This post was updated on October 30, 2020 to reflect current market dynamics.
In the second quarter of 2020, global digital revenue shot up 71% compared to the previous year. As global buying behaviors shift due to the health crisis, an ecommerce presence is no longer a nice to have. It’s a need-to-have.
Before joining Salesforce, I managed the direct-to-consumer (D2C) channels for two fast-growing U.S.-based companies. Through trial and error, I learned how to map a successful global commerce strategy While it’s tempting to go full steam ahead to capture your global potential, there are so many considerations (and pitfalls!). It’s hard to know what to focus on first.
While every company is different, there are key steps to international commerce success:
- Identify international market potential
- Understand the challenges of international ecommerce
- Localize by market
- Determine payment methods
- Activate and launch
Let’s examine each.
1. Identify international market potential
It’s easy to find digital transaction volume in a given country, but they only provide a starting point. Look deeper: What is the population size in the country? How stable and penetrated is technology, particularly mobile and logistics infrastructure? What about geopolitical considerations?
It’s also critical to understand the level of brand awareness. If your brand is a relative unknown, factor in the cost, time, and effort of building awareness. When prioritizing markets, search for consumers abroad who know your brand. Capture as many data points as possible. Dig into web tracking data to learn where people browse your site. If you have non-transactional sites in the countries you are considering, analyze traffic volume and trends. Include referrers and social media signals in these markets. This exercise will help determine the countries fertile for growth.
2. Understand the challenges of international ecommerce
Expansion to any country comes with challenges and complexities. For example, a U.S. retailer looking to expand into Canada (with a forecasted $33 billion in ecommerce sales in 2024) needs to consider custom, duty, and taxes. Taxes can be very complex depending on your brand’s legal status in certain provinces.
In my experience, it’s most effective to first target a small number of strategic, high-potential growth countries. Fill in remaining markets with a verified third-party international fulfillment service. It can plug into your own checkout experience. Salesforce Commerce Cloud customers can leverage the AppExchange and Commerce Cloud Partner Marketplace for pre-certified fulfillment partners and faster integrations. The partner you choose should manage all backend fulfillment on your behalf. Their capabilities should include payments, fulfillment, duties, customs, and tax compliance. They should provide a low-risk option for testing across many markets.
3. Localize by market
Once you decide there’s a market opportunity, immerse yourself in the consumers. Delivering a localized experience goes far beyond site translation — although even that has nuances. A “sweater” in the U.S. is a “jumper” in the U.K., for example.
Language is the most important consideration for localization. Poor translation is actually the number one hindrance to conversion on foreign sites. Other factors include different address formats and varied checkout preferences.
Usability also plays a role in a localized experience that resonates with customers. Consider separate product photography featuring local models or up-close shots of stitching and labels.
Finally, campaigns may need a local makeover too. Some countries start end-of-season sales earlier than others. Weather conditions in different hemispheres trigger the need for different clothing.
Your localization checklist
- What is your approach for campaigns and promotions? Is it one-size-fits-all or country specific?
- What is your product catalog and inventory mix? Is there one central warehouse selling the same products across all targeted countries or are there exclusive products per country?
- What is your price strategy? Will the item price be the same across regions?
- Will you have individual teams in the respective countries? What is their size and level of web managements skills?
4. Determine payment methods
Payment and tax are two of the most complex factors. Tackle these locally based on legislation, diversity of payment types, and consumer preferences. For example, consumers in some Asia-Pacific countries value convenience above all else. Those in the Netherlands prize consumer protections.
Analyze your target market to understand and offer the best payment mix. Many consumers in the Latin American market use a payment system called DineroMail. After making a purchase, shoppers are directed to a DineroMail site. They print out a payment slip they then take to an OXXO or 7-Eleven to make payment.
Salesforce Commerce Cloud natively supports payment and currency plug-ins from leading providers. This makes it easy to quickly launch relevant payment providers in the country or region of your choice. Customers can pay in their local currency using their preferred payment method.
Brands also need to consider capture and settle when it comes to foreign payments. During the investment phase of your expansion, you can spend money on currency exchange fees if you pay local partners and employees in local currency but settle digital revenue in your home country.
In some countries, complexity is heightened given internet and consumer regulations. In others, you may face volatile currency. If you are going to price in local currency but want to capitalize in your home market, you need to watch exchange rates carefully. You may even consider evaluating risks and potential insurance options.
On top of that, you may need to establish a local bank account abroad. Be sure to complete the entire application process as early as possible to ensure all systems are a go when your site is ready to launch.
5. Activate and launch
Brands may want to leverage existing vendors for their international expertise as a low-risk option to test markets. Before contracting with new partners, check existing third-party logistics providers (3PL). A payment gateway in Europe may also support payments in Latin America. Run a full assessment with all vendors to determine their capabilities.
Make sure all 3PLs meet local requirements. For example, can your CMS handle European umlauts and consume Asian characters? There are a million things that can trip up your launch, frustrate your customers, or put a dent in your plans.
Get ready for what’s next in international commerce
As I discovered in my previous roles, the unique multi-site functionality of Commerce Cloud makes it easy to create and manage local site instances, deploy localized marketing messages and promotions, global content strategies, custom price lists, and more. In addition, check out the pre-certified translations providers in the Commerce Cloud Partner Marketplace to help deploy professional and automated translations directly to your site and marketing efforts.
Hopefully, these five steps will help you on the road to international expansion. To learn more strategies for global expansion, check out this comprehensive guide.