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3 Questions to Ask Before Going Global

With the rise of ecommerce, small retailers have access to huge opportunities in global markets—opportunities that were before only available to enterprises. I helped to expand mp3Car, which sells electronics parts, to sales in over 150 countries. At Whitebox, I help other small retailers reach the same kind of success with automated systems and processes.

This summer, I talked about global growth for small retailers on a panel with a few ecommerce experts at MultiChannel Merchant’s Growing Global Conference in Hollywood, California,  Ben Sharir, Angie Stocklin and I had a great conversation. Here are a few key takeaways from what I shared that day.

 

1. How can you simplify your global growth strategy?
The best way to simplify is to start small and continue to build processes to solve problems. We test those processes domestically, and then modify them as needed to expand internationally. For example, Whitebox creates a quality assurance document for every product we help to sell. We normally test each new product by only selling domestically at first. That way, if there are problems with our quality assurance document, and faulty products reach customers, we catch issues and fix our quality assurance process before we start dealing with international returns.

It’s probably going to be cheaper and simpler for you to outsource your international ecommerce where you can. We have several partners who provide us with warehousing space and shipping. It’s hard to find partners who will work with small starting volumes, but they’re out there. Vendors will often have a scalable pricing structure that moves with how much you sell. Most things you build on your own (or people you will hire) will have a fixed cost structure. So it’s riskier to build in-house.

I recommend working with a partner first to prove that there is international demand for your product. When you have more data, you can make a better decision about whether or not it’s worth it to invest in the infrastructure you need to do international ecommerce in-house.
It might seem expensive to bring in a partner, but when they help you anticipate and navigate complexities of global growth, you’re going to end up ahead. For example, a while ago, I followed a Kickstarter campaign that got in big trouble when they found out that, to ship to some countries, international taxes and shipping would cost customers just as much as the product itself. If the Kickstarter company had reached out to a shipping, logistics, or accounting firm that had experience with international shipping, they could have chosen the countries they were willing to ship to more carefully, or at least warned customers of the cost earlier.

2. How can smaller retailers identify the right target markets for their product lines?
While some folks recommend throwing spaghetti on the wall and seeing what sticks, I think that’s a bad idea. Unless you have an unlimited amount of capital, expansion by trial and error isn’t efficient. Expanding in the wrong way can lose you money if you’re not strategic about where you spend your capital.

For my business, I look at trends of similar products in that particular market as an indicator to see if there’s international interest. You can look at reviews, or look at tools like AMZtracker, which give you rough indicators of sales velocity on Amazon in different countries.

Amazon can be a great research tool, because they have different websites for each region, whereas this information is harder to get on eBay. Amazon velocity for similar products can indicate whether something would sell from Amazon, from your own website, or from other marketplaces.

3. What are some common pitfalls for small companies that go global?
Before I automated mp3Car’s processes, we had a lot of international packages get lost, and packaging mistakes. That might not seem like a big deal, but because of how expensive international shipping is, sometimes we would spend hundreds of dollars to deal with a shipping problem for a $30 order. Sometimes we would put the wrong customs documentation on the package and customers would be charged too much and get really upset. And that’s not even talking about how foreign customs offices felt about it.

If you ship via Fedex or UPS and you forget to include a customs document, it will get held by foreign customs offices and they will try to contact the shipper. Sometimes they have the wrong phone number and they will destroy your shipment. Before we automated, we lost thousands of dollars in orders this way. Additionally, when we shipped via USPS, we had dishonest people who said they didn’t receive the package when they did. Or some countries had corrupt postal offices and the packages would disappear. So sometimes we went with government shipping options first, and when the package didn’t go through, we would have to resend it with a more expensive logistics partner.

We also dealt with a lot of fraud. We blacklisted whole countries because we had so many problems with them. We also decided not to have insurance on our international shipments because with the volume and value of our shipments versus our premiums, handling disasters ourselves made more sense. Now that we have automated systems for better pick and pack and quality control, mistakes are extremely rare. I can’t even remember an international packaging mistake from after we changed our processes. 

In Conclusion

Taking a researched, systematic approach to global growth will save you headaches and money. I’m happy to get on the phone and point you in the right direction.

 

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