4 Solutions to Take Your Retail Business Global Going global is easier than ever before, even for small mom and pop shops. Use these tips to build a solid global expansion strategy, and see where your business takes you.
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Until now, most small business owners have had very limited opportunities to expand internationally. It was simply too hard to manage. But by 2014, billions of consumers were buying online, and sales volumes reached over $1.5 trillion. This tremendous growth in cross-border ecommerce created new markets for sellers worldwide.
This opens the door for small and midsize businesses (SMBs) and mom and pop merchants to take their business global, accessing new geographies and customers.
But how do you tap into this giant, unknown international market while overcoming the complexities involved? Here are four key aspects of a successful global expansion strategy:
1. Leverage local marketplaces.
Online marketplaces offer small businesses the ability to expand into new markets quickly and cost effectively. Following the incredible success of Amazon in the U.S., marketplaces all over the world have seen an explosion over the last four years. Players like Linio and MercadoLibre in Latin America, Lazada in South East Asia and Jumia in Africa are opening doors to consumers worldwide.
Let's understand why selling on a marketplace can be a good strategy. Marketplaces have lots of customers who are looking to buy a wide variety of merchandise, so they provide a platform for small businesses to offer products to their customers and generate more sales. There is no need to invest in branding, website design or marketing, so startup costs are low. And, you can get on the market quickly. You can easily setup a catalog, and start selling immediately.
In short, marketplaces allow easy access to new consumers and keep overhead and customer acquisition costs low.
2. Outsource logistics and fulfillment.
Although marketplaces often take care of delivering the product to the end consumer, getting your product to their warehouses may present some logistical challenges. Luckily for SMBs, outsourcing your shipping and fulfillment is an option. Two of the strongest vendors to consider are Amazon FBA and 4PX. Both are strategically located and have large warehouse and distribution systems.
When selecting a vendor, you have three serious considerations. First, look at proximity to marketplace for fast delivery to centralized warehouses. Next, find out if size/fulfillment capacity can grow with your business? And lastly, don't overlook logistics in terms of shipping options, turnaround time and costs.
3. Utilize cross-channel inventory management.
Another challenge for small businesses is the ability to strategically manage orders and inventory across multiple marketplaces. Leading vendors such as ChannelAdvisor can help merchants optimize their inventory management, reducing shipping costs and delivery times.
For small businesses, this might mean ensuring that multiple orders made by one customer are shipped together, and that the most valuable marketplaces are restocked first. As these businesses grow, inventory management becomes a great tool for setting prices and producing smarter forecasts.
4. Consider your payment methods.
Receiving payments is likely the area that receives the least attention but yet presents the greatest complexity for companies going global. While wire payments are historically the go-to solution for cross-border payments, they are not cost or time efficient, particularly for businesses dealing with lower-value transactions. This is why Payment Service Providers (PSPs) have stepped in to fill in the gap.
When choosing a payment provider, verify that they are regulated and make sure they work with all your partner marketplaces. Check to see if they have strong service and support and whether they can pay out in your local currency. Consider their payout options and fees, and understand the time required for funds to clear.
All these new solutions available to small businesses have created an environment where barriers to grow your business globally are lower than ever. By anticipating complexities and working with strategic partners, small businesses, as well as mom and pop merchants, are well poised to capture an exciting share of the massive global ecommerce market.