To succeed abroad requires more than just the ambition and a translation. In this blog post we will talk about the 3 elements we find most important. The blog post is based on our experience from working with more than 200 companies over the last 5 years.
The first important area is:
Know your numbers!
Yes of course, but which numbers are the important ones to understand when you talk about e-commerce. For us the key number to pin point is the IPO (Income per order).
When you sell online a lot of costs are triggered when the customer click the buy button. This is very different from selling in retail stores. A new order triggers cost for customer service, warehouse salary, packaging material, shipping costs, return handling etc. Often this group of costs are just as high as the price you paid for the products them selves. Knowing these costs in detail are necessary in order to determine the IPO.
Knowing your exact IPO (Income per order) in a new market makes it possible for you to fully understand the potential and the challenges you are heading for. The best way to calculate the IPO is to start with the home market.
When you have the details in the calculation as described in the black box below, it is easy to adjust each number according to the situation in the new market.
The next step is to figure out if there are other things in the new country that will influence your business case. How are the competitors acting, are the product prices the same etc. The average order size is an area where it is important to be carefull. It makes a huge difference on your IPO if the average order size are 20% lower or higher.
Doing the calculations thoroughly will tell you if the market seems attractive or if you should look in another direction – or maybe keep focusing on your home market.
As you might have noticed we don’t include marketing costs in the IPO calculation. This is because only some of the orders will have a direct marketing costs. The IPO tells you how much you have left for marketing, before you start loosing money on a new order.
Therefore we also use the IPO calculation as the starting point when setting the KPI’s we will use for our marketing activities.
Bottom line is that selling abroad, where you don’t have the market knowledge and you don’t see your competitors activities, requires a thorough reporting with the right numbers.
When you have the numbers you need a local hero
Actually I used exactly this headline for a blog post in 2012. You simply need input from an e-commerce specialist like your self, but a person that has been growing up in your target country and who knows how e-commerce is done best there.
This is not a full time job, you just need access to a local person to guide, advice and localise your activities.
This is relevant in many areas, but I would like to highlight the challenges in marketing. In each market the marketing channels have different importance and you will also find new channels you haven’t heard of.
It is critical to have a local person who will make sure to give you knowledge about the marketing options, make the right choices for your business – and not just go with a copy of your Google setup in the home market.
It is all about implementation…goes an old saying. And it is true. This is actually the area where most companies can improve.
When you launch a webshop abroad you still have all the other things that used to fill out your day. In the first important months, you don’t even get anything in return for the many extra hours of work. This sometimes leads to changes in prioritization of the tasks and the new market is simply pushed down on the to-do list.
In a new market with established competition you can’t succeed if you don’t give it your best shot. You need to have a professional webshop, give a great customer experience and take advantage of the best possible online marketing options.
Our best advice…
When you plan to launch your shop in a new country, we always recommend to prepare a business case using the 5 phases below. Do the calculations properly and make sure resources are set aside, also in case sales don’t meet your expectations in the beginning.
We will speak about these things in Århus and Copenhagen in September, read more here.