Expansion into new markets - how to start and is it even worth it?

Customer acquisition
Expansion into new markets - where to start and is it worth it?

There are over 200 countries in the world. Why limit yourself to one? Your business can flourish abroad, where it may hit a niche or unique needs that customers do not have anywhere else. Sometimes expansion to new markets is a natural step in the company's development.

For years, at the top of the list of Polish export destinations are: 

  • Germany, 
  • The czech republic,  
  • Great Britain 
  • France 
  • Italy. 

The proximity and simplicity of trade with these countries make it relatively easy to expand, especially when it comes to our neighbors. Researching the market's potential alone will not be costly, and there is no shortage of consulting firms specializing in the German or French market. Nevertheless, the expansion of stores to foreign markets can also be observed in other directions.

The top ten also includes the USA and Russia. The first market gives a chance to be present in the media or on the most important shopping streets in the world, as evidenced by the case of the Inglot beauty brand salon or the success of designer Magda Butrym in the world of celebrities.

On the other hand, Russia is an enormous market that is often overlooked in expansion plans, and is a gateway to the post-Soviet countries. No wonder you can buy clothes in Russia Local Heroes, in Kazakhstan Śnieżka paints, and in Russia, Belarus and Bulgaria - Bydgoszcz vehicles PesyTo Lebanon Polish sugar travels, a in Saudi Arabia you are drinking coffee Mokate. Recently, the rapidly developing countries of Asia, and in particular, are in fashion China, where Polish producers of food, construction equipment and interior furnishings already export.  

Expansion of companies into new markets - where to start? 

It is worth starting each expansion into new markets with their analysis. Free and paid reports of chambers of commerce and organizations are widely available. Nevertheless, it is worth supplementing them with your own research or analysis on request. However, this is only one side of the coin. The second is the potential of your company. Consider whether: 

  • Can your company compete with those present on the foreign market? 
  • Can your costs and prices be kept at the appropriate level? 
  • do you have access to employees and advisers who know the language and the realities of a given country? 
  • export to a given market is possible and technically profitable (perishable goods, bulky goods, delicate goods, requiring specific conditions) 
  • the political and social situation in this country enables expansion? 

How well did you prepare your expansion strategy for new markets?

Be sure that you will achieve success!

Currently, a fairly simple solution is test expansion into new on-line markets. This is a type of market research that will show you if there is a need for a given product. Expansion must start with establishing a budget. Same as product launch in Poland it generates costs, and it is the same abroad, where you need to add the costs of establishing a branch, translations, permits, analyzes and creating websites. Alone branding you may need to refresh or redo to account for cultural differences. Did you know that Czechs buy forest-scented dishwashing liquids, and Poles prefer lemon and mint? Even Coca-Cola has Fanta yogurt in Japan, and KFC in India sells rice with vegetables. It may turn out that your product will only work abroad after changes. 

When developing your business abroad, you don't have to build a factory right away. Other solutions are: 

  • license - the product will be produced by someone else under your brand; 
  • joint-venture - the contractor will bring the know-how, and you will bring competitive products; 
  • production to order - e.g. for a Chinese furniture chain or an American discount store; 
  • indirect export - with the participation of an intermediary from a given country; 
  • direct export - you introduce products to a new market yourself. 

How long does the expansion into new markets take on average? 

It is impossible to give the average amount of time needed for foreign expansion. The easiest way is in the EU countries, where you can often start a new project after 1-2 months. Exotic and distant markets are different regulations, work culture or even trips lasting 1-2 days each time. In addition, you need to devote a lot of time to the analysis and observation of the market, so that you do not miss the nuances that will affect the success of your business. All this means that expansion into new markets often takes up to a year or more from the first analysis to the opening of the store. 

Expansion into new markets - threats and risks 

Expanding into new markets has many obvious pluses. If the domestic market is highly saturated, you can spread your wings abroad if no one is selling what you are there yet. You can even apply skimming strategy and any price positioning without reference to the tight Polish market. On the other hand, however the risk of not knowing the realities or an unforeseen event is big. The more distant the direction, the more potential threats. For example, the Polish brands Lubella and Łowickie, after their expansion into a new market in China, soon enjoyed success. It turned out that Chinese competitors had registered their trademarks. As you know, ignorance of the law is not a good excuse in case of trouble, so it is worth getting to know the foreign legal system in depth before expansion. 

