While many of us are spending more time than ever at home, the most exciting part of the day is when our online orders arrive in the mail.
Since the COVID-19 pandemic began, online retail spending has skyrocketed. In the UK, e-commerce sales grew 26% y-o-y in April 2020, while the US saw an even sharper increase of 45% y-o-y.
The opportunities for merchants to grow abroad and reach a whole new international customer base are ripe. In Belgium, almost 50% of shoppers choose to buy online from merchants based in other EU countries, while in Finland, this number rises to over 54%.
But expanding an e-commerce store abroad is easier said than done, and you'll need to have an extensive plan on optimizing your store for overseas customers.
We've put together a checklist for what you'll need to consider when localizing your online business and how to implement them.
Let's dive in.
Localize your content
First things first, your global customers need to understand who you are, what you're selling, and how to move through the sell flow.
You'll need to adjust your web content to support the languages spoken in the markets where you're expanding.
Localization is a word that's thrown around a lot, but there's a difference between translation and localization.
Translation: the process of transforming one language into another to hold the same meaning
Localization: recognizing the target culture and being less concerned with staying true to the original text
By truly localizing your content, you not only speak your customers language but also set up locally relevant offers, geography-specific price lists and policies tailored to your target audiences buying behavior.
Set up local customer support
Satisfying your customers is the key to retention and building advocacy. Of course, the bigger your brand grows, the contact from customers will increase.
You can mitigate this by improving your user experience (UX). By localizing your FAQs, product descriptions, and service emails, customers should be able to self-solve their queries without having to contact your team.
That said, there will always be problems that only human interaction can solve. Having a team member on hand that speaks the language is the best way of delivering top-notch service.
Localize your checkout
Having a fully localized checkout goes beyond just speaking your customers language.
Depending on the market, zip codes, measurements, dates, currency unites will need to be adapted as they all use different formats.
Otherwise, your customers wouldn't be able to input their zip code format for the delivery or billing, and they'd have no idea how much they'd be paying in their local currency unless they do the leg work themselves.
Ultimately the customer walks away unhappy, and you lose out on a sale.
You can easily cut out some of the leg work of localizing your checkout by implementing the Payvision checkout solution, which fully customizable and automatically supports all major languages.
Support the right payment methods
We've all been there. You've spent time researching a brand, carefully chosen items, spent time creating an account and filling in your details - only to realize the payment method you're used to using isn't supported.
The brand loses out on a sale, and the customer wastes time and walks away with a sour taste in their mouth.
Supporting the right local payment methods is crucial to ensuring customers can convert. North Americans will expect to always pay via credit card, whereas Germans prefer to use direct bank transfers.
Establishing a solid pricing strategy
Pricing is another aspect you'll need to think carefully about, as your current prices may not translate well to the new markets.
There are two routes you can go down when establishing your overseas pricing:
Cosmetic pricing localization
Cosmetic pricing is the simplest approach, you'll just be making sure that your current prices are converted and shown in the local currency using the most recent exchange rates.
For example, your product may be priced as GBP 16 in the UK market and you'll display it as USD 21 in the United States.
When you're looking to convert customers fast, this is the bare minimum you should be doing, as customers won't want to calculate prices themselves based on conversion rates.
True pricing localization
To thoroughly localize your website, you'll need to research the willingness to pay in each market.
Raw and adjusted costs can change significantly between markets, and what consumers are prepared to pay will also differ
You can take for example, the Big Mac Index to get a gist of people’s expectations across the world. Also research the price points of your local competition and conducting price sensitivity research.
This will enable you to create personas for each of your markets and create a granular strategy for each location you’re expanding into.
Understanding currency risks
With 45% of shoppers feeling uncomfortable purchasing in a foreign currency, offering multiple currencies is key to unlocking higher conversion rates.
But selling in multiple currencies comes with the dreaded foreign exchange (FX) is a factor that keeps many merchants from expanding abroad.
Currency rates are forever changing. If there’s a delay in processing a payment or a refund across borders, there’s a chance that you’ll lose or gain (win!) money because of currency conversions.
It’s important to factor in exchange rates so your revenue doesn't change out of the blue when your money comes your way or paying through the nose when sending refunds.
There are easy ways to mitigate the risks:
Firstly, you can simply open foreign bank accounts in the markets you’re expanding into. You won’t have to lose headspace on converting currencies until you’re ready to withdraw the funds, waiting until the FX is favorable to you.
Payment providers and e-commerce sites also offer simple tools and services for exchanging currencies.
By partnering with a PSP that also offers global card acquiring, you won’t have to get into the nitty gritty of manually calculating FX rates, and you can even save on interchange and currency exchange fees as you’ll only have one partner processing the payments.
Calculate new landed costs
In laymen's terms, landed costs are the charges merchants will pay for the product to 'land' in the customers' hands.
This will include taxes, duty fees, exchange rates, customs, tariffs, shipping/handling fees, and processing the payment from the consumer.
These costs can differ significantly depending on the market, most you'll have to cover yourself, and others you can offset to the customer, such as the shipping fee.
It can get a bit mind-boggling but don't worry, you won't need an accountancy degree to get your head around your total landed costs.
Your payment provider will give you a breakdown of exchange rates and processing fees.
Plus, there are additional resources out there that will help you to calculate the costs and will help you to know your true profit margins.
Setting up delivery and returns
When shipping products internationally, the best decision is to work with a global courier service such as DHL and UPS.
While this is not the cheapest method, couriers have huge logistic networks and experience at their disposal. Plus, the majority will offer additional services like customs clearance.
Working with a reputable service that buyers already know will also give your brand that extra security blanket new customers will be looking for when assessing your trustworthiness.
Complying with legislation
Last, but certainly not least, you'll need to be aware of the international regulations to comply with. Take time to thoroughly research the overseas laws that are relevant to your new market.
For example, in 2019 China implemented its first regulations for e-commerce merchants, while Canada has some pretty restrictive anti-spam laws that can influence your marketing emails.
While, if you're planning to move into a European market, the General Data Privacy Regulations (GDPR) act means that you cannot gather, store and use more data than what's necessary.
Additionally, you must ask European users' permission to use their data and deleted it after a certain time period or upon the user's request.
Failure to comply can result in hefty fines, even if you only have a few European customers.
PSD2 regulates transactions between bank accounts and protects consumers from rising levels of fraud. If you're working with a PSP that has pan European coverage - you should already be PSD2 compliant.
So, there we have it - follow these easy steps and you'll be ready to start business overseas in no time!