E-commerce Expansion: How To Do It?

What is expansion?

Expansion generally means to increase, extend or increase in volume or intensity. In e-commerce, it can be two processes:

• Expanding the business to include new products or services in the home market
• Expanding the business abroad

However, when people talk about “e-commerce expansion,” most think about expanding business abroad, which we will focus on in this article.

E-commerce expansion is the process of taking your business beyond the borders of your home country. It is characterised by the fact that it consists of several steps, such as market research, preparing a financial plan, or creating quality content in a foreign language.

E-commerce expansion aims to become part of the market in your chosen country, so you need to know it well. You also need to know the customers themselves and their buying habits. Only then you will know how to attract them and provide them with your products.

What are the benefits of expansion?

Expansion has many benefits, but only if it is well thought out, and the steps are carefully planned. Otherwise, you will encounter complications and problems that can ultimately lead to failure.

Some of the main benefits of expanding your e-shop overseas are:

Expand and exploit market potential

By expanding your e-shop abroad, you can reach new customers who would not otherwise have access to your products and services. As a result, you can increase sales and contribute to overall revenue growth.

It is also worth remembering that entering new markets extends your reach. Your brand will be known to customers in your home country and those abroad.

Sales and profit growth

Revenue and profit growth are closely related to the previous advantage. When you expand into other markets, you have many more potential customers to attract and persuade to buy your product.

Risk diversification

A presence in several countries can reduce the risks associated with particular market conditions, economic factors or seasonal fluctuations.

However, to take full advantage of this, you need to be aware of the differences between the regions in which you operate. For example, if you sell sunscreens in low demand here in winter, promote them in countries where it is warm all year round.

Reach new market segments

Expanding your reach to new customer segments or targeting groups with needs and preferences different from those at home is an effective way to grow your business and diversify your customer base.

Global market experience

Expanding abroad will help you gain international business experience and improve your business management skills. At the same time, you’ll be able to use your new-found experience in your home market, for example, to combat competition.

What are the risks and drawbacks of expansion?

You should be aware of a number of risks and drawbacks associated with e-commerce expansion before taking this step.

Difficulty

Expansion is generally a demanding process that does not take a few days or weeks. It often takes months, during which time you have to plan, arrange and deal with many complications, both large and small.

If you want to simplify your expansion, look for professional companies that can handle it for you. However, you can expect higher costs in this case.

A big investment

Expanding into new markets requires a large investment in marketing, logistics, and various other tasks. So, if you do not achieve the expected turnover or return on investment, you could face financial problems.

Changes in the political situation

The politics of your chosen country also have a big impact on how you fare. Changes in legislation or regulation can make it not only difficult to expand but also to do business later on.

The political situation is something you cannot control. However, you should monitor it, and if there are any major changes, you should act immediately to find effective solutions.

Economic risks

A number of risks fall into this category, including currency fluctuations, economic crises and inflation. If you don’t want to be significantly threatened by them, you should develop a sound financial plan and well-thought-out procedures for managing unexpected risk situations.

Competition

Your overseas business may also be threatened by local competition. They have the advantage of knowing the market and the customers and how to target them. Before you expand, do your research and find out which brands and companies will be competing directly with you. Learn about their strengths and weaknesses and use this knowledge to your advantage.

The risks of logistics

Logistics management is generally more challenging abroad. The whole situation is complicated by long-distance communication and a multitude of rules that are often opposed to our own.

Changes in technology

Technology is advancing rapidly, affecting many business areas, not to mention that companies abroad may prefer different systems or equipment to those at home. If you don’t want to fall behind and complicate the work of your business partners, you need to keep up with new trends.

Why do e-shops decide to expand?

There are several reasons why e-shops decide to expand into a foreign market. The most common are:

• Oversaturated market – does it seem that a large number of other e-shops are already offering the products or services you sell? The ideal solution is to expand. However, choose a market where people don’t know about the product, or it’s only minimally represented
• Lack of potential customers – may or may not be related to the first point. Sometimes, there just aren’t enough customers in the market who are interested in your products. That’s why it’s a good idea to do your research and find out where your target audience is
• Look at the competition – have you noticed that your competitors are expanding into foreign markets? If you don’t want to be left behind, expand your reach, too. Whether you choose the same market or a different one is up to you, but think carefully
• Increase brand awareness – as we mentioned earlier, expansion will help you increase your brand awareness and strengthen your brand name and authority. In some cases, it can even add credibility

How do you go about expanding successfully?

Expanding your e-commerce business overseas involves several steps. Each is important and will greatly influence your success rate. You can read more about them in the text below.

Plenty of time

Expansion takes a lot of time. Don’t put unnecessary pressure on anything or rush into anything. Always think through your decisions and actions. This will help you avoid mistakes that could cost you money.

If you don’t have time to expand now, put it off until later. The same applies if you decide to outsource the whole process.

Choosing the right country

Which country you expand into depends on many factors, including

• The services and products you offer
• The objectives you want to achieve
• The target audience you want to reach
• The size of the country’s market

Before you expand, do your research and find out which countries might be ideal for your business.

