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Expanding internationally can have a significant impact on many areas of a business. Year-over-year revenue growth, increased brand reputation, and new customers across multiple geographies, among other additional opportunities. That being said, if a company’s expansion efforts are not managed properly, global marketing success will be unattainable. 

Are You Prepared to Jumpstart Expansion Efforts?

While all of these new opportunities sound exciting, entering a new market unprepared can be a massive drain on resources with little to no return. Wholesale businesses need to make sure they are fully prepared to handle the process. Here are some telltale signs to determine if your business is ready to take this next big step:

  • You have more business than you can handle
  • You have a solid team of employees
  • You are running out of space
  • You have a plan for growth
  • You are meeting goals
  • You have enough cash
  • Retailers are seeking your company out
  • Your industry is growing

If you check all or most of these boxes, chances are your business can handle international expansion, and Wholesale Central is coming in hot with everything you need to prepare for this opportunity: 

  1. Conduct Research on the Areas You Plan to Expand Into
  2. Figuring Out International Taxes
  3. Compliance & Regulations
  4. Build an International Marketing Campaign
  5. Provide a Variety of Online Payment Options
  6. Manage an International Team

Conduct Research on the Areas You Plan to Expand Into

“Research, research, research. Nearly half of the companies that attempt international expansion conduct no formal research before launching, making it no surprise that most of these expansion efforts fail,” Lindsay Boyajian Hagan, VP of Marketing at Conductor, said. “In order to avoid a costly mistake, companies should use first and third-party data to figure out their total addressable market (TAM). Segmenting the markets by demographics and specific locations can further assist in focusing their efforts more effectively.” 

Once you have your target markets you plan on expanding into, it is extremely important to research specific taxes and regulations in those areas. Earlier this year, reports from several European Data Protection Authorities (DPAs), the bodies empowered to regulate consumer privacy under the General Data Protection Regulation (GDPR), have ruled that Google Analytics violates the law. DPAs in Austria, France, and Italy have found that the tool, which allows website owners to track and analyze traffic to their sites, impermissibly passes European user data back to the United States without adequate safeguards. 

According to The National Law Review, Google Analytics collects user data from cookies, including pages visited, browser information, operating system, screen resolution, selected language, date and time of page views, and the user device’s IP address. Ecommerce businesses serving European consumers should be on notice that their analytics services may land them in hot water with regulators. With fines reaching as high as four percent of the company’s annual revenue, most organizations cannot afford to roll the dice. 

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Figuring Out International Taxes

You need to consider all of the different types of taxes that exist and that income taxes can be due at many levels in separate jurisdictions — federal, provincial, city, and country. You also need to take into account indirect taxes like value-added taxes (VAT), property taxes, and payroll taxes. Since VAT laws have been implemented across Europe, regardless of where you are selling from or what you are selling, your revenues will be subject to local VAT. 

The VAT is a consumption tax assessed on the value added in each production stage of a good or service. Every business along the value chain receives a tax credit for the VAT already paid. The end consumer does not, making it a tax on final consumption. According to the Tax Foundation, more than 170 countries worldwide, including Europe, levy a VAT on goods and services. Although harmonized to some extent by the European Union (EU), EU member states’ VAT rates vary across countries. 

The EU countries with the highest standard VAT rates are Hungary (27%), and Croatia, Denmark, and Sweden (all at 25%). Luxembourg levies the lowest standard VAT rate at 17 percent, followed by Malta (18%), and Cyprus, Germany, and Romania (all at 19%). The EU’s average standard VAT rate is 21 percent, six percentage-points higher than the minimum standard VAT rate required by EU regulation

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Compliance & Regulations

According to ADP, U.S. compliance requirements can look nominal when considering the extensive requirements in many countries. When thinking about globally expanding your business, you need to pay attention to regulations regarding the handling and sharing of employee data across countries or regions, data privacy, national collective bargaining agreements, and employment contracts. 

