DHL's analysis of trade statistics shows that by going international, e-commerce merchants can increase sales by up to 15 per cent in the first year and double their growth rate at the same time.
The aim of this article is to help your business expand internationally. To do this, we will first look at the main forms of internationalisation and strategies and identify the main pain points. Then we look at the often neglected software side of these projects: Which system really makes internationalisation a success and which tools facilitate the process?
Internationalisation in e-commerce: what forms of trade exist
DHL's analysis of trade statistics shows that by going international, e-commerce merchants can increase their sales by up to 15 percent in the first year and double their growth rate at the same time. There is no single way to succeed in foreign markets. The best strategy depends on many factors, such as the demand for your product in the target country, the competitive situation or the size of your business. A basic distinction is made between:
Cross border selling: The simplest form of international trade. You sell goods from your shop across borders and adjust shipping costs and charges accordingly. Cross-border selling is particularly suitable within the EU, as there are usually no customs barriers and payment is made in euros in most Member States.
Export: Basically the same as Cross Border Selling, with the important difference that as well as direct export (you sell your goods B2C), there is also indirect export. If you find a wholesaler abroad to sell your products for you, this is called indirect export.
Licence and franchise: You grant a foreign manufacturer permission to produce and sell your goods. With a licence, the licensee is largely free to decide how to proceed. With a franchise, on the other hand, they are bound by your marketing concept. This is why McDonald's, for example, looks the same everywhere, sells the same burgers and uses the same advertising.
Cooperation: You look for a partner abroad to help you break into the market. When Apple launched the iPhone in Germany, it first teamed up with Deutsche Telekom. Since this still exists, despite Apple Stores in all major cities, it has even become a strategic partnership.
Joint Venture: Here, too, you look for a partner company abroad. Together, you then set up a third-party company to sell your products. The joint venture is legally independent of its parent company.
Branch office: You open a new branch abroad, which is legally part of your parent company.
Subsidiary: You set up a new company abroad that operates independently and is legally separate from the parent company.
Internationalisation strategies: The most important sub-strategies
There is no single strategy for successful internationalisation. Rather, an internationalisation strategy is made up of a variety of aspects, which must be weighted differently depending on the situation. The most important of these are:
Target Market Strategy:
In which and how many countries do you want to play? Untapped markets can be lucrative but also risky. Expanding into many countries promises fast growth, but can also lead to high losses if it is not successful.
Market development strategy:
How do you intend to enter the new market? As an exporter, a licensor or with your own subsidiary? The closer you tie the market development strategy to your company, the more control you have over all strategic decisions. At the same time, however, your financial commitment increases and so does the risk.
Timing strategy:
When will you enter the market? This does not mean the time of year, although that can play a role, but whether you are one of the first to enter a new market or whether the competition is already established. In the first case, you bear the risk of entering the market, but you can expect high profits if you are successful. In the second case, you can predict your sales figures fairly accurately, but you have to constantly fight against your competitors.
Allocation strategy:
How will you handle procurement, logistics and distribution in the new market? Do you want to manage everything centrally or differentiate by country? A centralised approach makes planning easier, while a differentiated approach allows you to adapt better to the target country.
Coordination strategy:
How will you coordinate your activities abroad? Do you have local managers or is there a head office in the home country? The former promises more socio-cultural success in the market, the latter gives you much more control.
Checklist: Typical internationalisation mistakes in e-commerce and how to avoid them
After all, companies run into the same problems time and again when they take the plunge across the border. The most common pitfalls are:
Avoiding these mistakes requires careful strategic planning. The next step is to go through this checklist point by point, making sure you tick off each item:
#1 Carefully select the target market
The first question is of course: Where do we want to expand to? Almost all further steps depend on the answer. Many e-commerce traders take their first international steps in the DACH region - assuming that Austrian and Swiss customs differ only slightly from German ones.
But beware: as is well known, the Swiss Confederation already uses a different currency and levies import duties; in reality, it may be a more complex market than Belgium or Italy, for example. However, much more important than all the supposed hurdles when choosing a destination is the question: Is there even a demand for my offer there?
#2 Consider cultural differences
A Portuguese is melancholic by nature and a Dutch woman is significantly taller than the average European woman? Sure, these are clichés, but there is always a grain of truth in them. Therefore, you should never copy your website one to one from the German model, but rather adapt it to the typical customs of the country. This includes tonality and visual language, of course, but also details such as preferred payment methods or country-specific shipping options.
#3 Competitor analysis is a must
An in-depth analysis of your competitors will give you the answers to many questions about successful internationalisation. How do the national shops differ from the German offer? How are goods presented? How aggressively are promotions and special offers advertised? If you can't find any meaningful statistics for your target country, look at the shops of as many competitors as possible. Click through to the checkout. This will give you an idea of which payment methods are most popular locally and which shipping options are most important.
#4 Clarify the legal situation
Taxes, data protection, legal notice, terms and conditions - there is a lot to consider when doing business abroad. Within the EU, the hurdles are relatively low. Here, the one-stop shop of the Federal Central Tax Office is your main point of contact. In the UK and Switzerland, however, things are more complicated. In both countries, for example, you need a local legal representative to be allowed to trade at all. Our advice is therefore Always get expert legal advice for your overseas business, otherwise it can get expensive.
#5 Find strong logistics and fulfilment partners
Shipping from Germany to the rest of the world is possible, but not very attractive. Your customers pay high shipping costs and have to wait a long time for their order. Exchange becomes a horror scenario for them. It is much better to provide storage and logistics on site. However, this requires a large and risky investment. It is better to rely on a partner to handle these tasks in the destination country. All the major carriers offer international fulfilment. There are also logistics providers, that specialise in international business.