Interesting fact: The CEE ((Central and Eastern Europe) region offers many opportunities for many e-shops. It grew from 6% to 15% between 2016 and 2021 alone and is expected to account for up to a fifth of the retail sector by 2026.

Market Research

Have you chosen the country to which you want to expand? The next step is to carry out thorough market research. This can be divided into three groups:

Customers

Customers are an important part of both domestic and international business. To be successful, you need to know them well and understand their needs and preferences. Your market research should, therefore, focus on the following areas:

• Buying behaviour in the country
• Knowledge of traditional values
• Preferred payment methods
• Knowledge of cultural differences
• The approximate age range of the target group (may be slightly different from the domestic market)
• The interests of potential customers

The more information you have about your customers, the better sales strategy you can develop for them.

The competition

E-shops and brands offering the same or similar products and services will also affect your business. You can only compete with them if you analyse and know them well.

• When analysing the competition, you should consider
• The size of the competing e-shops
• The number of competing e-shops
• Prices of products and services
• Marketing activities
• Competitors’ strengths and weaknesses

Expert advice: Use the competitive data you have gathered to create a SWOT analysis. This will identify all your strengths, weaknesses, opportunities and threats. You will know what you can rely on (e.g., high product quality) and, conversely, what you need to watch out for and continuously improve (e.g., long delivery times compared to your competitors).

Legislation

In addition to the target group, you should also focus on the legal conditions and specific requirements that could make the whole expansion process more difficult for you later on.

What market research methods should you use?

Market research is an important part of expanding your business abroad. It will help you understand the market, differences in customer behaviour and various other details that will tell you what to prepare for and expect.

Several methods can be used to obtain all the necessary data:

• PESTEL analysis – focuses on political, economic, social, technological, environmental and legal factors to better understand the market, the threats you may face and the opportunities available
• Market segmentation – divides the market into different groups based on certain parameters, such as age, buying behaviour, geography, etc. This identifies which target groups are relevant and which are not
• Benchmarking – compares your processes, performance, or products with your competitors. This helps identify weaknesses and opportunities
• Cultural analysis – the main focus of the analysis is cultural. The aim is to understand local values, habits and consumer preferences so that you can better understand them.

Foreign language keyword analysis and a new version of the e-shop

For a new market, you need a new version of your online shop with a simple and memorable domain and content in the local language. Before you start writing, do a detailed keyword analysis to determine what people are searching for about your product or service.

The keywords currently being searched for will also help you develop your publishing plan. They’ll tell you what people want to know more about and what might draw them to your site.

Keyword analysis will also help you with this:

• General SEO – keywords you should use when creating URL addresses, meta descriptions, meta titles or image descriptions
• Social media – Facebook, Instagram, or YouTube searches work similarly to Google searches. By using the right keywords, you can rank much higher and capture the attention of potential customers
• User experience (UX) – keyword analysis is also helpful in creating the structure of the e-shop, optimising the website’s UX and so on

Relevant keywords for foreign countries can be found using tools such as Ahrefs or Semrush, which also have dozens of other useful features

Expert advice: A domain name should be concise, short and supportive of your brand. Avoid complicated names with numbers or different characters that look untrustworthy.

Quality content

Quality and optimised content can make your website reach the top of search rankings. So don’t take it lightly.

You can translate existing text, such as product descriptions, company details and so on, and then have it checked by an expert. Another option is to use a professional translator.

If you are creating new content based on keywords, you also have two options:

• Have the texts written in your preffered language and then translate them into a foreign language,
• Find a person to write the texts, ideally a native speaker, who will write the text directly in a foreign language.

It is advisable to find a native speaker to translate the texts. He or she will be familiar with local customs, making the resulting text sound natural. You will also avoid various mistakes, such as including prices, symbols, addresses, etc.

Quality customer service in a foreign language

When shopping online, customers often have additional questions they contact customer support with. Therefore, it is important that you provide them with at least email or telephone support in their native language.

Remember that quality service is the key to success. If you help customers solve their problems quickly and easily, they are more likely to come back to you and may even recommend you to their friends.

Did you know…?

Providing customer support in the local language and with a local telephone number significantly increases the shop’s credibility. So, if you want an edge over foreign e-shops that do not offer this option, include it in your services.

Setting up PPC campaigns correctly

We probably don’t need to tell you that PPC campaigns are effective. The success of PPC campaigns depends mainly on their settings. Therefore, study the local specifications and use appropriate keywords. Once the ad is up and running, monitor its performance and adjust it if it is not performing well.

In addition to PPC campaigns, you need to consider other marketing methods that will help increase the visibility of your e-shop. These include social media, newsletters, and content optimisation. Influencer marketing, which uses famous and influential people to promote products and services, has recently become popular.

The right marketing strategy

In addition to PPC campaigns, you need to consider other marketing methods that will help increase the visibility of your e-shop. These include social media, newsletters, and content optimisation. Influencer marketing, which uses famous and influential people to promote products and services, has recently become popular.

