Torsten Schäfer, Europe Managing Director at Pattern, discusses unlocking global potential and how SMB’s can tap into thriving international ecommerce markets:
With global ecommerce sales expected to reach $8 trillion by 2027, digital marketplaces are filled with opportunities for businesses eager to capitalise on this momentum. Although ONS data has revealed a 0.3% decline in UK retail sales, Germany’s ecommerce sales have risen for the first time since 2021. Alongside this, countries like India and Indonesia are also witnessing a 20% ecommerce market growth rate.
For small and medium-sized businesses (SMBs), this expansion presents a significant opportunity to tap into thriving international ecommerce markets and take advantage of global prospects. By breaking away from the confines of domestic markets, businesses can access new customers and diversify their operations, increasing their overall revenue and competitiveness.
Overcoming barriers to entry
Research indicates that the UK is a country comfortable with cross-border online shopping, with international purchases making up a quarter of all ecommerce sales. However, entering global markets can be challenging, especially for small businesses unfamiliar with new regions. Bain & Company has reported that over 50% of SMBs view cross-border trade processes and logistics infrastructure as major obstacles to selling overseas on digital channels.
Despite the inherent difficulties in international scaling, particularly for small businesses lacking the expertise or resources for a global strategy, it’s possible to overcome bureaucratic challenges and access these markets. The rise of online platforms such as Amazon and Alibaba have mitigated some of these hurdles, but navigating the complexities still requires careful attention and strategic planning.
Strategically selecting global audiences and business models
The initial step towards successful international ecommerce is strategically selecting markets that promise the greatest potential for growth. AI tools can be pivotal in assessing international audiences and analysing data related to search trends, helping businesses gauge market entry challenges and competition levels.
Understanding cultural nuances, buying behaviours, and market demands in the targeted regions is essential. Businesses cannot presume that strategies which are effective in their local market will effortlessly translate to new, international audiences. To achieve growth, a significant upfront investment will likely be necessary as momentum builds.
Navigating regulatory compliance and tax challenges
Understanding and complying with import and export regulations, customs duties, product safety standards, labelling requirements, tax laws, and certifications in different regions can be overwhelming for SMBs looking to expand globally. Rather than being discouraged by these regulatory challenges, business leaders should view them as essential steps towards accelerating growth.
Collaborating with an expert with knowledge of global markets is the most efficiency way to manage international regulations. This initial investment can ensure seamless cross-border sales operations and minimise the risk of future fines and penalties.
Developing a successful selling strategy
After addressing regulatory challenges, refining the selling strategy to fit the target region becomes a priority. Pricing must remain both competitive and profitable, factoring in currency fluctuations and local purchasing power. Selling cross-border means additional costs, including higher delivery expenses and potential sales tax or duties on personal imports. These elements will strongly influence the pricing strategy. As a result, it is essential that businesses conduct a pricing analysis by market to optimise the approach depending on the region and to ensure the pricing strategy meets market expectations.
Listing products on more regionally popular marketplaces like Pinduoduo in China or Mercado Libre in Latin America can significantly enhance visibility. To achieve maximum impact, marketing needs to resonate with local consumers, going beyond mere translations to accurately reflect language patterns and cultural preferences. Product labelling, representing both brand identity and compliance with regional standards, is another critical consideration.
Ensuring operational excellence
A robust supply chain is pivotal for the success of any ecommerce initiative. Expanding internationally requires reassessing potentially overhauling existing logistics framework. Collaborating with third-party logistics (3PL) providers specialising in international markets can greatly alleviate logistical challenges as well as reduce overhead costs. Services like Fulfilment by Amazon (FBA) offer comprehensive solutions for efficiently managing inventory, fulfilment, and shopping logistics across borders.
In addition, businesses must evaluate whether additional personnel, platforms, and processes are necessary to ensure smooth operations in foreign markets. Tailored, localised approaches may be required in areas such as management, supply chain, marketing, and customer service to build a strong foundation for success in international operations.
Embracing ecommerce risk leads to success
Despite the seemingly daunting nature of international expansion, the reality is that global ecommerce offers vast growth opportunities for businesses. SMBs that choose reliable partners and exhibit boldness, foresight, and a readiness to navigate regulatory uncertainties can turn these challenges into lucrative opportunities. While many SMBs may feel overwhelmed by the complexities of international sales, the global ecommerce landscape is full of opportunities for those bold enough to face the potential challenges.
