If your business has done well domestically, you may be ready to expand overseas to attract new customers and gain market exposure. But keep in mind, the playbook that has brought you so much success in Australia may not have the same effect overseas. The truth is, many Australian brands have invested significant time and money expanding into new markets only to discover a critical factor that stymies even the best-laid plans.
Here are the top 4 mistakes to avoid when expanding into global markets:1. Lack of research and unrefined market-entry strategy
This might seem obvious, but many businesses fail to undertake specialised market research and develop a market entry strategy that effectively covers the challenges, risks and rewards of expanding into global markets. Some areas to consider include:
- Know the market - Understand economic feasibility, market ‘personality’ and culture, market trends, market size and forecasts.
- Undertake a financial feasibility study - to determine the financial viability of a new market.
- Protect your intellectual property and trademarks - with authorities in any new locations. There is no such thing as a global patent, trademark or design so protection from Australia may not be sufficient in another country.
- Legal obligations and business regulations – ensure the business is flexible enough to work within the confines of localised laws and regulatory guidelines.
- Translate sales and marketing to each new market – Understand your target shopping markets' habits and localised sales approaches before committing to a strategy.
When you can identify a gap in the market and deliver a product that customers want, that's product-market fit. But just because your product works domestically doesn’t necessarily mean you can replicate that success when you’re expanding into global markets. After all, each new market will have unique quirks, traditions and existing players to contend with. Pre-launch research and preparation is essential for determining your target customer, defining your value proposition, testing your products, refining your messaging and adapting products.
A good example of not having the right product-fit can be found with the rise and fall of fashion startup Shoes of Prey. The company allowed shoppers to customise and design their own footwear. Considerable market research indicated that mass-market fashion customers had an appetite to customise their footwear and expansion into new markets was underway. As they entered new markets, sales began faltering. The problem, it turned out, was product-market fit. In our recent interview with Shoes of Prey founder Michael Fox, he explains:
“We thought we had product-market fit in the mass market segment and had begun expanding into the US, the UK and other markets. It was only then that we realised that while our product was resonating with a small niche of creative customers, it wasn’t resonating with mass-market consumers. At that point, our business was far more operationally complex because we were operating in a number of countries.”
In an interview with Smart Company, he explained further:
“We learnt the hard way that mass-market customers don’t want to create, they want to be inspired and shown what to wear. They want to see the latest trends, what celebrities and Instagram influencers are wearing and they want to wear exactly that — both the style and the brand.”
The company eventually liquidated in 2018 after ten years of operation, shocking the world of online retailers. Michael Fox is now a co-founder of Fable Food - a plant-based food startup - and says the company is deeply focused on understanding their customer and investing in consumer research. We interviewed Michael to find out his take on product-market fit today and his new company – you can read more here.3. Siloed technology infrastructure
Expanding into new global markets is a complex enough undertaking. Without the right technology infrastructure, it is infinitely harder. Fortunately, the advancement of cloud ERP solutions makes it far easier to take a retail business to the global stage. ERPs come with built-in best practices, manual process automation, and regulatory, compliance, language and currency support. From an operational standpoint, an ERP system lets you manage sales, manufacturing and distribution - locally and globally. Visibility wise, the right ERP solution will allow users to both drill down into local data for each location or get a bird’s eye view of overall company health.
If you are currently relying on multiple siloed solutions or a patched-together system, then it may be time to look at whether your infrastructure is ready to support operations in multiple territories.
You can learn more about the pivotal role ERP plays in global retail expansion in this blog.4. Lack of expert, experienced and local advice
Don’t rely on your own limited knowledge to get everything right. You will want to know ahead of time your risk factors, cultural differences, potential legal hurdles and so much more. Making mistakes and correcting them after the fact is cost and time prohibitive. Instead, source local expertise and speak to people who have successfully navigated international expansion.
A good starting point is this blog ‘3 tips for international retail expansion from those who have done it’, where we interviewed Australian businesses who have already conquered international markets. Or download our eBook ‘9 tips for global expansion success from ANZ retailers who’ve done it', for even more tips from those who’ve expanded their retail businesses overseas.
Annexa is a leading NetSuite partner with extensive experience designing and implementing comprehensive and customised business systems, including payroll solutions, financial management, warehouse management and ecommerce solutions.