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The international potential for Australian businesses

The prospect of internationalisation is intimidating, especially the overwhelming thought of the time and monetary investment needed to expand. However, international expansion can be as straightforward as trialling your product in new regions or delving further into expansion by developing a localised website. 

The global eCommerce opportunity is mind blowing. Cross-border trade is expected to account for 20 percent of eCommerce by 2017. Any retailer worth its salt is already expanding or planning to. Many retailers find that expanding internationally can be a low, calculable risk that offers a consistent and high return on investment, provided they choose the right partners. Beyond the aforementioned global growth, there are numerous reasons these retailers are driven to broaden their horizons and expand internationally:

Seasonal Stock: Many retailers are expanding their reach in order to sell excess seasonal stock. For example, apparel and sportswear retailers have begun selling their summer stock to the Australian market once the season ends in Europe and the US. This lengthens the season and avoids the issue of excess inventory or selling remaining products at a dramatically reduced price.

Growth has levelled off: Some retailers have found that their growth has become stagnant in one region and do not see the potential for further local growth. This can be down to aspects such as market saturation. However, rather than accepting this as the status quo, savvy retailers are looking to markets where there is a demand for their products and potential to drive growth.

Strong domestic competition: If you are in an industry fraught with competition, it is easy to become embroiled in price wars, squeezing your margins to the breaking point. Broadening your horizons to new marketplaces is a way of getting a step ahead. Now is the time to embrace cross-border trade and establish yourself internationally before your competition has the chance to do the same.

Diversify the risk: Everyone is familiar with the old adage that you shouldn’t put all your eggs in one basket. This pertains not only to relying too heavily on one online channel, but also relying too heavily on one country. Selling internationally can diversify the risk to your business in a number of ways:

  • The more marketplace geographies you sell into, the more potential buyers are seeing your products.
  • The more countries you sell into, the less vulnerable you are to any one country’s economic situation.
  • Often, items that don’t sell well in one country fly off the shelves in another. Some of our sellers increase the breadth of their products to cater to their foreign buyers.

Ease of expansion: Marketplaces like eBay and Amazon are focusing on internationalisation, and this has simplified the process of selling your products in multiple regions. Amazon has simplified international selling for online retailers in Australia and APAC. ChannelAdvisor Australia recently announced an expanded service offering, which will enable retailers in Australia and APAC with cross-border trade initiatives and selling through Amazon.com. In addition, Fulfilment by Amazon (FBA) can expedite shipping and protect your all-important Seller Ratings.

Is internationalisation is for you?

It’s a rare case that sellers don’t have an opportunity to expand abroad. A good signal for expansion opportunity is if you’re selling items consistently to a specific country. This means that your price and shipping are attractive to that country’s buyers. Attractive enough, in fact, that the buyer is willing to purchase even though the ad isn’t in their native language. You then have to ask yourself, how many other buyers from this country am I not reaching?

On the other hand, if your English items are not selling to foreign markets, that doesn’t mean they couldn’t. Perhaps one of your competitors or a local seller is luring customers away from you because they are already listing directly to the foreign market. Intercultural Elements, the intercultural consulting and eCommerce-specific translation service, has found if a retailer’s items sell well in a domestic market, they will generally sell well in foreign markets after being properly translated and localised.

The benefit of the eCommerce revolution is that you can test the international waters without much investment. Trialling your products on eBay and Amazon in different regions to judge that market’s reaction is a great way of gauging success. Having said this, even testing the waters has to be done properly to effectively measure your accomplishment and to ensure this does not impact your performance.

Where is the international eCommerce opportunity?

The international eCommerce opportunity really depends on some key factors, including: where your business is based, your business model and your products. To best judge which items to expand to which markets in what order, it is better to receive a consultation; but generally, for Australian retailers, selling into the common language markets provides the best return on investment. Markets such as the US, UK, New Zealand and Canada are a safe bet, followed by countries like Singapore, India and Hong Kong. For UK retailers, the UK, France and Germany tend to be good large markets; second-tier expansions are then Australia, USA, Italy and Spain. If you’re based in the US, then Australia and Amazon Canada tend to be good starting markets.

How to approach expansion

Take your business’ expansion seriously, and get it right the first time. ChannelAdvisor partner, Intercultural Elements provides these tips for expansion:

  • Don’t assume everyone speaks English. Although most online buyers speak sufficient English to understand English ads, most buyers would prefer items in their native tongue, and under the rules of the country they live in. This desire increases with more expensive or more technical items.
  • Selling items successfully abroad is not unlike selling them domestically; it’s all about building trust. Machine translations (or even human translations that aren’t ecommerce-specific) erode that trust, as do ads that have not been localised for the country you’re selling into.
  • Be aware of the different payment methods that are preferred in each country. A seller listing in Germany without offering wire transfer puts a barrier in their own way, and Amazon Italy requires you have an Italian bank account. There are payment gateways that can help with this.
  • Each country-specific eBay and Amazon site has subtle but important differences in the different geographies. Here are some examples of what to pay attention to:
    • Price of listings with and without a shop; sellers can save lots of money by knowing whether to buy a shop and where the rates are the best for their type of product.
    • Categories, browse notes, item specifics, etc. can differ greatly per geography; since search is increasingly based on these, it’s vital that the translator be able to navigate the marketplaces to choose these correctly.

Starting out

When starting out, marketplaces such as eBay and Amazon are a good starting point. These options already have an established audience of millions, as well as a recognised process and low barriers to entry. Trialling your products on these sites will be a good indicator of how your product will perform in that marketplace, all while establishing a customer base internationally.

There is no doubt that there is a lot of potential with international expansion, but it is not a case of one-size-fits-all. You need to identify an approach that suits your business offering and expand at a pace you are comfortable with.

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Mark Gray

Mark Gray

Mark A. Gray, is managing director, APAC, ChannelAdvisor.

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