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Commerce & Sales Channels

An Ecommerce Seller’s Guide to Building an International Customer Base

Commerce & Sales Channels
September 29, 2020
8 min read
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As ecommerce and fulfillment technology evolves, the global marketplace grows smaller and merchants’ growth opportunities grow larger. This guide outlines first steps to launching an international sales channel.

Why Sell Cross-Border?

As your business expands into new markets and sales channels, you may be wondering what sort of opportunities lie outside the US borders. Today’s digital-first economy makes expansion into international markets accessible for businesses of all sizes, and many merchants are already branching into international markets. 62% of retailers sell internationally, and one third of those merchants report that international sales is their most important growth lever.

It’s no wonder that so many merchants are tapping into international markets as international ecommerce sales growth outpaces domestic growth by 25% year over year. What’s more, 10-20% of international purchases are considered “high-value”, and the average order value of international purchases is 17% higher than domestic. Merchants who currently sell into international markets report that cross-border sales account for 10% of their current sales, indicating an opportunity for a 10% lift in overall sales for merchants not yet selling internationally.

If your business is ready to take the first steps to expanding cross-border and establishing an international customer base, we’ve laid out a few important considerations to ensure this new growth lever is a successful one.

Finding Your International Customers

Before expending resources to expand cross-border you’ll want to take stock of current international demand for your products and consider segmented marketing tactics to get the ball rolling on international orders. A simple and low-cost first step is to conduct an analysis of your site traffic to determine how many international browsers you already have. You can also take a look at your social media channels to determine how many international followers you have and if so, which countries are most represented among your followers.

You should also take a look at your competitors. How many of them are shipping internationally, and are they selling at a price point that you can compete with? Once you’ve determined which countries or regions you may like to target, take a look at the domestic market within that country. If there are domestic competitors in that market, what are the key differentiators between your product and theirs? Would you be attracting international customers based on value, quality, or your range of product options?

Understanding Your International Customers

With easy to implement international points of sale and payment services like Shopify, Paypal, and Square, you can quickly start making your cross-border sales with little capital investment. However, with any new venture it’s prudent to understand your target customers before you move into this new market and to test and refine your tactic based on early results. The first step is understanding why shoppers make cross border purchases in the first place. Consumers in mature ecommerce economies like Japan, Germany, Canada, and the UK report that they shop internationally to find a wider variety of products than they can find in their home country. Shoppers in less mature economies report that higher quality goods draw them to shop with international vendors. These insights are valuable for segmenting your marketing campaigns, advertising your diverse selection of products in mature markets and advertising the high quality of your products in less mature markets.

It’s also important to understand why many consumers hesitate to make cross-border purchases in order to win over shoppers who may be on the fence. Overwhelmingly, trust is consumers’ greatest hang-up, with 19% of shoppers reporting that they don’t trust international shops. 24% of those shoppers cite concerns about making returns and 18% cite concerns about delivery speed. The greatest tool in your toolbox to build confidence in your international customers is partnering with an internationally-trusted courier, allowing you to borrow brand equity from your shipping partner. This type of partnership also allows you access to technology to provide accurate and reliable tracking information.

Being upfront about shipping costs (including duties, taxes, and insurance) before the checkout page is also important for building consumer confidence. Shoppers don’t like to feel like they’ve been duped into adding an item to their cart only to be surprised with high shipping costs at checkout. Utilize a shipping calculator plugin through your ecommerce platform to take the guesswork out of estimating shipping costs, and state clearly in your terms if the customer will be responsible for paying any duties once their product has arrived at customs.

Your International Customers May Be Closer Than You Think

Many merchants’ first step into international sales is Canada, and for good reason. Canadian shoppers already have strong preferences for American brands like Walmart and Best Buy, making them a bit more trusting of American merchants. In fact a recent survey showed that 45% of Canadian shoppers planned to take advantage of Black Friday deals, and with 90% of Canadians living within 100 miles of the US border, it’s easy to reach these international customers via ground shipping.

Don’t Over-Invest Early On

With growing customer expectation for speedy delivery, some merchants may be tempted to store inventory internationally to compete with domestic shipping times, but finding a fulfillment partner that can store your inventory domestically and efficiently ship cross-border often proves to be a more prudent first step into international sales. Keeping your inventory close to home allows for full flexibility with your inventory in case products don’t move as quickly as expected. As with testing into any new sales channels, you’ll want to keep operations nimble and continue to feed your highest-performing sales channels, which you won’t be able to do if your inventory is stuck across international borders. This approach also allows you to quickly start up your new international sales channel, add as many new countries or regions as you’d like, and quickly halt sales to any market that proves unfruitful.

It’s also important to invest in scalable technology rather than fixed assets when testing into international markets. Partnering with a fulfillment provider with a quality Warehouse Management System (WMS) will allow you to automate processes and integrate with your current storefront or marketplace. When paired with a well-resourced courier, a strong WMS will also streamline calculating shipping costs and filling out customs paperwork streamlined. Allowing an outsourced fulfillment partner with a comprehensive technology platform to do the heavy lifting of testing into international markets lowers risk and raises your chances of success.

Meeting Fulfillment Expectations

Consumer expectations for domestic shipping are fast and inexpensive, but when purchasing cross-border, consumers are forced to choose their highest priority. When shipping internationally, merchants should offer a wide variety of shipping options, allowing shoppers to self-segment based on their preference for either fast or inexpensive shipping. Include options for customs and duties processing, including both DDU and DDP options, and offer both economy options (usually with domestic last-mile delivery) and premium (fast) shipping.

While the price tag on premium shipping options may seem prohibitive to sales, research shows that merchants that offer premium shipping on international orders grow 60% faster than those who only offer standard or economy options. Many consumers expect a high price tag for international shipping, with 10% of international shoppers choosing to upgrade to premium shipping at checkout. This demand for premium options is often driven by the higher average order volume (or AOV) typical of international orders and the often occasion-driven nature (holidays, birthdays, etc.) of international purchases.

A World of Opportunity

As technology evolves to give merchants the ability to meet customers wherever they’re shopping and to meet those customers’ expectations for delivery, the global marketplace grows smaller and merchants’ growth opportunities grow larger. Shipping cross-border and building a base of international customers is now possible for businesses of all sizes at relatively low risk through strategic partnerships and integrated technology.

To learn more about how Ware2Go is helping merchants build their businesses domestically and internationally by simplifying end-to-end supply chain, reach out to one of our logistics experts.

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