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4 Essential Steps When Expanding Internationally

Nov 8, 2018

International Commerce

When it comes to expanding internationally to a new market like the U.K. there are a number of benefits to keep in mind.  Reaching a new customer base and earning more revenue is first and foremost.  Competition also tends to be lower, leading to faster growth along with higher price points and more sales revenue.  If you have a seasonal product (e.g. swimwear), expanding to a new market might mean that revenues are steadier throughout the year.

However, to reap these benefits there are a few steps you need to take to make sure you get it right:

 

  1. Value Added Tax (VAT) Registration: Amazon now requires all sellers in the U.K. and Europe to be registered with a VAT number for tax collection purposes. Fortunately, there are a number of vendors out there to help you with this.  VAT Global and Fiscal Solutions are just a couple of them.  Find one, get registered, stay compliant. 

2. Choose a Logistics Solution: With your newly hired VAT consultant, decide on which logistics solution makes the most sense for your business.  Amazon offer two choices:

  1. “European Fulfilment Network (EFN)” – where your goods are stored in one location (e.g. the UK) and sent out to multiple countries from there.
  2. “Pan-European FBA” – your goods are stored in multiple Amazon warehouses throughout the U.K. and Europe.

Advantages and disadvantages are discussed here, here, and here.

Of course, you can also use a 3PL.  It’s up to you and what fits best with your business.

International Profits Increasing

3. Translate your listings: Even if you are only expanding to the U.K. at first, keywords and core product descriptions are likely going to be different.  “Running shoes”  “trainers”, “sweater”  “jumper”, the list goes on (don’t even get me started on the word “pants”).

Yes, you can use Google translate, but if you are serious about getting it right, you need to find a local to do your translations.  If you are just starting out, check out freelancer marketplaces like Fiverr and FreeeUp.  For larger jobs, companies like Intercultural Elements and Smartling might be a better fit.

4. Understand Currency: When you expand internationally, currency markets become much more of a factor in how you set your prices.  Because the values of currencies are constantly changing, you need to do some analysis so you don’t find yourself in the red.  Know what your margins are at different exchange rates, and make sure you know where your “floor” is. 

If your margins are narrow but you are doing a ton of volume, look into setting a forward contract to lock in exchange rates.  You are in the business of selling your product, not speculating on currency markets.

Expanding internationally is a great move for a lot of sellers.  There are a few hurdles to get over, but it is precisely because those hurdles exist that make international expansion so attractive.  The tools are out there to help you take advantage of the opportunity.  If you are ready, there is no time like the present.

Gabriel Grisham

Expert on International eCommerce Growth Strategies

Gabriel Grisham has spent over a decade working with companies on cross-border commerce. A native of California, he lived in China for almost ten years before returning full time to the SF Bay Area. Gabriel has a B.A. from Duke University and an MBA from Thunderbird School of Global Management. You can reach him at Gabriel.Grisham@ofx.com.

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