A thorough analysis must be carried out not only in relation to the country, but also to individual cities and regions. It is often less popular and cheaper towns that offer more interesting perspectives than large, highly competitive cities. From such a smaller center it is easier to expand, and in case of problems - to withdraw. This is shown by the example of Reserved, which opened its flagship store in Germany in Stuttgart, or the already mentioned Inglot, which began its overseas expansion in Montreal. On the occasion of opening its first German store, a representative of Reserved revealed in interviews that the company's annual marketing expenses on this market amounted to EUR 4 million at that time. It is worth remembering when planning expansion into new markets. 

International e-commerce - is it profitable?

The popularity of e-commerce is constantly growing. The biggest boom in online sales took place in 2020, when the pandemic reality forced us to change our shopping habits. We changed walking around shopping malls to browsing online stores and shopping online. However, the galleries have been open for a long time, the pandemic is coming to an end, and the popularity of e-commerce is not declining and there is no indication that this will change in the near future. Optimistic forecasts encourage the expansion of e-shops.

Every entrepreneur who wants to consciously develop their business should consider online expansion to new foreign markets. In the era of amazing internet opportunities and constantly developing new technologies, international e-commerce undoubtedly pays off. Especially on the European market, thanks to the unified EU regulations, which greatly facilitate business operations on a larger scale.

An international online store is a chance for a prospering business! Expanding into new markets is a great way to increasing sales. With the right preparation, you can see a marked increase in turnover compared to the profit only from local sales.

By expanding your online business, you will make yourself known on the international market. In this way, you will develop your company and gain some kind of advantage over domestic competition.

The success of the Internet expansion into a new market is not a coincidence, but the result of carefully planned and consistently implemented activities. What to remember when planning international e-commerce?

Expanding into new online markets - what do you need to know?

International e-commerce can seem incredibly complicated. And although it is indeed not the easiest undertaking, with proper preparation, basic threats that could reduce the effectiveness of expansion can be avoided. What to pay special attention to when planning international e-commerce?

The first important issue is the method of shipping the offered products abroad. To make sure that the transport goes without any complications, it is worth using the services of one of the international carriers. The most popular are FedEx, DHL and UPS.

Remember about the customs declaration each time! A customs declaration is a document containing the information necessary to complete the customs clearance of goods. It is a written declaration to the customs authorities about the type, quantity and origin of the transported items.

The last important issue related to shipping products abroad is customs. A duty is a levy imposed by the state on goods in connection with their import or export across borders. Many retailers leave it to the buyers to pay the duty. This is a natural move in the current market. However, it is worth mentioning it in the regulations, so that customers are aware that they may be asked to pay customs upon receipt of the parcel.

The second important issue is the choice of payment methods for purchases. Buyers' payment preferences may vary considerably depending on the region of the world. In Great Britain or France, customers most often choose the form of payment with a debit card, in Germany, online bank transfers are the most popular, and in the Netherlands, consumers use the iDeal system. Choosing the right form of payment often determines the success of international sales. You should make the shopping as convenient as possible for foreign customers.

In the process of online expansion into new markets, pay attention to:

  • currencies - foreign customers prefer to pay in their own currencies; some global payment service providers allow you to sell products in different currencies; otherwise, use calculators that will automatically convert prices based on the latest exchange rates,
  • cultural differences - attitudes and social norms differ depending on the region of the world, which you should remember when creating communication and marketing of your online store; thanks to this you will avoid image crisis,
  • language versions of the store - it is best to create several language versions, taking care of the correct translation of the content; translations should be consulted with a native speaker, who will detect possible errors and suggest which phrases will work best in specific places on the website,
  • foreign customer service - international service can be a challenge, especially in the case of returns or complaints; take care of proper preparation of employees to work with a foreign client; proficiency in a foreign language is the basis.

Expansion into new markets and foreign positioning

Proper preparation of the website for online expansion into new markets is of great importance. It largely determines the success of the entire undertaking. Adapting the store to comfortable and safe international shopping increases the chances that satisfied foreign consumers will use the services again, thus joining the group of regular customers.

As a conscious trader, you are surely aware that even the best-planned international e-commerce will fail if you do not take care of proper promotion. The activity that combines the preparation of the website to function on a new market with promotion is foreign positioning.

