A new trend has emerged with the rise of eCommerce. Businesses are finding that traditional roadblocks to international expansion have been removed by innovative technological advances — and as their local markets become crowded with new eCommerce contenders, they’re moving across borders in order to seek out untapped consumer bases.
Those who look before they leap understand that going it alone equates to going in blind. There are several areas of business that become more complicated the second they’re conducted on foreign soil, including product positioning strategy, distribution logistics, tax considerations and opening local currency accounts to make supplier payments. Businesses that attempt to handle these items in-house often find their resources are inadequately equipped to support the extra requirements without proper training, and as a result, the additional burden can become quite a strain on internal personnel.
Building a Network of Experienced Partners Significantly Streamlines Expansion
Fortunately, the rise in international eCommerce has created a market conducive to establishing new partnerships. Small and medium-sized businesses have options to partner with other companies that provide services that address obstacles associated with cross-border business, supporting seamless international enterprise.
The following is a list of four key areas in which it is advisable for a business to seek outside support when considering going global. For the sake of example, each area highlights a potential partner and includes an explanation of how its service offerings remove barriers to entry for entrepreneurs looking to grow their business:
1. Product Positioning Strategy
When expanding to a foreign market, an entirely new set of consumer research should be conducted in order to best position and price a product or service on the international stage. InterCultural Elements (intercultural-elements.eu/) is one such company that assists businesses with understanding their competition within foreign markets. They also help determine which countries a business has the best chance of expanding to without major upfront investment, and what price point a product should be set at for the greatest potential returns.
2. Distribution Logistics
Shipping abroad is another area that can get a bit thorny without a partner that offers expertise on the most efficient methods available. There are customs to consider, as well as different country-specific rules relating to what can and can’t be sold via an online marketplace. Ingredients lists, for example, are much stricter in the UK than in the U.S.
If these rules aren’t closely followed, products might be held for weeks or months on end while the business owner works to resolve the issue — and while the customers waiting on their merchandise become increasingly impatient. Worse, products can be rejected altogether, leaving the seller with the decision to either return the entire shipment or destroy the products. Ignoring seemingly small rules can have costly repercussions.
First Choice Shipping (firstchoiceship.com) has built a niche for themselves in the international shipping arena. They facilitate customs brokerage, customs clearance, warehousing services and special Amazon services to help small business owners deliver their products to customers all over the world – both on time and hassle-free.
3. Tax Considerations
An entirely new set of tax laws must be taken into account when a business expands into a new international territory. Every country has its own way of doing things — and mistakes in this area can be quite costly.
AVASK Accounting & Business Consultants (avaskaccounting.co.uk/) emerged to assist businesses with country-specific accounting intricacies. This accountancy and tax firm offers VAT, tax and accountancy services, as well as provides personalized plans for SMEs that include the modeling, benchmarking and employee training necessary to execute a tax strategy for businesses expanding to Europe.
4. Local Currency Accounts for Supplier Payments
Executives that have never conducted transactions internationally are often unaware that there are alternatives to reaching customers overseas and facilitating cross-border payments. It’s important that business owners educate themselves on the different solutions that exist to streamline payment processes, especially when additional currencies are introduced into the mix.
WorldFirst’s payments platform, for example, helps to alleviate the pain points associated with cross-border transactions by enabling sellers to access local currency accounts. These accounts are used to then make supplier payments and receive customer payments. Funds received are brought back to the seller’s home currency at competitive exchange rates, leaving business owners with one less logistical thing to worry about.
Payments Can Get Particularly Tricky
Businesses that do not opt to go with a partner in the payment sector typically facilitate their foreign payments through transactions that take place between a foreign bank and a U.S. bank. When the process is handled this way, the business and their suppliers are subject to unnecessary delays and high foreign transaction fees.
Conversely, when a business partners with a payment platform designed specifically to conduct foreign transfers, it benefits from the assistance of an account manager who equips owners with the information needed to make the right decisions based on a specific transaction. These account managers also provide transaction-specific rate quotes, which are dependent on factors like the amount being sent and types of currencies involved. Armed with information and access to a real person, small businesses can choose the best path forward for conducting business efficiently – and cost-effectively – across multiple countries.
Trust Your Gut — But Verify with Supplemental Research
It’s important to conduct comprehensive research on your options before choosing partners to help facilitate your business’s international ambitions. A good rule of thumb is to review bids from at least three potential vendors. In addition to that, take a close look at past results and be sure you have a full understanding of each potential partner’s offering.
Ideally, you will want solutions that are high-quality, fit within your business’s budget, and can be implemented quickly. It’s often said in business that you can only hope to have two of these three features, but that’s simply not the case. Potential partners exist that can offer all three. You only need to find them and engage their services.
The search might take a bit longer, but it will be worth it in the end. Discovering these partners early on will make a vast difference in the ease with which you enter the international market — and will ultimately set the stage for your foreign venture’s future success.
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