Fevad figures demonstrating an ecommerce market continuously growing (+1 pt over brick-and-mortar commerce every year), statistics at EU level positioning France as third “only” of ecommerce sales. Here is to give etailers some legitimate ideas to expand internationally whether they consider themselves at maturity in their domestic market or not.
This article is not about debating personal convictions : should one capture their local market before expanding their geographical operations (one country after the other) or instead throw many nets at a time. This question is to be answered by the entrepreneur. However, it is about figuring out what the priority markets are and sell products.
MARKETPLACES ARE OPPORTUNITY TESTERS
The ultimate way to appreciate buyers’ interests for your products is to expose them. To that end, international marketplaces stand for an ideal channel for a POC (“Proof of concept”). Not only do most marketplaces have ready-to-use tools to make adding a new country easy in your settings, but they also provide a range of statistics : competitors name and prices, sales projections, thereby enabling to stock best-sellers in the suitable quantity.
Should products already exist in the marketplace database, retailers are then exempt from translating description and product features and free from technical issues to publish their listings. The set up can be completed in a couple of hours.
1 – Set up a POC
For now, the appropriate steps are the following :
- Make sure your current shipping carriers provide “acceptable” fares for delivering into your new markets. Should the POC be successful, then acceptable fares should become competitive on the domestic market, both in terms of time and price.
- Provide your best effort to process 100% of orders originated from marketplaces in the new countries. Over a minimal cancellation rate or negative reviews, the marketplace is likely to penalize retailers on their overall marketplace activity, therefore including their historical channels, generally making most of the sales. Beware of stock shortage, picking errors, extended response times. In other words, make sure you are prepared and stringent when sales go up !
It is possible to connect a PrestaShop store to marketplaces, therefore managing stock and orders in a centralized way (highly recommended) :
- Install and set up each individual marketplace module after the other from the PrestaShop back-office. (eBay, Amazon, etc..)
- Sign up a plan with a feed management solution (Shopping Flux, Lengow, Neteven..) for your PrestShop. They are already connected to most marketplaces.
The catalog will be pushed from PrestaShop towards marketplaces in both cases, however do not forget to primarily set up your selected countries in either the module settings or directly onto the marketplace settings.
2 – Then, improve profitability
When the POC is over and has demonstrated which market opportunities to seize, one retailer may wonder whether to maintain marketplaces up and running or shut down feeds. In option 1, it is appropriate to look for ways to optimize profitability as the withdrawn fees are high. In option 2, retailers will favor selling their products directly on their store (and collect full margin).
How to optimize marketplaces ?
Firstly (re)negotiate shipping fees for your new markets, then consider signing up for one marketplace program ‘Fullfillment by”. Make sure you have made several projections in your business plan and keep an eye on ROI for this program. Adjust prices downward to the market situation, withdraw products having too little margin, finally overstock your best-sellers (therefore optimizing buying price and shipping fees).
Keep in mind
A retailer newly selling internationally from its store should not expect generating as much sales than primarily on marketplaces. Most of online stores do not get the same amount of traffic nor similar financial capacity to communicate. A POC on marketplaces is more about identifying opportunities in terms of trends from one country to the other than set up a target in absolute.
In any case, keeping in mind the good quality/service ratio, the question of how to deal with stock and shipments is on the table.
CENTRALIZED STOCK VS LOCAL STOCK
Identifying opportunities is not enough to make the project successful. In order to maintain buyers’ interest for your products and generate sales, it is necessary – as mentioned above – that the shipping fees and delivery times are as competitive as if buyers were purchasing from a domestic player. In fact, this truth is less applicable if one has an exclusive distribution deal, sells rare products or products subject to a buzzing effect. If so, competitors might run out of stock before you do. You are then not capturing the market but what’s left of it.
For competitve reasons, some retailers decide to split their stock and implement multiply buffer stocks in local countries. This can be done on one own’s name but is rather time-consuming. It implies registrating a local company, hiring order pickers and / or stock managers, set up working processes and contracting with shipping carriers. In the long run, this is the way to go.
Alternatively, some service providers can host a buffer stock. Acting as a super logistician, they have representation rights, manage clients service, product returns and so forth (Salesupply is one of them). This may be to consider as an intermediate, easy-to-go step and requires thorough calculation in the business plan. As any service provider, this solution is costly.
The next post will be about how to configure PrestaShop to sell internationally : new language, currency, VAT rates, either in monostore or multistore.