Bernardine Wu, the Founder and CEO of FitForCommerce, sat down with Josh Halpern, Director of the eCommerce Innovation Lab at the US Department of Commerce, to discuss best practices around international exporting barriers, and important considerations for companies entering international markets.
Bernardine has been working with companies in the eCommerce industry for many years and has extensive finance, technology, and eCommerce experience rooted in Wall Street. The below interview represents some of the highlights from their discussion, which can be watched in full in the videos that follow.
But first, we scanned the internet and pulled some images of Bernardine traveling the world. Bernardine, we hope you don’t mind.
Identifying market opportunity
Q. How does a business that is primarily operating domestically identify opportunities for penetrating international markets?
A. Identifying market opportunity is key to deciding whether to go international. Market opportunity depends on how your products are received and if they are popular. Sometimes this depends on verticals. For example, skin care and vitamins are very hot in Japan, while luxury brands and goods do well in Korea. You need to start with understanding the demand. Then you need to understand the competition. Lastly – well actually firstly – you must know if you can even sell there! [You must consider] for example, regulations, quality control, logistics. Logistics is also a big piece because you need to understand the internal logistics in that country, risk, etc.
Brand protection and channel mix
Q. What considerations are important for companies to ensure they protect their brand and avoid channel mix as they enter foreign markets?
A. This depends on how big your brand is and if you have in-country stores or licensing agreements. We find that some retailers need to protect their brand by being overseen by a brand control department. Or some have agreements where they cannot compete with their partners. Or some may sell multiple brands and they have to get licensing from that brand. Furthermore, you also don’t want to compete with yourself if you have an in-country presence. Another thing is packaging. If you are fulfilling from that country and not shipping internationally from a US location where you have control, you have to make sure your packaging is consistent.
Q. Are there certain factors that are important for determining channel mix?
A. Understanding how to sell outside the US goes to market opportunity like we discussed, but then the question is: How and what channel do you want to pursue? It also depends on timing. You may want to try out a country via eBay or Amazon. You may want to look at delivery times from certain channels or learn how people shop to see how they pay, for instance, or how many products they want to shop from. Sometimes people use consolidators, where buyers can purchase from many vendors and have [goods] consolidated in one facility and then shipped over. Others use marketplaces. Others create localized sites. This depends on demand and logistics costs, as well as organizational support. The great news is there are many options – so you can determine your pace and take advantage of the different options available from a technology and logistics perspective by outsourcing, and then bring it in-house if it proves profitable.
Optimizing the customer experience
Q. For companies that are using an eCommerce strategy, how can they go about optimizing the foreign customers’ experience online?
A. First of all, this also has a lot of flexibility. And it all depends on how transparent you want to be. Do you want the shopper to know they are shopping through a third party or not? If you do not need as much control over your brand and data, then you have a lot of options. However, if you want full control, then you need to localize the site, allow them to pay in the local currency, display the entire cost to them including duties and taxes, offer customer service options, and then, at the most sophisticated level, allow them to shop on your site on branded pages without even leaving the site, and integrating all those pieces together. This is going to depend on technology. And organization that can support this. But it is, again, flexible and depends on transparency.
The difference between digital and traditional brand-building
Q. How does building a digital brand compare to building a brand through traditional marketing models and what factors are important online?
A. This is no different than any other building of a brand strategy. You need to figure out what content you can add that will boost search engine optimization (SEO), which makes you more reachable. It is important to understand how people shop and what interests them so you can build those pieces of content. Social plays a big role because you can interact directly with the customers, so understanding what social mediums are available and used in other countries is key. A simple review of how many Facebook likes you have by country can allow you to see where you may have opportunity to grow.
Pricing considerations in eCommerce
Q. What should a company consider around pricing a product in the eCommerce world?
A. This depends on whether you want consistent pricing. If you do it gets tricky. But the bottom line is you need to keep in mind duties, taxes, and display regulations per country. Some countries see the full cost rolled into the product, some have you break it out, some have you break out taxes and duties separately. You may find it easier to work backwards but this differs by country. You also have to see how price-sensitive your customer base is. Will you as a company eat some of this cost or pass it to the customer? Will it affect your margins? All good questions and all require research to see what makes sense and where.
Managing international payments
Q. How can companies ensure they can manage their online payment processing and ensure they are checking the right boxes to get paid?
A. If you want to take this responsibility on yourself, you can invest in a payment provider that is international. However, there are fraud implications here and payment will be determined by country, as some countries still do COD. However, if you do not want to take on this piece, this is a good reason to invest in a third party tool that will take care of the payment processing and assume the fraud risk. These type of providers also will take on the additional piece of harmonization and taxes along with currency issues, if you want to accept foreign currencies.
Q. When starting an eCommerce focused entry to a new foreign country, what are the important considerations in making sure those products are shipped in a timely and efficient manner?
A. This is really a big one as it is based on a lot of factors. First of all, there is price and delivery time. How much is it going to cost you to ship your product from your warehouse in a reasonable timeframe? This question will determine if you should even look at fulfilling it yourself. Others use other warehouses closer to the country of delivery. However, if you can run your own fulfillment from a timing perspective, you need to ensure you have the in-house organization to fulfill orders, and the relationship with a logistics provider to do so in a cost effective and timely manner. There are, again, logistical services where you can ship product within the U.S. and they will do the cross border delivery (and duties, etc.) and the cost will be by parcel or by transaction. Others can come and pick up product and take it to a consolidator. This will all depend on volume. It also may have an impact on packaging since the boxes may be opened to be inspected or repacked. Researching the time it takes to get to the country and then also the time to get the last mile is also a factor in the decision, and it will differ by country and by logistical partner.
After-sales service strategies
Q. Are there any after-sales service issues that a company should prepare for when they are exporting internationally using eCommerce services?
A. Customer Service needs to be able to service the customers so it will be important to have a customer service team who can speak in the different languages or to outsource one. Also, handling of returns will need to be figured out in terms of if you will accept them, will they come back to the US, will they remain in a third party warehouse, consolidated and sent back, or will they remain somewhere else to be fulfilled from later. Some sellers will even throw away returns in-country because it is not worth it to pay for the shipment back. Others may offer no returns on certain items in certain countries. And some sellers will, in the case of damaged or faulty goods, allow the customer to keep the product and still ship them a new one. This all depends on the product you sell, the price-point, margins, and if it is resalable or refurbishable.
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