International selling: How to get started in 2020
If you want to take your brand to the next level, one of the key steps can be intimidating — starting to sell internationally.
And it makes sense if you're feeling hesitant about it. You'll have to learn about customs, overseas shipping, new laws and regulations, and more.
However, the benefits are worth the effort. International selling is a fantastic way to scale your business and increase sales by reaching customers all over the world.
But where do you start? Here are few simple steps to help you lay the groundwork for your expansion plan.
1. Make sure you're ready
Dipping your toes into international waters has a steep learning curve and it can be expensive to test, so it's not a decision to be taken lightly. Here are some factors to help you decide if you're prepared to take this step.
You SHOULD sell internationally if:
- Your business is already well-established and you're making a steady profit.
- You have a few international orders already OR have people from other countries asking about how to get your products.
- You can see from social media analytics that people from other countries are interested in or following your brand.
- You're earning enough revenue to support running multiple stores, even if only as a test to see if international selling could be profitable.
You SHOULD NOT sell internationally if:
- You just started your online store or aren't making a steady income from your business.
- You don't have the bandwidth to run multiple stores and spend a lot of time learning. Since there's a lot to learn, it will take your time away from your main business. You'll also likely need to make a few hires to help you manage the new inventory and marketing efforts.
It's up to you to decide whether or not now is the right time to take on this new project. If you're unsure about it, it's better to establish a reliable customer base and train a new hire or two before you jump in.
2. Decide where to sell
There are a couple of ways to do a basic check on demand and competition for your products in other countries.
Use Google Trends
This is a free tool that shows what the interest is in various countries for any search term or topic.
Keep in mind the scores you'll find have "no direct quantitive meaning." According to Google, they're a relative number based on search volume and geographic trends. Even then, it's still a good place to get a general grasp on the interest people from other countries have in certain products.
Go to Google Trends, type in your product, and see where there's interest. The example below uses cricket bats.
From there, you could research your competition in those countries and use that to inform a strategy for your expansion.
Do SEO keyword research
This will give you a bit more insight into the regional interests and needs of potential new markets. While Google Trends uses search data to come up with their scores, this will give you more solid numbers about how many people are actively searching for products like yours.
Use SEO tools like Ahrefs and Moz, which usually have a free tier. You can quickly find get an idea not only on interest, but how hard it would be for your website to come up when people search for products like yours.
Below is search data Ahrefs collected on the search term "cricket bats." The search volume describes how many people search for that term every month. Keyword difficulty is an estimate of how hard it would be to get onto the first page of results for that search term. The lower the number, the easier it is.
You can dig further and look at the keyword volume and difficulty for specific countries. If the keyword difficulty is low but the search volume is high, this could mean there's a gap you can fill, and that there's not much competition. Ranking on the first page of search results for that country could result in more sales.
Find markets with favorable economic conditions
Depending on the country or region you're targeting, it's possible that you can charge more for international shipping and still under cut that area's local equivalent products, if their economy isn't performing well at the time.
It’s worth researching the exchange rates and prices of similar products in a few international markets to see if you can spot a great deal.
How do you do that?
Read news articles from local business journals in the areas you're considering, check out trade magazines, and consider visiting the country and speaking with local business owners. If you can't visit, try to make connections and hop on a Skype call with them to ask about the economy. Talk to as many people as you can, and keep good notes.
3. Account for additional costs like shipping rates, taxes, and other fees.
While international selling can be a huge growth area for your online store, there are a few things you should be aware of.
You'll have to pay VAT
If you're an American seller, you've probably never dealt with VAT before. VAT (Value-Added-Tax) is Europe's version of sales tax. According to Efficient Era, VAT is unlike sales tax, which is typically paid at the point of sale by the consumer in the U.S. Here's a definition,
"...collected at every stage of the supply chain — or every time “value is added” — hence the name. It’s collected piece by piece over each transaction until it’s ultimately paid in full by the end consumer. After that, each participant in the supply chain gets a VAT refund based on the difference between VAT paid and VAT collected.
In a lot of ways, VAT and sales tax are very similar. For the same tax percentage, the amount of money that the government receives and the amount of tax the end consumer pays is the exact same. For example, a $50 item (not including tax) with either a 20% sales tax or 20% VAT will cost the consumer $60 in both cases, and the government will receive $10 in taxes either way."
So what’s the real difference between sales tax and VAT?
With sales tax, every member of the supply chain is exempt from collecting or paying taxes except for the retailer, who collects the full tax from the customer and later pays it to the government.
With VAT, every member of the supply chain pays a little VAT to the previous member, and collects a little VAT from the next. At the end, they’re refunded the difference."
This probably sounds confusing, so here's an example on how VAT works:
You might also have to start pre-paying customs when you ship into and out of most countries. Rather than paying them each time you ship something, you'll need to pre-pay them to avoid things being returned to the sender.
Again — not a huge deal, but something to think about before you dive into international waters.
Make sure you account for increased shipping costs, especially if you're sending products over seas. Setting up inventories in international warehouses can help mitigate expenses, as well as using pricing strategies to help subsidize shipping costs.
4. Create a localized shopping experience
Beyond new types of taxes, you'll also have to deal with differences in language, culture, and currency.
Being able to display your prices in other countries local currencies could be the most important. If you have a store on BigCommerce or Shopify, Bold Multi-Currency can give you that ability. It automatically displays prices in shoppers' local currency.
This lets shoppers know that your store serves their country and saves them the trouble of having to convert prices on their own. If you don't, they might not even bother converting prices and abandon your store altogether.
Depending on the country, you might want to set up a completely different site that better aligns with their culture, including professional translation into their official language.
But if you're just starting out, expanding to countries you can serve in languages you know well is probably a good idea.
5. Set up inventories in other countries
Depending on how close you are to the countries you want to start serving, you might want to look into setting up inventories in international warehouses. This also adds the responsibility of managing multiple inventories.
If you don't, you might end up with insanely long shipping times. While this isn't a huge deal, with all the inventory management apps out there these days, it can still be a headache if you're not careful.
To sum it up
International selling is an important step in establishing your brand as a leader in your market niche, but you shouldn't go into it blindly. Make sure there's demand for your product and that you can expand profitably.
If you want to learn more, these guides on selling internationally for major ecommerce platforms can help you go forward:
Did these tips help you plan your expansion, or do you have any tips of your own? Let us know in the comments!