How to choose a digital retail agency to help you expand internationally
Our superconnected global village might give digital retailers the sense that selling internationally is as easy as uploading an item to a Shopify store and then hitting the publish button. In reality, international digital retail is a lot more involved.
The fact that someone from Germany can dial up to a web store in the USA doesn’t mean that the US seller even has the right to sell in Germany. And even if they do have the right, what guarantee do they have of success in an entirely new ecosystem?
To succeed in digital retail on an international scale, it is vital to hire a digital retail agency that can help you navigate the mire of local regulations, the competitive landscape, advertising differences, and other vital factors.
Here are the four major elements to look for in any agency you intend to hire to help you expand internationally.
1. Local expertise
First and foremost, the agency must have the necessary expertise and a thorough understanding of the market you are expanding into.
Local rules and regulations
The rules and regulations of a jurisdiction are the most important element to know before expanding into it. Failure to know these rules can sometimes even lead to a branch being closed down shortly after it is opened.
The rules and regulations for selling internationally are as varied as there are jurisdictions in the world.
Setting up a website in China requires that the company obtain an Internet Content Provider (ICP) license from the Chinese government.
Running a website in Germany requires following some of the most rigorous privacy standards and complex cookie-handling policies in the world.
France requires online merchants who are subject to Value Added Tax (VAT), a form of sales tax, to maintain a certified system of records.
Another all-too-typical example is when products ready to be sold get stuck at customs for months because the proper paperwork wasn’t done. The losses to production and sales can be catastrophic.
The list goes on. Whatever agency you hire must thoroughly know the rules and regulations of the area you want to expand into.
Knowledge of the largest markets
A digital retail agency should have comprehensive knowledge of all the major markets, including Europe, the UK, Asia, Australia, China, and the US.
Specifically, the agency needs to know:
What the requirements are to enter each market for your product category
What product safety data sheets are required, if any
Any necessary tests for product approval
Tax ID requirements (Every country that you intend to sell into requires that you have a Tax ID associated with that country. Getting one can be a complicated process filled with red tape, even when you know the procedure.)
If you require a physical address to sell in that location (For example, to sell in the EU, you must have a physical address within the EU. Many third-party logistics providers (3PLs) will allow you to use their address to complete this requirement.)
Consumer sentiment for the product (This can include political and ideological leanings or just plain consumer preferences.)
Failing to consider even one requirement for selling in a new jurisdiction can prevent you from ever going live in that market.
2. Expert-level competition analysis
An in-depth competitor analysis will provide the necessary insight to give you an edge in the new international market you intend to expand into. The lack of such an analysis can nullify any expansion efforts.
The questions a digital retail agency will help you answer include:
Who are the biggest brands in your product category?
How many total brands exist in your product category?
What are the monthly/yearly revenues of your competitors in this category?
How brand-loyal are your competitors’ consumers?
The lack of competitors might also be a red flag. Someone noting that Amazon doesn’t operate in Portugal might be quick to assume that starting an online shopping website in that country might be a great idea. But they would need to investigate Portugal’s tax regime and import tax policies to understand fully if that is a viable option.
Calling on an expert agency for the area is the only way to guarantee the validity of any competitor analyses.
3. Deep understanding of advertising
Launching in a new market is a lot like launching a new business. You might be well-known back home, but the new market hasn’t necessarily even heard of you, especially if there are local brands that people prefer.
That’s why a deep understanding of advertising is important, both generally and specifically to that area. For example, Germans use a professional networking website called XING far more than they use LinkedIn, so advertising on LinkedIn in Germany might not be particularly effective.
Different online platforms have different levels of population penetration in different countries. The advertising ramifications of this thoroughly.
[Related: Should you pay in USD or local currency?]
4. Nimble and adaptable
Even if the agency does have extensive experience in that jurisdiction, there will always be hurdles and barriers to overcome, some known and others unknown. An agency should be adaptable to every situation.
In a sense, an agency should be a little like a business consultant while it offers guidance specific to that jurisdiction.
Can you afford not to invest in a digital retail agency?
The rewards of selling your digital retail products internationally are many. But so are the barriers. Trying to address every single one of those barriers alone is extremely challenging, and can end up being very costly, too.
Hiring a digital retail agency that knows all the major markets and understands the procedure for selling successfully in each market is the most cost-effective and efficient solution to putting your digital retail business on the international stage.
That’s why Airwallex has teamed up with partners who can make international expansion even easier for our customers.
For example, PointStory helps with everything from product marketing, advertising, and branding to general international expertise. They provide the guidance and knowledge your business needs to expand successfully.
Tik Yip has spent over 17 years in digital retail. In early 2020, he formed PointStory.io along with his business partner to create an agency specifically focused on building direct to consumer brands both domestically and internationally. In his spare time, he enjoys woodworking, traveling and cooking.