Foreign positioning is an important area of SEO dealing with the optimization of international websites. The aim of the process is to increase the visibility of the website in foreign-language versions of search engines. Why is it so important? If the store's website is displayed high in the results of a popular search engine in a given country, more people will find it, which will increase online sales efficiency. Excellent visibility of your e-store in the search engine increases your chances of market success!

Does foreign positioning always take place on Google? Although Google is the world leader in internet search engines, other services are in the lead in some countries. Yahoo is the most common in Japan, Yandex in Russia, and Baidu in China. Before starting positioning activities, be sure to check which search engine your target customers are most likely to use.

Foreign positioning - a task for professionals

Foreign positioning is a real challenge. It is a time-consuming process that requires full commitment, experience and excellent knowledge of SEO, marketing, international market mechanisms, etc. This task is worth entrusting to specialists.

Professional positioning is done by professionals SEO agencies. The agency will comprehensively analyze the foreign market, check the competition and perform positioning activities that will allow you to effectively reach foreign clients.

Why is it worth choosing a Polish SEO agency? Foreign positioning carried out from Poland can be as effective as the activities of a foreign entity, and at the same time costs much less. SEO costs in Poland are lower than on the European market, e.g. in Germany or Great Britain.

The second issue that speaks in favor of Polish agencies is better communication with specialists and easier cooperation. Communication in the same language and the possibility of meeting at any time reduces the risk of misunderstandings that could hinder effective expansion into new foreign markets.

3 foreign positioning strategies

An entrepreneur who wants to start a business in international e-commerce can choose one of three foreign positioning strategies.

The first is to operate on the foreign market through a separate domain. The process is based on setting up a separate domain for each country and conducting separate foreign positioning activities on each of them. This requires the creation of separate groups of external links that are valuable for the site and come from pages from a given country. Operating through a new domain increases the costs and time of the entire enterprise. The upside is that the sites are not linked to each other, which means that the failure of one of them will not affect the other.

The second strategy of foreign positioning in expansion into new markets are activities based on subdomains dedicated to one country. A subdomain is a subdomain Internet address belonging to a main domain or a higher order domain. An entrepreneur can create any number of domains. However, it is worth bearing in mind that all subdomains are related to each other, so the failure of one of them will be the failure of the entire site.

Despite the connection, each subdomain requires individual optimization in order to adapt it to the specificity of a given market. The advantage of using subdomains is that there are no costs associated with buying a new domain for each country. Subdomains are a good solution for those online stores that have a strong, valuable main domain - this makes positioning much easier.

The third option is activities based on directories dedicated to one country. The process is to create subdirectories for each country on one site. It is the easiest and cheapest method of introducing different language versions of the website, but it is less effective. Its main disadvantage is the risk that search engine robots do not understand geographic targeting for individual directories, which may lower the effectiveness of the entire foreign positioning. Single directory problems can affect your entire site.

Expansion into new markets - the most common mistakes

Expanding into new markets is a large undertaking that sometimes exceeds entrepreneurs. What mistakes do companies make most often?

The first is wrong budget estimation. It is worth bearing in mind that expansion into new markets involves additional costs. Incorrect financial analysis can lead to accidental destruction of domestic business. At the beginning, it should be determined whether we really can afford such an undertaking and whether any additional expenses will not be too much for the national budget.

The second mistake is an inaccurate analysis of the foreign market, covering both competition and consumers. Knowledge of the market is essential to conduct effective operations. It facilitates planning of marketing and promotion, indicates development paths and defines the aspects that should be paid special attention.

The third mistake is weak branding brand. Only strong brands can survive in foreign markets. A brand that has a weak identity, is inconsistent and does not carry any values, may have a problem with entering a foreign market. The key to success is decent branding, i.e. developing strong brand awareness.

Is this a good time to expand into new markets?

The prospect of business development caused by expansion into a new market is undoubtedly tempting. However, is it suitable for every entrepreneur? Before you decide to introduce a sell option abroad, answer the key questions about your business - especially those related to finances.

First of all, carefully analyze your budget so as not to make the mistake we wrote about earlier. Rational planning of expenses increases your chances of success. If at the moment you cannot afford to expand your business to new markets, first think about what you can do to change your situation on the domestic market. The solution may be investor support or an additional form of promotion that will increase sales.