#6 Choose the right software
Last but not least, internationalisation in e-commerce can only be successful if you rely on a software system that supports you every step of the way. For example, it would not be very efficient to manually adjust every single price in the shop to the current exchange rate of a currency, or to send the order confirmation email in Polish. The best shop systems are designed for international trade and automate many processes at the same time: For example, prices are always displayed in the local currency or shipping costs are adjusted to the customer's location. The shop has a country-specific domain and can be switched to the preferred language in multilingual countries. Payment providers are adapted to each country, as are shipping options. The possibilities for making your day-to-day business easier are endless.
Successful internationalisation in e-commerce: the right shop system
In fact, #6 on our list is the one that has the biggest impact on online retail. Because #1 to #5 are one-off processes. Your shop system, on the other hand, is something you will be working with every day and hopefully will be with you when you expand to the next country.
The shop system you choose should at least cover these points:
Possible systems include Shopware, Magento or, if you have the IT skills, WooCommerce.
However, our favourite is Shopify Plus. The system does the following, among other things:
#1 Multi-Currency with Shopify Payments
Shopify is already capable of handling multiple currencies out of the box. By default, prices are converted into Euros, US Dollars, Canadian Dollars, Singapore Dollars, Hong Kong Dollars, New Zealand Dollars and British Pounds at the current exchange rate. The currency displayed to store visitors depends on their location. When you enable Shopify Markets for your business, the number of supported currencies increases to 133.
Read more: Shopify Markets
#2 Automatic shop translation
Shopify Plus currently supports 20 different languages out of the box and is able to automatically translate all shop content, including outgoing communications such as your transaction notifications. The language displayed can then be selected by the user or determined by their geolocation. With Shopify Markets, you can also choose a separate domain for each country (e.g. www.myshop.de and www.myshop.us) or create a separate subfolder for each country (www.myshop.com/uk) and match the languages provided with the web address.If you need more than the 20 languages already available, you can also find them here in the Shopify App Store. The most popular translation apps include langify (4.7/5.0 stars with 1,418 reviews) or Shopify Translate & Adapt (4.3/5.0 stars with 262 reviews).
Our tip: Although translator AIs are getting smarter, we generally recommend that all texts are reviewed by a native speaker. "I am blue" has a completely different meaning to "I am blue". langify, for example, offers this service.
#3 Localised payment options
One of the most common reasons for cart abandonment is a lack of payment options. If customers do not find their preferred option, they abandon the transaction more than 80 percent of the time. Worldwide, there are about as many preferences as there are countries: In the US, credit cards are the number one payment method; in the huge market of India, people are used to paying cash on delivery; and in China, nothing works without digital payment systems such as Alipay and WeChat Pay. Shopify Payments already supports the world's most popular payment options and can display them at checkout based on your location. Unlike the standard plans, Shopify Plus allows you to customise your checkout and expand it to include a wide range of payment systems. Is your international expansion taking you to the UK? Shopify Plus makes it easy to offer Skrill to your customers.
#4 Shipping providers by market
With Shopify, you can also differentiate the shipping providers offered by country. The shipping options available to your customers are based on the shipping address they provide. Postage and packaging rates are also automatically adjusted.
#5 Localised invoices
The information that must appear on an invoice - such as tax and customs details, legal information or return conditions - can vary from country to country. For absolute legal certainty, we recommend that you consult a notary. To automatically send your customers the invoice that is legally compliant in their home country, there are apps available: the most popular invoicing apps areSufio (4.9/5.0 stars with 473 reviews), Order Printer Pro 4.9/5.0 stars with 855 reviews) and the PDF Innvoice app (5.0/5.0 stars with 587 reviews). Shopify itself is also working hard to integrate this option into its system worldwide.
#6 Manage fulfilment centrally
As mentioned earlier in this article, a central warehouse will not work internationally in the long term. It is better to work with a specialised fulfilment provider. However, it would be pretty annoying in day-to-day operations if the shop and fulfilment system were to run separately. This is why Shopify Plus has numerous interfaces , that can be used to connect external software. This includes a fulfilment service provider's system. This not only keeps your warehouse and shop in sync automatically. Most importantly, you manage everything from a single interface and don't have to switch between different systems.
#7 View tariffs by product and country
Even within the European Union, the movement of goods is not completely duty-free. For example, alcohol and tobacco products may need to be declared. Shopify Plus allows you to add customs information to your products, such as the customs tariff number, and display it at checkout. More features are planned and some are already in testing. In the future, all customs duties will be automatically displayed, added to the selling price and paid to the relevant authority. We will keep you updated!
#8 Control all your stores centrally
Our last point is probably the most important: no matter how many markets you expand into, with Shopify Plus you can control your stores from a single control centre. You don't have five shops in five countries, you have one shop with multiple international presences that you manage centrally. You can choose to make changes to all your stores, selected stores, or just one. The 4th of July discount promotion should only run in the USA? The daring swimwear is not for the Arabian Peninsula? Your new testimonial only works in South America? No problem at all.
The right software is essential for a successful internationalisation strategy
Two things will help you break through internationally: a well-thought-out strategy and the right shop system. The former requires planning, and for the latter, we recommend you rely on Shopify Plus. As an all-in-one international e-commerce platform, there is currently no better solution.
If you have any questions or would like support on your way to your next international market, please contact us!