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Five Reasons You Should Take Your Ecommerce Global – and Five Reasons You Shouldn’t

by John Yunker | February 18, 2014 | No Comments

Expanding business globally

Expanding into a new market can be a risky and expensive undertaking. Based on my experience, for every ten companies that should be expanding abroad, there are roughly one or two companies that would have been better served by staying at home a little while longer. Some companies aren’t ready to go global, and some products and brands simply do not travel well. But how do you know if and when your company is ready to go global?

To help answer the question, here are a number of factors to consider before you leave home.

Five Reasons to Go Global

1. People around the world are already purchasing your products.
You may already have customers in various countries — customers who have bravely navigated your (possibly intimidating) U.S.-centric website to purchase a product. These customers are a promising sign that there is demand in certain markets for your products. Often, I find that companies decide to expand internationally because their customers around the world have pulled them into it. When your customers are urging you to go global, it’s hard to argue against following their wishes.

2. It can diversify your revenue base.
Just as financial planners will tell you to diversify your retirement account with a mix of conservative and aggressive investments, think of going global as doing very much the same thing with your business. Your domestic market may be considered your conservative investment — a market where you are established, that you know well, and that promises you a relatively predictable rate of return each year. But what if the U.S. hits a recession just as Asian or European markets are expanding? If you have established yourself in a number of markets, you insulate yourself to some extent from the trials and tribulations of any one market.

3. Your competitors are succeeding globally.
If you have watched your domestic competitors expand internationally — and succeed — the clock is probably ticking for you to do the same. That’s not to say being late to a new market is necessarily a bad thing — sometimes timing benefits the “fashionably late.” But at a minimum, you should pay close attention to those competitors that are going global and prepare to do the same.

4. A foreign competitor may soon become your domestic competitor.
Consider the success of Toyota, Honda, Kia, and Hyundai — Asian carmakers that were once ignored by the “Big Three” American carmakers. You can wait for foreign competitors to enter your market, or you can meet them first in their home markets. In a global economy, you can’t hide from the competition. Globalization is a door that swings both ways — just because you choose not to expand into other markets doesn’t mean others won’t enter your market.

5. You crave adventure.
Expanding into a new market can be intimidating and confusing and, at times, maddening. But the process can also be hugely exciting, much like traveling the world. You might find that entering new markets excites your employees. You might discover fresh product ideas as you enter new markets — and this inspiration can develop into hit products in your home market. There’s absolutely nothing wrong with never leaving your home market, and you may be better served staying put. But if you find yourself dreaming about having customers all around the world, embrace the adventure of going global. And get your passport.

Five Reasons Not to Go Global

1. You don’t have realistic expectations (and budgets).
The most common mistake companies make when going global is expecting too much success too early. Doing so not only sets unrealistic expectations, but it also creates a short-term mentality, along with short-term budget commitments. Companies that succeed in new markets typically start small, set achievable and realistic goals, and set longer-term (3-5 year) budgetary commitments.

2. Your staff isn’t ready to go global.
While I believe that the best way to learn something is to do something, you also need to be as prepared as you can be before getting started. Too often, companies don’t have people who are even aware of the complexities of going global. Regularly reading this blog, for example, is something every employee should undertake to start getting a feel for the opportunities and challenges of going global. You want your colleagues to be inherently curious about the world, about cultures, and, ultimately, about customers who may speak any number of languages.

3. Your brand and/or products won’t “travel.”
Some products “travel” more easily than others. That is, a product may require extensive localization simply to meet the regulatory or cultural requirements of a given market, which makes international expansion a great deal more expensive. You also need to consider local competition. Just because you’re new to the market doesn’t mean you’re unique to the market. There could be a wealth of companies selling similar products. And, if not, you should be prepared for fast-acting copycats. Legal safeguards may not give you the same degree of protection you expect from developed markets. And, even if they did, the black markets in emerging markets thrive on copycat products anyway.

4. You haven’t engaged with your customers around the world.
Odds are that you already have some customers in various markets — customers you could interact with right now to learn why they went out of their way to select your company and products. These customers are your “beachhead” into new markets, and if you haven’t invested time to speak with them and understand their needs, you’re better off waiting.

5. You want to target China first.
China is the world’s second-largest economy. Shouldn’t it be the first market an American company should target when expanding abroad? Not necessarily. In fact, I often urge companies to consider targeting other markets before China. China is a particularly challenging country for a number of reasons, ranging from intellectual property protection and government regulations, to local competition and payment obstacles. These risks are present in every market, but they can be particularly acute in China. Often, companies that target China first simply focus on the size of the market rather then on fully understanding their potential customer segments within the market. With proper research, companies sometimes find that smaller countries offer greater revenue opportunities.

What’s Your Answer?
There’s more to consider when making the decision to expand into a new market, but hopefully these ten factors have given you a good idea of where your company stands. I must stress that, for the majority of the companies I work with, I recommend going global more often than not. For most companies, it’s really not a question of if they should expand but when.


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