How to succeed in international e-commerce
Which countries have the highest e-commerce revenue? Where is the growth rate highest? Which markets have the lowest entrance barriers and offer the easiest entry into cross-border trade? Which countries have peculiarities that aren’t found anywhere else, but are essential for your business’ success? And which markets should skip altogether, because the cost/benefit ratio doesn’t make sense for European businesses?
Anyone who wants to sell products or services internationally needs to know the new target market extremely well. It’s the only way to develop an internationalization strategy that is precisely aligned to the target group in each country. In our blog, we have been analyzing e-commerce markets around the world for years and offer tips and background information on the individual countries.
You can view the different continents here: Europe, North America, Central and South America, Asia, Africa and Australia
If an European e-commerce business expands to target international markets, it will almost certainly set its sights on the countries that surround it. Short transport routes, good infrastructure, stable political and economic situations all make these countries an ideal choice. And in other EU countries, there are essentially no issues to deal with in terms of customs, taxes or legal frameworks, which is an added bonus. The linguistic barriers are also manageable. But where exactly to begin is often a matter of personal taste.
Should you start out with the relatively prosperous, e-commerce loving Northern Europe, which has the downside of a comparatively small population and well-established e-commerce competitors? What about Southern or Western Europe, where e-commerce isn’t as established, but the potential for growth is huge? Or Eastern Europe, which many retailers don’t even have on their radar? Many of your competitors are totally ignoring this economically interesting region. Another option would be to stick with Central Europe. You might face a lot of competition, but you can be confident that you’ll benefit from having all the infrastructure that is needed for successful online retail.
North America (which includes Canada and Mexico in addition to the USA) has enormous potential for European e-commerce retailers. This region has a large target audience who is well-acquainted with e-commerce. Good infrastructure, predictable social and political situations and low language barriers are just a few of the other plus points. And finally, the USA is the largest e-commerce market in the world. Any e-commerce business that takes itself seriously is almost destined to be represented in North America in one way or another.
However, some disadvantages deserve consideration. These include the fact that serving the North American market is a challenge for EU businesses. The long transport routes and customs formalities mean that delivery times would be unacceptable to most customers. This makes it a good idea to open a subsidiary (or, even better, a few of them) in the target country. The added fact that the competition in North America is extremely professional and well-established doesn’t make it any easier to get started. If you want to get your slice of the pie (as they say in America), you’ll need to be prepared for cutthroat competition and have a lot of staying power.
Central- and South America
If you ask European e-commerce retailers about their top target markets, the countries in Central and South America are probably not high on anyone’s list. There are a few reasons for this, including the long distance and long delivery times, the often poor infrastructure in these countries, instable political and economic situations in some cases, and complicated customs procedures.
But there are also some up-sides to this market, and the language is certainly one of them. In theory, nearly all of South and Central America could be targeted with only two languages: Spanish and Portuguese. Where else in the world can you reach nearly 500 million people with only two languages? On top of that, the growth rates for e-commerce are staggering in some areas, and the competition is, in many cases, less significant than elsewhere in the world.
Asia, the largest of all the continents, is composed of a large number of totally distinct countries and e-commerce markets. These range from large to small, from near to far, from very interesting to relatively insignificant. As Russia’s home continent, Asia includes the largest country in the world (at least, most of it). And China and India make it home to the two most populous countries in the world as well.
To successfully target these countries, you will need to spend more time familiarizing yourself with the local situation than you would elsewhere. There are a number of stumbling blocks for European businesses. Linguistic, cultural, and religious norms can pose challenges, as can political situations. A simple translation of your website won’t be enough in any of these countries. To avoid embarrassing faux pas, a comprehensive localization that takes local norms into account is essential.
Africa might not be as dazzling and multifaceted as Asia, but it also includes a colorful spectrum of countries that, in some cases, also have entirely different cultures, religions and historical backgrounds. The economic, political and social situations in some countries are drastically different to those in others.
As a result, European e-commerce retailers might consider some countries to be good candidates for cross-border commerce, while others currently wouldn’t come into question at all. Just one more reason to get to know these countries well before making a decision.
For many e-commerce retailers who are looking for new markets, Australia (and/or the entire region of Oceania) are just a tiny spot on the map—too far away, with long transport routes and a target market too small to be worth mentioning. It might be an incredible travel destination, but it doesn’t seem economically interesting.
But the region—especially Australia and New Zealand—has its plus points. There is a young population of digital natives who live in a few large metropolitan areas, meaning they have access to good infrastructure. The countries have no linguistic barrier at all, because your business probably has an English translation available already. It might be worth taking another look!