Opening up in a foreign market with an online shop requires localization, marketing, fulfilment, returns management, customer service and much more. This really is quite difficult to do in a country where you probably do not reside, your company has no offices and you are not exactly fluent in the local language.
Therefore, an online shop operator quickly has to contend with the following problem: what processes and services will they provide themselves and what would they like to outsource. What is the cost of keeping services in-house? What is best handed over to a competent local partner? There is also no simple solution to the classic make or buy dilemma in the field of e-commerce.
At first, even in foreign markets, many retailers automatically feel that they would like to do everything themselves. Work on localizing the website is quickly begun and customer service can for the time being be provided remotely, with the help of a number of native speakers. However, what may at first glance seem uncomplicated is - a question of the correct assessment of order quantities, turnover, customer contact and logistical challenges - if you want to do it well and if it’s to be worth it.
In general, companies want to expand on their own. The decision in favor of outsourcing services will mostly only be made after realizing that support and local know-how in a foreign market could be very advantageous.
Global or local?
The “buy” strategy, or the outsourcing of services to an external service provider, requires less capital expenditure, frees up internal resources and is often flexible when demand is not static. In spite of this, many retailers worry about the loss of control regarding quality and their brand image – after all, with outsourcing the people often entrusted with important parts of the project are not employees of your company.
If one decides in favor of the make strategy, one must appeal to the internally available capacity and lay out the necessary capital, to ensure a good localization of the online shop. This should also include customer service in the national language, the most popular payment methods and the desired know-how about the target market.
Example of a centralized approach: Zalando
Large retailers with lots of capital, like the pure player Zalando, often decide in favor of a centralized location and get the necessary staff to come there. Doing so raises the employee’s loyalty to the firm and helps maintain integrated supervision on all company activities. However, one is thereby distanced from the local market as there is no direct contact with it in day-to-day business.
Smaller businesses can also opt for the centralized approach but rely on partners for specific segments of the businesses. For instance, a local payment provider, a local logistics service, a local marketing agency… Most of PagBrasil´s clients work like this. It doesn’t fit exactly with the partnership approach, so perhaps it is worth it creating a new point.
Example of a decentralized approach: Conrad
The example of the firm Conrad Electronic on the other hand shows a decentralized strategy: they open a subsidiary in every target market. As a result, you tackle issues such as localization and returns, but this approach is also time-consuming, labor-intensive and very costly.
Example of a partnership approach: Feelunique
Feelunique is a UK online beauty retailer that had seen considerable growth of revenue from the China market, and they have done so by partnering up with a local partner Azoya that provides turnkey e-commerce solutions. Feelunique doesn't have own staff in China, and the partner takes care of everything including logistics, marketing, language, customer services, IT etc. The result is that they can have a very localized business in China. But this approach relies on finding a suitable partner to operate local business with understanding in the specific retail categories.
The Japanese online giant Rakuten is a little unconventional, as it buys up and rebrands local retailers. However, in the end this also translates as in-house internationalization.
Still, for many smaller retailers these options will not be under consideration, mainly because of the costs.
Questions of trust: payment methods and contact information
Once you have decided on a market, this then means wooing and keeping customers. The first (but surely not the only) step is a localized website. This should clearly be focused on local customers and in no case look like a poor imitation of the own site. Offering locally preferred payment methods is part and parcel of this step. To this end, you often need to have a local bank account, or work with a payment provider that offers cross border settlement. Even your address and telephone number should be country-specific. And if, like the majority of online retailers, you do not have an office at this location, this can be difficult. Without an address, it is often impossible to get a telephone number or a bank account. Here it is often advantageous to work with a service provider that can take care of everything. In this way, you can spare yourself the painful search for solutions or even just the work of engaging with several different providers.
How to setup your customer service for other countries?
While payment methods and an address can simply be placed on the website, there are still more important moments in which your new foreign customers will have to be able to get in direct contact with you. On these occasions, nothing is more important than that your customer feels understood and has the feeling that they are really being helped, and preferably in their own language. Naturally, the following question is raised: how can a company fulfil these requirements?