become an internationally operating company, e-commerce companies must make a number of preparations and implement planning tasks. These include, for example:

  • Choosing the right corporate structure
  • the alignment/adaptation of the brand image
  • the implementation of the technical conditions
  • the organization of logistics

This article will give you a few useful pointers and food for thought to get your international online trade off to a safe start.

The opportunities of expanding abroad

What may have started as a thought experiment can quickly become an irrevocable goal: expansion abroad. The advantages are clear and often economically oriented. By opening up new sales markets, you pave the way for additional revenue and boosted company growth.

In addition to increased growth, cost considerations can also be an incentive for a manufacturing company. As personnel and location costs are often lower abroad than in Germany, you can sometimes significantly reduce your running costs by expanding abroad.

What important aspects do you need to consider when expanding?

However, the opportunities are of course always accompanied by unanswered questions and risks. Serious planning and thorough research are essential. If you are considering expanding abroad, make sure that you fully and seriously clarify the following aspects:

Strategic

First, you have to make the fundamental decision as to whether the expansion is physical or purely digital. As an e-commercler, you have the advantage that you can organize your entry into the international market online - even from your home office.

The advantage of a branch office is that you do not need your own management. You can often manage the branch from the parent company with the existing human resources.

The establishment of a subsidiary, on the other hand, is much more complex and complicated, but also offers some advantages over the branch office: These primarily relate to easier access to the local market, both for customers and suppliers.

The easiest way to tackle the various questions about your corporate strategy is to use a business model canvas. With such a very easy-to-use tool, you can keep a clear overview of the most important aspects and approach them strategically.

Some of the essential questions you need to clarify here include:

  • Expansion, whether physical or digital, involves additional work. Can your team take on this additional workload? Do you have the necessary resources and special skills? Where do you need to expand to cover new requirements such as extended customer service or translations? And does your company have the necessary budget?
  • What steps make sense in your context to localize your e-commerce business? Which new local strategic partnerships should you enter into?
  • What is your strategy regarding returns? Where will they be sent in future, how will they be processed?
  • Consider in advance how your current value proposition fits the target country. How good is the product-market fit, or to put it more simply: are there enough customers for your product? How do you need to adjust your Unique Selling Point (USP) if necessary?
  • And not to forget: Your marketing. How and through which channels will you advertise your products abroad, what impact will the expansion have on your social media strategy? What new content will you need? Which advertising channels do target groups in your target country prefer? What about local influencers to support your marketing in the new target country?
  • And in the financial area: How does the expansion pay off? You need to carry out a cost-benefit analysis.

Legal

The legal aspects relevant to you depend heavily on the strategic decisions you have previously made.

  • Legal questions arise above all when choosing the legal form if you are physically expanding abroad: will you set up a corporation or a partnership? The respective pros and cons are country-specific, which is why there can be no general recommendation. It is important to clarify the individual advantages, disadvantages and uncertainties in detail.
  • It is important to inform yourself in detail about the legal requirements and rules in the target country with regard to company management, customs and taxes. What legal risks do you expose yourself to when expanding? For example, many countries have personal liability for the management - the risk for the management can be considerable.
  • It is advisable to bring an international team of consultants on board to comprehensively clarify all legal and tax aspects of the expansion and to keep abreast of new developments.

Technical

For an e-commerce company, the technical aspects of expanding abroad are of vital importance. They are part of the product range, the key partners and the key resources:

  • New requirements for the systems must be defined and the existing systems must be scrutinized: do they meet the changed requirements?
  • Your existing e-commerce platform must be scalable and localizable. This means that it must be able to handle the increased number of customers and orders as well as offer localization functions such as additional languages and currencies. The major players among e-commerce platforms such as ShopifyPlus or Magento easily meet these requirements.
  • Which additional partners do you need, and can they be integrated into the existing processes, data structures and systems? This is primarily about the warehousing, logistics and payment infrastructure. The better these are optimized, the easier and more profitable the launch of your international business will be.

Conclusion

Expanding into new countries is an enormously complex task that requires conscientious preparation. Many questions need to be answered, processes redesigned and procedures planned.

The potential profit can be extremely lucrative: You draw the attention of a new customer base to your brand, open up a new target country and have the opportunity to increase your turnover. The points of reference for internationalization described here will help you tackle all legal, infrastructural and conceptual challenges and make your expansion a success.

When expanding abroad, get support from tax consultants specializing in e-commerce taxes to make sure you are on the safe side legally. They will inform you about taxes, tax law and tax legislation relating to e-commerce and help you avoid typical pitfalls.

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