An Introduction to Agile Cross-Border Trade Part 2: The Stages of International Expansion

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1 Agile Cross-Border Trade Part 2: The Stages of International Expansion and Where to Begin

2 Agile Cross-Border Trade Part 2: The Stages of International Expansion and Where to Begin Agile Cross-Border Trade Part 2: The Stages of International Expansion and Where to Begin Over the years, e-commerce has become significantly more complex and fragmented. Previously, internet traffic was limited to just one or two channels. Today, however, retailers are seeing customers come from mobile, social, comparison shopping engines, marketplaces and search engines. If that weren t enough, when retailers decide to embark on cross-border trade (CBT), the intricacy of their sales increases even more. How do retailers manage this increased complexity and succeed when selling internationally? We ve put together the ChannelAdvisor Agile Cross-Border Trade Framework to help retailers map their path to selling across borders in an organised, manageable way. We ve compiled a three-part ebook series to define the framework and aid retailers who are setting their sights across borders. In the first part of this guide we featured an introduction to CBT and discussed the nuances of different regions. In this second instalment, we ll delve into the stages of the ChannelAdvisor Agile CBT Framework. CBT Stories and Experiences What s important to keep in mind throughout this series is that what might work for a retailer in one region will likely not work in another. If you decide to expand into China and Latin America, for example, you probably shouldn t be employing the exact same methods used for the U.K., U.S. or European markets. When entering into an e-commerce market, retailers traditionally needed to develop a fully transactional website, drive traffic to that website through campaigns and continue to monitor and optimise results. This sort of approach suits some retailers, but return on investment takes time and the build-up is demanding. Upon moving into new markets and regions, retailers might be surprised by how competitive these markets (such as China) are and how different consumer preference can be. The top 10 sellers in one region will not be the same top 10 sellers in another region.

3 Agile Cross-Border Trade Part 2: The Stages of International Expansion and Where to Begin ChannelAdvisor has seen many retailers try and fail because they over-invested by focusing on operational challenges and ignoring the critical element of connecting to existing sources of demand (in other words, where the consumer already shops). ChannelAdvisor s Agile CBT Framework What exactly is the Agile CBT Framework? It s a new method that takes a fresh approach to new market entry. It s a model based on iterative and incremental development, allowing retailers to harness the power of marketplaces to expand their sales internationally. Agile CBT promotes adaptive planning and evolutionary development, via an interactive approach with rapid and flexible response to change. Many of the principles of developing large software projects (i.e. agile software development) are directly applicable to the challenge of selling internationally. Agile CBT involves a cycle of testing, learning, iterating and integrating what is learned into the next test. A successful retailer will understand consumer behaviour and competition, whilst fixing errors along the way. Benefits of Agile CBT include reducing the risk involved in new market entry, aligning your costs and revenue with a lower overall investment and allowing you to scale the CBT mountain one step at a time. Additionally, by receiving and reacting to demand feedback sooner rather than later, you allow yourself time to course correct and pivot when appropriate. By receiving and reacting to demand feedback sooner rather than later, you allow yourself time to course correct and pivot when appropriate. The 4 Stages of the Agile CBT Framework There are four stages to the Agile CBT Framework: Passive Active Lite Site Full Site Each stage builds on previous stages and solutions. Of course, these stages can differ depending on your individual company and market targets.

4 Agile Cross-Border Trade Part 2: The Stages of International Expansion and Where to Begin Stage 1: Passive In this stage, you introduce products in new markets local to each region, and provide a better experience for traffic. You ll be shipping from your home market, and though volume might be low, so too is your investment. At this time, you should focus on streamlining your fulfilment process, facilitating any returns, offering customer service and managing tax and legal accounting. Stage 2: Active Once you ve laid the groundwork and found success selling a sample of products on a local marketplace, the active approach entails listing the broader set of your products. You ll begin to provide content and support in local languages and product selection, localisation and pricing and exchanges rates will be implemented. This step illustrates the more hands-on and active approach of Agile CBT as opposed to more traditional means of new market entry. Stage 3: Lite Site During the third stage of the framework, you launch a lite version of your website local markets. You engage in lower risk revenue-share marketing (CPA) and retention marketing. You focus on service, reputation building, local logistics, your e-commerce site platform and marketing. The overall goal of this step is to be fully equipped and have everything in line for the fourth and final stage. Stage 4: Full Site The final stage is when you provide full site functionality. You aggressively acquire customers via riskier marketing, expanded website functionality, improved mobile functionality and a 100% local experience. The overall strategy throughout these steps hinges on continually learning from challenges encountered in previous steps, then adapting and iterating. Though we highly recommend going through all the stages of the framework, flexibility and adaptability are essential throughout the process. You might iterate on any one stage multiple times before moving to the next. You might never reach some stages in certain markets, and you might skip a stage altogether in some markets. Regardless of what method you use, challenges will continually arise during a CBT transition. Your goal should be to identify the base-level challenges you have to overcome in each phase in order to move to the next.

5 Agile Cross-Border Trade Part 2: The Stages of International Expansion and Where to Begin Connecting to Demand: Passive and Active Passive and active are two approaches a retailer can take when expanding and selling their products overseas. Passive Passive involves listing products on local marketplaces and offering to sell internationally to consumers navigating to your domestic website from abroad. A basic approach, passive is suitable for retailers with limited or constrained resources and for testing demand for your products without needing to localise your content. It s also a good technique for retailers who want to dip their toe into CBT before expanding further. It allows you to get used to the shipping, returns and customer service demands from other regions. Active Active is a more advanced approach to CBT and includes localising content and listing in different currencies. Amazon and ebay each offer programs to assist retailers in selling internationally and expanding into new markets. The ebay International Selling Program is an advanced program aiding retailers in selling internationally. It s offered via invitation only to retailers in the U.S. and U.K. with considerable success in their home market. With the program, ebay will help with translation and localisation and will market your product to other regions as opposed to simply selling and shipping to them. Amazon introduced an advanced tool in Seller Central called Expand Offers Internationally. It allows retailers to recognise any of the products in their inventory that are already in the Amazon catalogue for a targeted country. Retailers are only required to provide the local price and quantity of their offering and could allow them to expand quicker with decreased costs, enabling the retailer to see if there s a demand internationally and also save on translation costs.

6 Agile Cross-Border Trade Part 2: The Stages of International Expansion and Where to Begin Summary The Agile CBT Framework is a strategic approach that requires your long-term attentiveness. To succeed through this method, you must have an overall strategy and goal, along with a per-market group strategy and goal. Conduct market research and prioritise markets based on complexity and demand. Be aggressive but realistic, don t bite off more than you can chew and keep demand at the forefront of planning. The final instalment of this three-part ebook series will take an advanced look at Agile CBT and will review the best practises for CBT success. To find out more about ChannelAdvisor contact ukteam@channeladvisor.com or call Trust us. Be Seen. To learn more: Call US AU Visit ukteam@channeladvisor.com The global standard for e-commerce leaders.