With cross-border trade expected to account for 20 percent of all ecommerce by 2017, international sales represent a huge opportunity for the UK. Many retailers are looking at internationalisation to boost growth following market saturation, while others are expanding their reach in order to sell excess seasonal stock. Broadening your horizons to new marketplaces abroad can keep your business a step ahead of strong domestic competition. Great opportunities await those who successfully crack new markets, but itís crucial to be aware of the pitfalls of cross-border trade before making the move.
Where to go
The most crucial decision is choosing which markets to target; research is essential. Location depends on various factors, from your business model to the type of products you sell. Itís best to think local when approaching a new market because, although youíre going global, youíll get top results by beginning as if you were a locally based business.
Retailers should plan for local variables such as culture and returns and delivery practices. Familiarise yourself with prospective customers and competition to see if and how your offering will suit. France and Germany can be good markets for trialling your cross-border trade activities, followed by Italy and Spain.
Expanding internationally is an excellent opportunity to diversify trade risks; the more countries you sell to, the less vulnerable you are to any one countryís economic situation and the more potential buyers see your products. Often, items that donít sell well in one country will fly off the shelves in another, so, as long as you choose the right market, cross-border trade can be very profitable.
Use your trading channels
Marketplaces like eBay and Amazon are increasingly focusing on internationalisation, making it easier to sell across multiple regions. Marketplaces provide a great way to start trading overseas with less risk. Remember though, each country-specific eBay and Amazon site has subtle differences beyond the obvious language change. A ďone-size-fits-allĒ approach wonít work; itís crucial to tailor your offering to your new customers.
The meteoric rise of Asos over the past three years demonstrates the value of fully optimised digital channels that realise the full potential of existing and emerging online markets. You can access consumers in geographies that would have seemed unrealistic even a few years ago because supply and demand are globally connected via digital channels. This is particularly true in the apparel space, where retailers can connect with consumers, create new markets and extend seasons online.
Get the lingo
Would you buy a product if you couldnít understand the product description? Knowing the local language is vital to international salesódonít assume everyone speaks English. Websites and content should be properly and professionally translated for each country. Although most online buyers speak sufficient English to understand English ads, most would prefer to shop in their native tongue, and this desire increases with more expensive or technical items. Selling items successfully abroad is not unlike selling them domestically; itís all about building trust. Machine translationsóor even human translations that arenít ecommerce specificóerode that trust, so make sure your text is properly localised.
Take tax seriously
For retailers looking to expand internationally, considering the entire landscape of your target markets is vital. One of the main pitfalls that retailers face when selling internationally is the complexity of their tax obligations.
Each individual EU country has a distance-selling threshold, so you need to analyse your sales for each of these regions to understand your VAT requirements. If your stock is located in the UK and youíre selling to other EU countries, you may have to register for VAT in those countries where the sales have exceeded the distance-selling threshold (this can vary from Ä35,000 to Ä100,000 depending on the country). When selling stock from within the EU to consumers outside, the tax burden is most likely to fall on the consumer, but if you decide to locate stock in the country where customers are based, for speed or transport savings, then the tax obligation may well fall to you.
Authorities are proactively monitoring cross-border trade and fining noncompliant businesses, so donít fall into this trap. Be on top of your tax responsibilities so that you can sell with peace of mind. Consult an expert who can clarify the VAT requirements as mistakes can be costly; VAT can be backdated up to 10 years, alongside interest on the unpaid VAT, penalties, and interest on the unpaid penalties.
The potential for expanding globally is vast; donít allow bad planning to hinder your success. Understand the implications of internationalisation, seek advice if you are unsure and proceed with the certainty that you are meeting all logistical requirements. Then, watch your global sales soar.
Seamus Whittingham is managing director EMEA, at ChannelAdvisor, an ecommerce platform provider.
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