Plan your marketing strategy carefully. Consider how and to whom you want to communicate your products. Be aware that a combination of channels can be successful, but don’t overdo it. Consider which ones are really necessary and which ones would not reach your target audience at all.

For example, if you sell products to people in their 50s and older, you should focus on Facebook and Instagram. You can skip TikTok and Snapchat.

Use of local comparison shopping

Comparison sites are popular tools used by thousands of shoppers. In minutes, they can find out which e-shop offers the best price.

The advantage of comparison sites is that they help e-shops establish themselves. So don’t forget them when you’re expanding; try to get your products on them.

Did you know…?

Up to 78% of shoppers have used comparison sites for at least one online purchase. Even more, around 65% of users say that comparison shopping has saved them time when shopping.

Tailoring portfolios

International shoppers are different from domestic shoppers. They have different needs, preferences and requirements. Therefore, you do not need to offer them all products. Feel free to select only the ones you think they will be most interested in.

The advantage of tailoring your portfolio is that you don’t have to spend time optimising and translating texts for products that may not sell abroad at all.

So, how do you choose the right products? Look at the data you collected during your research. It will tell you all you need to know about your customers and their buying behaviour.

Starting a business abroad

With your marketing, website and content sorted, you can move on to less fun and creative tasks, such as setting up a company.

You are not obliged to set up a local company when expanding abroad. But whether you do so depends largely on the country where you want to do business. German customers, for example, are wary of foreign companies. They prefer to buy from local companies. Countries in the CEE region, on the other hand, should be no problem.

Financial plan

A financial plan is a document that gives you a rough idea of the expansion cost. It will also help you reduce the risk of unforeseen expenses that could lead to various financial problems.

When drawing up a budget, it is a good idea to expect higher costs for certain tasks and leave a reserve if something becomes more expensive.

Legal preparation

The legal side of doing business is complicated but do not have to be. If you want to be sure that you are doing everything in accordance with the law, you should consult experts. Ideally, those familiar with the laws of the country you plan to expand into.

Opening a local bank account

Opening a bank account is not compulsory, but it is worthwhile. Foreign payments into an account are subject to a fee. The fee depends on your chosen bank, but it is generally not small.

Setting up a bank account in the country you want to expand to can save you tens or hundreds of pounds, which you can use for marketing activities.

Local payment methods

The success of an e-shop is also influenced by how products are paid for. If you don’t offer customers their preferred payment methods, they won’t trust you and won’t complete their purchase. The same applies if you don’t sell your products in the local currency.

So first, find out which payment methods are most commonly used by foreign customers and make sure you offer them in your e-shop. Then check the prices. If a country has its own currency, use it instead of euros.

Local address

The address is crucial, especially when the customer decides to return the product. If they find out that they have to send it all the way to you, they will likely leave the e-shop without making a purchase.

However, the opposite will happen if you have a local address, e.g. for a collection point. The customer will be sure that if he orders something that doesn’t suit him, he can return it easily, quickly, and without any high costs.

VAT registration

Each country in the European Union has a fixed annual turnover limit, which determines the need to register for VAT. Limits vary from country to country and can change over time, so check regularly.

However, sometimes, it is worth registering for VAT even if you do not reach this limit. For example, if:

• you want to appear more reliable
• the tax rate abroad is lower than here
• you have customers who are subject to VAT

Logistics

Today’s customers don’t want to wait a week or two for their products. When they order something from you, they expect it to be in their homes within two or three working days at the most. To meet their demands, you must not forget logistics when expanding.

Check out the shipping companies. Find out what quality of service they offer, how fast they deliver, and their prices. Also, find out about reverse logistics. This means, for example, whether the carrier handles returns.

Build a relationship

Good business relationships are also essential for a successful business. So start networking and look for distributors, suppliers, and partners willing to work with you.

You can outsource your networking. Local agents usually know the market and have contacts with companies you could do business with.

Tools to help you expand

There are many tools available on the Internet today to help you expand. We’ve picked out some of the basics for you:

Statistics from Statista.com

You can find accurate and up-to-date customer statistics, buying patterns, market size, and other details on Statista.com. The reports are clear, and the basic information is usually free. If that’s not enough for you, the site also offers a monthly subscription.

Other valuable data can be found on the websites of a country’s embassies, chambers of commerce or government agencies.

Google Market Finder

Google Market Finder is a tool designed specifically for e-commerce store expansion. Once you enter your domain and category(s) of products and services, it will show you the countries that would be best for your expansion. It will also give you basic information about the countries, such as:

• Monthly searches within the chosen category
• Net disposable household income
• Ease of doing business index

Google Trends

Use Google Trends to see how popular your chosen word is in different countries. You can even see how it has been searched for over time. This can be useful if you’re selling something seasonal and want to know when people start to show more interest in it.

Google Trends also shows you other popular related terms and topics you can use when creating content, for example.