To help understand the different regulations in the country you plan on expanding into, Brian David Crane, founder of Spread Great Ideas, says entering into partnerships with other businesses can greatly help. “Businesses looking to improve their foreign footprints can enter into partnerships with local firms that are known leaders in a similar market. These partnerships help overcome cultural and regulatory differences and allow both partners to bring value, financially and strategically, to the venture,” Crane said. 

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Build an International Marketing Campaign

“What I try to ensure my business clients do not overlook is proper strategic marketing and development where they first identify their target market, business model, pricing, and income streams. Then, they can register their business, choose a name, and do their business plan,” Kennette Burgess, Founder and CEO at FOCUS Marketing & Development Solutions, Inc., said. 

Building a proper marketing campaign can make international growth more accessible for businesses. Once there is a clear goal defined, companies can begin creating long-term objectives and defining key metrics to help with tracking progress. Before getting started, Hagan recommends that businesses ask themselves the following questions to help solidify their marketing objectives:

  1. How many and which products do you plan to deploy in the new market?
  2. What is the perceived value of your product to service in this market? Is it economical, valuable, premium, or ultra-premium?
  3. Do you want to be a market leader or follower? Is your brand best-in-class or on par with competitors?
  4. What are your revenue targets?
  5. How many customers do you need to acquire to achieve those targets?
  6. How will you build out your digital presence to reach international customers?
  7. Where can your marketing efforts yield the greatest ROI? 

“In order to implement a successful international marketing campaign, companies need a strong international marketing strategy that considers the unique languages and cultural distinctions of each country where they want to do business, along with regulatory and economic factors,” Hagan said. “Companies need to figure out their definition of success and then develop objectives around that vision. Focusing on understanding the differences across each market is a must so they can use the right strategy to penetrate that market.” 

The strategy and tactics to win in a new market may be different than what is successful in the U.S. No matter what strategy you go with, knowing your target audience is critical to success. This will enable you to develop content and marketing programs that connect with your new audience as well as deliver standout buyer experiences that motivate more retailers to buy from you and keep coming back. 

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Provide a Variety of Online Payment Options

This is vital for expanding into other geographic locations, because what may be popular in the U.S. may not even be offered in other countries. For example, PayPal is used almost everywhere, except for countries like Ukraine, according to Vova Tsukur, Co-Head of Wix Payments. Instead, Ukraine has Apple and Google Pay, so making sure you offer the popular payment options in certain areas is a game-changer in terms of buyer experiences. 

“When it comes to checkout optimization, the first thing I have seen small businesses not do is provide good payment options for their customers,” Tsukur said. “Providing relevant payment methods based on your buyer preference is driven a lot by geography. It is also important to provide more than one payment method and offer choices. We have seen that conversion is best when you have two-to-three payment options.” 

Regarding different payment methods, it is also important to provide currency conversion on your website. This can help increase conversions by about 20-30 percent, according to Tsukur, since retailers will know how much they are actually spending when they purchase products from your website. 

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Manage an International Team

“Expanding business operations internationally requires a deep understanding of the market you are entering and employees who are both native to the culture you will be operating in and who understand your company, its mission, and its culture,” Ben Johnston, Chief Operating Officer at Kapitus, said. “When managing an international team, it is important to maintain frequent, detailed communication between teams in both countries and to schedule in-person visits multiple times a year to ensure alignment and develop shared goals and visions.” 

If you choose to enter a new market abroad by acquiring an established company, you are likely to face greater cultural challenges because you are purchasing an entity that already has its own culture and track record of success, according to Johnston. This may clash with the culture and style of the acquiring entity. It will be important to spend significant time socializing with the leadership and build trust between key decision makers who you will need in order to achieve success. 

If you choose to build an international business organically, you will need to hire leaders who are aligned with the vision of your company and who can represent and replicate their culture in your new entity. This will take longer, but may have a greater likelihood of success as the new team will be selected with the core mission of your company in mind, according to Johnston. 

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Expanding internationally can provide lucrative opportunities for businesses to expand their client base and sell more products and services. That being said, entering a new market unprepared can be a massive drain on resources, so it is imperative that you do the legwork in advance to prepare for your expansion, and these tips can definitely help steer you on the right path.

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