Cross-border ecommerce is growing rapidly because of a constant need and motivation to develop online businesses and spot new opportunities.
As we can read in the ESW Global Voice 2022 survey direct to consumer (d2c) online purchases increased by as much as 17% year-on-year. The same report shows a 12% growth in cross-border purchases YoY. Moreover, the forecast is that these trends are going to continue. What does this mean for online retailers?
After the pandemic online sales boom, many ecommerce business owners started rethinking their business strategies and business models by asking themselves how they could continue to profit from the situation, retain customers, and deliver constant success instead of catching a one-time wave.
Is a direct-to-consumer strategy the best way to achieve success in sales? How to increase international sales in a direct-to-consumer model?
We've prepared some tips and analyses that may help you with the right business strategy. Don't forget to download our brochure - there's a link at the end of the article.
D2C marketing strategy - a sales accelerator
What exactly is direct to consumer? It's a marketing strategy that cuts out any distributors or other vendors from the sales process, allowing a company to sell its products directly to consumers.
A not long time ago, this model was mainly associated with manufacturing companies selling their goods to other businesses to use for preparing the final product. Nowadays, after the temporary closures of traditional stores, companies started selling directly. This turned out to be a strategy with huge potential. Why?
The most obvious benefit is earning more thanks to the removal of margin for a distribution channel. For many companies, managing sales directly also means increasing sales, since they can put in 100% effort into providing a unique customer experience. Being close to your customers means you can meet their expectations better. Designing the right product and target audience based on gathered consumer data builds strong customer relationships and loyalty. If you manage to do that, you will also gain an honest company star.
The fact that D2C is an important direction has been confirmed by the actions of such giants as Nike or L'Oreal, which started offering customers sales in this model.
How to successfully expand into global markets as a direct-to-consumer company?
So let's assume that your company considers direct selling to international clients in its marketing strategy. How to approach such a challenge? How successful direct to consumer companies started their cross-border journey?
Of course, there is no one-size-fits-all recipe for selling direct, and the final model depends on many factors such as product, volume, type of client, and resources. This is not the right way for every business, but there are examples that show that you can reach the top with a bold idea and the right planning.
One of them is a company named Dollar Shave Club, which offers razors... in a D2C model. Blades are goods that we tend to search for in drugstores rather than buy from the manufacturer. DSC found a way to get closer to their customers and started offering their products for an affordable price in a subscription model.
It's pretty obvious that, if you decide to enter direct to consumer retail, you should also consider expanding the business to other countries. What is important in the planning stage and can't be skipped? Remember: failing to prepare is preparing to fail.
4 steps formula
What should be done at the beginning of the project to make sure that your marketing efforts will increase sales? There is a lot of important work to do, and every aspect should be adjusted according to the new strategy: online store, social media networks, and loyalty programs. Sometimes it is a good idea to create a separate brand that will be your "direct" brand, and design an appropriate customer journey with all sales and marketing strategy points.
However, we do have a short summary of four important areas that need to be covered when entering new markets.
Do the right research
Before any further action, you should validate the potential of your product and business in foreign markets. This means checking such aspects such as:
Good news! We have done this job for you and you can find a lot of useful information in our series "Explore the market" - reports, summaries, insights, country by country.
Marketing and industry reports
Analyze the target market to confirm that the product has potential and you will find new customers there. Hard data is the best base, not only for further analysis of what consumers prefer but also to gain knowledge about the average basket value, most popular categories, shipping, and delivery expectations. This can help you adjust your product and strategy to meet customers' expectations.
Permits, licenses, certificates needed
Before setting up business in a specific country, you should always contact a local authority to find out if there are any area- or industry-specific permits or zoning restrictions that could limit your activities. That being said, there are a few major permits that many businesses operating across all local authorities will need to be aware of before they open their doors.
As an ecommerce business, you should already know that offering the right payment methods is important. One payment method is not enough. Remember that problems at the final stage of the purchasing process can be a reason for your potential customers to abandon their baskets and never come back.
Taxes and other surcharges
Corporate taxes can be a significant margin reduction. They vary in different countries, so it's good to analyze recent data to avoid being surprised. Moreover, not paying all of the owed taxes may result in legal problems, delays in deliveries, and other things that contribute to a poor consumer experience.
This is one of the most important things to check: who are your competitors, what do they sell, and how? It may be that you enter the market confidently with a fantastic product, but it turns out that the market is already saturated and there is little space for new players. By knowing your competitors you will also know how to adjust your strategy in order to be more competitive. Also, check customer retention rates - if the rotation is big this may be both an opportunity and a disadvantage, but you have to know how to play it.
Sales channels and ecommerce platforms
For d2c brands, it is their job to explore the potential of existing sales channels and ecommerce platforms. Normally this will be on retail partners, and you as a manufacturer would only be responsible for delivering products to retail companies. But if you choose a d2c marketing option, you have to check the potential by yourself and be present in the most popular sales platforms in order to reach as many customers as possible. Compare your product pages and adjust your SEO strategy to be visible.
Today we are operating in a very dynamic and often unpredictable environment. so prepare your business for various scenarios. A D2C marketing strategy requires a much more active approach, as everything is under your management. What do we mean by required flexibility?
Do not allow processes, procedures, or operations to complicate or slow down your business. Adjust them according to your needs. If your processes are not smooth and they are business stoppers, you may experience massive customer dissatisfaction as a result.
Make your business easily scalable, with the opportunity to test and enter new markets in a short space of time. Entering new markets has to be quick - the opportunity won't wait for you, so do everything in your power to scale your business according to the market situation.
Choose a seamless, transparent solution that helps you manage everything in one place. We recommend twice rethinking the solution you are going to implement since this will be a core component of your international expansion. If you have any problem with finding the right solution, we advice you to outsource this process to a fulfillment company. This might be the best option because you will receive professional support, integration of all digital channels, and even a dedicated customer service team.
Sell globally, ship locally
Start shipping from warehouses near your customers with international infrastructure on demand. A fulfillment network lets you pay less for shipments and offer next-day delivery to your customers as they become local.
This is the best option for companies that sell in direct models on foreign markets. You can forget all of the problems related to expensive and difficult shipping, platform integrations, as well as following all taxes and rules. Your products will be delivered straight to consumers in no-time.
This is what it looks like in an ideal world.
Very often, good preparation and flexibility won't be enough. As such, we are adding one more point: reduce as many risks as possible.
Prevention is the best solution. Instead of reacting to occurring problems, try to be proactive by gaining a deeper understanding of:
- Diversification - sales channels, markets, warehouses, shipping points;
- Customer satisfaction - smart returns and claims management;
- Trust and reliability - network of verified and trusted partners and operators.
Ready for success and a loyal customer base?
There are multiple ways to start your international business and eliminate the need for traditional retailers, but it's crucial to prepare your strategy in a proper way. While there are different distribution models, we can't deny that d2c is one of those with the highest potential.
When selling directly, you don't need distributor partners, but you may need logistics and fulfillment ones to help you boost your business.