Be sure to consider whether expansion into new markets will actually increase your sales and profits. Thoroughly analyze the target market in terms of the demand for the products you offer, as well as comprehensively research the local competition.

In addition, identify the resources necessary to start operating in a foreign market. Pay particular attention to the need for workers and materials for the production of goods.

The collected information will indicate the opportunities and threats resulting from expansion into new markets. This will greatly facilitate your decision to start a venture.

Expansion into new markets and the assessment of the company's financial situation

An analysis of the company's financial situation is the starting point for introducing the product to the foreign market. How to do it? They are helpful KPIs, used to assess financial possibilities. Among them we will distinguish:

  • EBITDA - a measure of the company's profitability; profit before interest, taxes, depreciation,
  • operating cash flow - funds flowing into and out of the company,
  • debt to EBITDA ratio compared to the average value typical for a given industry - assessment of the company's solvency compared to the competition; the income that the company should generate to cover all fixed expenses,
  • WCR - cash liquidity ratio; the amount necessary to run the business; the higher the WCR ratio, the more capital a company has, which - after paying all liabilities - can use for additional projects, such as expansion into new markets.

Expansion into new markets - summary

Expansion into new markets can be an extremely appropriate move, guaranteeing the multifaceted development of the company. The main thing is to properly prepare for this difficult undertaking. It is of key importance to define the financial capacity of the enterprise and to assess the profitability of the expansion - will the project bring the expected profits, and at the same time will not harm its functioning on the domestic market. Detailed analyzes of target markets are also important in order to maximize the opportunities and risks associated with starting a business.

In the case of expanding your internet activity, it is worth investing in foreign positioning, which will facilitate reaching the foreign target group. It is best to entrust foreign positioning to an experienced SEO agency that will conduct a detailed audit, help choose the best form of positioning and support the company in international e-commerce activities.

Expansion into new markets is your chance for international success!

Worth knowing:

What is expansion?

Expansion is the process of developing a company by expanding it into new areas of activity. In a business context, it often refers to expanding into new markets. It is a proactive action aimed at gaining a competitive advantage by gaining new customers and increasing the scope of the company's operations. At the same time, expansion is associated with risk, because when entering new markets, a company must face new challenges: cultural, legal and administrative or economic. However, if the planning and implementation of the expansion is carried out wisely, it can bring many benefits, both financial and developmental.

How to prepare for expansion into foreign markets?

Expansion into new foreign markets is a very important stage in business development for many companies. However, in order to be successful in this process, you need to prepare properly. The most important thing is to thoroughly understand your target market, its culture, business etiquette and consumer preferences. You also need to use the right marketing tools and prepare a good sales strategy. It is also extremely important to verify suppliers, transport and legal regulations. Establishing contacts with local business partners can work wonders and help you enter the market. It is also worth remembering about translating marketing materials into the local language and adapting the offer to the needs of a specific country.

What is worth knowing before expanding the company?

Before making a decision to expand into new markets, it is worth carefully considering all aspects of this process. There are many factors to consider when expanding your business into new territories, including: cultural and language issues of the market, potential competitors, and the availability of local suppliers and business partners. It is also crucial to properly prepare and define expansion goals and optimize business processes to ensure smooth operation of the company. Companies operating on the international market must be aware that success in one market does not necessarily mean success in another part of the world. That is why it is so important to carefully analyze all possible threats and challenges that the company may face before expansion.

When to decide to expand?

Deciding to expand into new markets is not an easy task. It requires not only a vision, but also an analysis of the market and its needs. Keep in mind that expansion can help you grow your business and increase your profits, but it also comes with risks. Therefore, the decision to expand should be well thought out and supported by relevant data. There are many factors such as market trends, competition, applicable regulations and many more that are worth considering before making a decision. In principle, when deciding to expand, we should be ready for changes and take into account not only our goals, but also the market situation.

Can an external company help with expansion?

In today's global world, expansion into new markets can be crucial to the company's success. One of the many ways a company can use to speed up this process is to collaborate with external specialists. This strategy gives the company access to experienced professionals who will help it succeed in new markets. Using the knowledge and skills of public relations specialists, the company can take advantage of their experience and resources in order to increase the chances of successfully reaching a new group of recipients.

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