October 01, 2016
Mapping Uncharted Markets: Simple Strategies You Can Use Today to Start Expanding Internationally
by David Isserman
If you are an executive at an early or growth stage direct selling company and you have not yet begun selling internationally, your trepidation is understood. However, expanding internationally offers significant growth opportunity. With an already established product portfolio in the United States, international expansion can be one of your greatest resources for building your customer base, growing your top-line sales and increasing your income.
At first glance, the thought of international expansion can seem daunting. From pricing and currency strategies to international inventory management, regulatory hurdles, logistics and financial reporting, international expansion can be overwhelming.
The good news is that when executed correctly, building your business outside of the United States doesn’t need to be considered an Olympic feat. In fact, many options exist that will allow you to test the waters of international markets before diving in head first. Below are simple strategies to help jumpstart your international expansion.
Start with Low Hanging Fruit
The best way to get started with international growth is to find the lowest hanging fruit. Start simply at first and take the most direct route to profitability.
Let’s begin by asking ourselves in which countries do the business conditions most closely mirror those that we are already familiar with in the United States. In which countries is the primary language English? Where are industry regulations similar to those in the United States? For those of us in the consumables industry, what countries provide free ports or free economic zones where we can sell and ship our products without duties, taxes and other government imposed tariffs? All of these questions will allow us to target the international locations that we can consider low hanging fruit.
For example, according to a recent article in the Boston Globe, Hong Kong was ranked as one of the best countries to consider when going global. With a simplified regulatory environment, ease of doing business and a port free of tariffs, Hong Kong can be great place to start laying the groundwork for your international expansion into Asia.
By allowing your team to focus on what they do best—growing sales—instead of battling regulatory hurdles, foreign languages or tariff headaches, you can find yourself quickly building a foundation for international success now with your current marketing initiatives and product portfolio.
Fulfill Internationally from the United States
When we begin the process of global expansion, we must ask ourselves how we intend to transport our products to the doorstep of our customers. Do we contract with an international warehouse or do we ship from our current fulfillment centers in the United States?
When getting started with international growth, the answer is easy. Keep it simple at first and ship from the United States. Fortunately, there are a number of cost effective parcel delivery services that can help companies with low or high volume cross border shipments.
As an example, Landmark Global, a division of bpost, Belgium’s national postal service, operates international shipping lanes to simply and cost effectively move packages cross border throughout North America, Europe, Asia and Australia. Companies like Landmark Global allow us to bulk load individual customer shipments onto pallets that are then transported across the border and dropped into domestic mail routes once inside the country of destination.
Let’s say that you just launched into Canada and that you have 50 orders going to your Canadian Customers every day. For small parcel shipments, DHL may charge you $35 to deliver each parcel from your warehouse in Salt Lake City to Toronto. Instead, using a consolidated shipping provider like Landmark Global to deliver these parcels into Canada can potentially decrease your cost to as low as $12 per shipment. Additionally, as an added bonus for companies just beginning to ship globally, oftentimes these companies will allow you to share pallets with other companies shipping from your same 3PL warehouse.
Creating a Seamless International Customer Experience
Who doesn’t love Amazon Prime? You log on, do a quick search for a product, click “Buy Now” and then two days later, voila, you receive your item free of shipping expenses and any hassles. Unfortunately for us, Amazon’s extraordinary international growth has created a set of consumer expectations across the globe that shipping will be fast and free (not just discounted).
As you grow globally, it is important to consider a savvy shipping strategy. How will you offer fast and free shipping for your international customers while still maintaining profitability?
To start, make your international shipping free. As painful as this sounds, free shipping is the new normal. According to a survey conducted by the global business advisory firm, AlixPartners, 36 percent of customers who decide not to order a product online do so because the cost of delivery is too high. Is it worth losing a $100 sale over a nominal international shipping charge?
If you cannot afford to offer free shipping on every order, consider rewarding consumer behaviors. As direct selling industry executives, what do we value the most? Is it new enrollments? Customers on autoship programs? Both? If your answer was “yes” to any of those options, then the easiest solution is to set a minimum subtotal for either enrollment orders or autoship orders or both where shipping will be subsidized by your company and offered free to the consumers.
Offering this “free shipping” carrot for international customers to continue to repurchase will not only provide top and bottom line growth, but it will also create greater customer lifetime values and seamless international customer experience in line with current e-commerce expectations.
Pricing for the Win with Local Currencies
When entering an international market, it is important to make the selling process as easy as possible for your international customers. You will need to determine how you can minimize sales costs and improve conversions. The very first step in this process is to price for the win using local currencies.
If you’re scratching your head trying to determine the best way to handle local currency pricing, then you’re in luck. I’m going to share with you a secret. This secret is used by many of the world’s largest corporations and can generate immediate revenue growth for your firm.
If you are expanding into countries where the dollar is weaker than the foreign currency, the popular strategy is to charge the same value for the item, but switch to the foreign currency.
For example, let’s consider the United Kingdom. Without looking at a calculator, can you figure out the conversion of $18 into pound sterling (£)? Alternatively, can you determine the conversion of £18 into dollars ($)? If you can’t do this within a few seconds, imagine how your customers must feel when they are presented with an e-commerce store full of foreign prices and asked to make this calculation. It is too complicated.
A common misconception by international shoppers viewing products priced in dollars is to imagine the price being more expensive in their own local currency plus a fear of being charged foreign transaction fees. It is important that we remove these obstacles. By charging in the local currency, it removes these barriers, simplifies the purchasing decision and improves foreign conversion rates.
Charging in a foreign currency can come with benefits. If you sell a product in the United States for $18, you could increase your prices overseas by charging £18 for the same product in the United Kingdom. At £18, you will remove customer pricing fears and also increase your sales price by almost 30 percent since £18 is approximately $23. This is truly a win-win situation.
International expansion can be critical to the success of your direct selling company. With the ever advancing competitive landscape in the United States and the potential to reach a larger consumer base, now is the time to start reaching beyond borders into new and uncharted international markets. When the strategies outlined above are correctly implemented, global expansion does not need to be an impossible or discouraging task. Instead, it can offer a tremendous growth opportunity for your direct selling business with limited risks.
Additional Resources for International Growth
- Ex-Im Bank: Financing the Export of U.S. goods and services to international markets. www.exim.gov
- USDA Market Access Program (MAP): Offers subsidies for overseas marketing and promotional activities to help build commercial exports of U.S. agricultural products, including food, beverages and qualified nutritional supplements. www.fas.usda.gov/programs/market-access-program-map
- U.S. Commercial Service: Provides free and at-cost market research, advisory and counseling services to U.S. companies expanding internationally. http://www.trade.gov/cs/
- Export.gov: An online export resource managed by the United States. https://www.export.gov
- Economic Development Agencies: State managed agencies offering to helping new and established companies grow and succeed domestically and internationally. https://www.sba.gov/starting-business/learn-about-business-laws/contact-government-agency/economic-development-agencies
David Isserman currently serves as the Chief Operating Officer for Touchstone Essentials, a direct selling organization specializing in premium, organic whole food supplements.