A Complete Guide To International eCommerce Expansion And Challenges

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Discovering & Overcoming The Challenges of Expansion

International eCommerce is an excellent opportunity for businesses as it allows you to scale your company to new markets. You can utilize the same formulas that work for you currently and replicate them to new territory. However, despite all the benefits, there are also a lot of risks involved.

In this guide, we have put together everything you need to know when expanding your eCommerce business.

Logistics Management

Logistics Management

The biggest challenge most businesses face during their international eCommerce expansion efforts is logistics management and setting up a seamless distribution network. However, if a robust distribution network with international locations already exists, all you need to do is integrate it into your new markets. Begin with formulating a plan to scale those locations. Increase the capacity as the volume of orders increases.

Building Your Business Network

Distribution Partners & integrations

In a lot of cases, businesses do not have a distribution network at all. Some countries don’t have the required logistical capability. So, what they can do is partner with different distribution centers. These can store inventory on-site. They may also integrate with these distribution centers, their applications, warehouse management systems, and their shipping notification systems.

The above integration will allow businesses to keep track of the inventory. Integrating to the distribution centers' systems will also ensure that the ‘inventory values’ in your eCommerce website or application are up to date. Ultimately, it will give real-time data to the end-user about whether or not an item is in stock. It will ensure customers do not accidentally purchase something that is out of stock.

One massive benefit of partnering with distribution centers is that they reduce the overhead expenses that come with a dedicated location. You also do not have to worry about the local regulations and requirements that concern owning such a utility. Not to forget, the hassle of logistics involved in finding and enabling a location from scratch.

Setting up a distribution network in a region this way will ensure the initial overhead is minimum. You can figure out the new market without taking any considerable risks. Ultimately, it will allow you to grow your business to a new market organically. In fact, a significant benefit of international eCommerce is that you can utilize organic marketing and digital marketing efforts to scale your business to new markets.

Long-Term Benefits and Relationships

Dedicated Distribution Centers

Once you start getting an increased volume of orders, it would be a good idea to get a physical location dedicated to your business. Having company-owned distribution centers is definitely going to be more beneficial than working with distribution partners in the longer run.

Since distribution partners charge a monthly fee, take a margin out of each transaction, or take some form of compensation, it reduces the overall profitability.

Whenever a specific market starts performing well - sales and profit-wise, it is advisable to go for your own dedicated distribution center. This way, you can achieve economies of scale by increasing the size and efficiency of the production process. Also, you would eliminate the need for a middleman, which will result in more revenue.

Dynamic, Robust, Built for Growth

Adaptable eCommerce Architecture

While evaluating the various global eCommerce systems and your own business growth; here are some of the questions and considerations you will need to keep in mind:

  • How capable is your International eCommerce system?
  • Is it possible for your global eCommerce system to adapt to different kinds of scenarios, for instance?
  • Can your system handle the different types or versions of software your partners might have for inventory and warehouse management?
  • Does the company you are working with have any previous experience in managing that kind of logistics with their clients?
  • Do they have the capability to handle that amount of data?

They might have a PunchOut catalog system, a cXML protocol, etc. for orders. Maybe they utilize EDI. Therefore, it is essential to know the type of APIs (Application Programming Interfaces) and integrations used by your various distribution partners. So, once you decide to get dedicated company-owned physical locations, the transition will be seamless for your system as well.

This includes different inventory information, different physical locations, separate shipments, shipping times, and shipment carriers depending on the region, different pricing, etc. As you might expect, the list is endless.

There are many detailed and complex nuances to keep in mind when choosing an eCommerce system, especially an international one. Since it is globalized, a lot of customs, duties, and distribution bottlenecks and challenges are bound to occur.

Fortunately, having a distribution partner when you are starting really helps iron out a lot of those details. Once everything is set, carefully monitor how your distribution partner handles things. When it makes sense to scale into that particular market, it would be a good idea to get a company-owned distribution center.

To execute your software and digital strategy, you may work with international eCommerce developers like Clarity. It will allow you to integrate seamlessly into the new system and carry out your international eCommerce business as desired.

How Can Clarity Help

Clarity International eCommerce Experts

When you are starting out, it can definitely be more beneficial to partner with a distribution center. We encourage you to look for distribution partners if you want to expand your international eCommerce business. It is potentially less risky, and there are lower odds of failure.

To be clear, lower odds are merely an uncertainty whether a thriving market exists in a location or not. Once you get market validation and find a successful market, you can gauge whether it is a good idea to set up a dedication location there.

Make sure there is enough margin capability and demand before phasing into a dedicated, company-owned physical location. Once you do that and there is no middleman involved, the profitability of your business will increase.

If you have any questions, you may get in touch with the friendly and knowledgeable experts at Clarity. We will be happy to provide you a complimentary consultation and answer any query related to international eCommerce systems.

Until Next Time...

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