Expanding to a new market in the ever-evolving world of eCommerce can be a game-changer for businesses seeking growth and sustainability. It opens doors to new opportunities, a broader customer base, and increased revenue potential. However, this strategic move also comes with its fair share of challenges that demand careful planning and evaluation.
Let's talk about these benefits and challenges first and then talk about 8 questions you should ask yourself when entering a new market to take advantage of these benefits and overcome the challenges.
In this article, we will be covering the following topics.
- Potential Benefits of Entering a New Market
- Potential Challenges of Entering a New Market
- 8 Questions You Need to Ask
Potential Benefits of Entering a New Market
- Expanding into fresh markets can increase sales and revenue by providing access to a wider customer pool.
- It enables you to reduce your dependence on a single market.
- It can boost the visibility and credibility of a brand on a global scale, leading to greater recognition and trust.
- An advantage over competitors can be achieved by being an early mover in a new market.
- Expanding into new markets provides you with access to previously untapped customer segments.
- It can provide significant growth and scaling opportunities for eCommerce businesses.
- When your business operates in various markets, you get to experience different consumer behaviors.
Potential Challenges of Entering a New Market
- Cultural differences and language barriers can impact marketing effectiveness and customer communication.
- Complying with each market's unique legal and regulatory requirements is critical to avoid potential penalties.
- In the industry, you may face challenges from established local competitors.
- Establishing effective logistics and supply chain operations can be complicated, resulting in delays and increased expenses if not appropriately planned.
- When you deal with multiple currencies, you face the risk of exchange rate fluctuations, which can impact on your pricing and profitability.
- Practical customer support requires careful consideration and investment to ensure satisfactory assistance across different time zones and languages.
- Expanding to new markets usually involves making considerable financial investments that may take some time before generating returns.
8 Questions You Need to Ask
When entering a new market, it's important to consider several factors. To ensure success, it's essential to ask the right questions. We'll discuss the eight most important questions to ask when entering a new market
What is the market potential?
Before entering a new market, conducting thorough market research and making informed business decisions is crucial. This includes determining the market potential by asking questions such as "What is the potential of the market?
- Market potential helps you assess the size and growth trajectory of the target market, as well as the demand for your products or services.
- Identifying any market gaps or unmet needs that your product or service can fulfill gives you a competitive advantage and a higher likelihood of success.
- By evaluating the market potential, you can create a well-informed market entry strategy, tailor your offerings to meet customer demands and position your business for growth in the new market.
Who is the target audience?
Identifying the specific group of potential customers, you plan to serve in the new market is crucial to ensure that your products or services remain relevant.
- Understanding the target audience's demographics, behaviors, and preferences enables you to tailor your marketing strategies to effectively reach and engage with them.
- By addressing the needs and preferences of the target audience, you can increase the chances of attracting and retaining customers in the new market, leading to greater success and growth opportunities for your business.
Warby Parker is a retail brand that sells eyewear. Before launching their business, they conducted market research to understand the needs and preferences of their target market, young adults. They used surveys, focus groups, and customer observation to learn that young adults were looking for affordable, stylish, and convenient eyewear that could be bought online. Based on the market research results, Warby Parker developed a business model that met these needs. The market research was essential to Warby Parker's success and helped them avoid making costly mistakes.
As a result of determining the target audience after this market research, many young people are loyal to the Warby Parker brand. On average, Warby Parker customers place 1.4 orders per year and purchase 1.5 units per order. With a net promoter score of 91 (for reference, apple is in the mid-70s), it's clear that most customers are delighted with their experience and would happily recommend Warby Parker to others.
Who are the competitors?
Understanding your competitors before entering a new market is crucial for developing a competitive advantage and making informed decisions.
- It allows you to assess the market landscape, differentiate your offerings, set appropriate pricing, and refine your marketing strategy.
- Being aware of competitors reduces surprises and helps you anticipate challenges.
- Learning from their successes and mistakes can provide valuable insights to increase your chances of success in the new market.
What are the legal and regulatory considerations?
Each market has its own set of laws, regulations, and requirements that you must adhere to when operating within its borders. By understanding these considerations in advance, you can avoid potential legal pitfalls and costly penalties.
- Compliance with local regulations is essential to protect your business's reputation and credibility.
- Additionally, identifying any specific restrictions or requirements for your products or services in the new market allows you to make necessary adjustments to your offerings or operations.
- Proactively addressing legal and regulatory considerations ensures that your business operates ethically, responsibly, and within the boundaries of the law, setting a solid foundation for sustained success in the new market.
How will I handle logistics and shipping?
Various options are available for transporting your products from a local to a global market.
- With e-export, you can quickly deliver your shipments not exceeding 300 kilograms and with a limit of 15,000 Euros to your new buyers via courier companies, through marketplaces, or directly on your e-commerce site.
- With warehouse rental, you can be closer to the market, reducing the cost of international shipping and shortening delivery times. This will allow you to fulfill orders more quickly.
- Another alternative to delivering your products to foreign markets is to get a fulfillment service.
After you have decided on your target market, you can agree with a fulfillment service provider such as OPLOG, and you can save on many items such as warehouse rental, security, and employees while delivering your products to the world.
What pricing strategy will I adopt?
You can strategically position your products or services by understanding the competitive landscape and market sensitivity to pricing.
- Pricing appropriately allows you to attract customers and gain a competitive advantage.
- Additionally, considering currency exchange rates and cost structures in the new market ensures profitability and financial sustainability.
- Adopting the right pricing strategy can enhance your chances of success and effectively capture market share in the new market.
For example, in 2018, IKEA launched in India and announced that over 1,000 products in the store would be available at a price of less than 200 Indian Rupees. This pricing strategy was created with the price-sensitive Indian audience in mind.
What marketing and advertising channels will I utilize?
It's important to ask, "What marketing and advertising channels will you use?" to create an effective market entry strategy before entering a new market.
- Identifying the most relevant and impactful marketing channels allows you to reach the target audience efficiently.
- Researching the local market's media preferences and digital landscape helps tailor marketing messages to resonate with the local audience effectively.
- Utilizing social media, search engines, influencers, and other appropriate channels ensures maximum brand exposure and customer engagement.
How will I handle customer support?
Effective customer support is vital for addressing inquiries, resolving issues, and providing assistance to customers in a timely and professional manner.
- Understanding the cultural and language differences in the new market allows you to tailor customer support to meet the needs and preferences of the local audience.
- Planning for potential time zone differences ensures that customers receive prompt responses and support, enhancing their satisfaction with your brand.
- By proactively addressing customer support considerations, you can foster a positive reputation, gain customer trust, and establish a strong foothold in the new market, leading to long-term success and customer retention.
To sum up...
Before entering a new market, your business must carefully plan and thoroughly research. This will help ensure your business has a permanent place in the market. To make informed decisions and achieve sustainable growth, consider addressing the eight key questions above before opening up to your target market.
If your target country is Europe or the USA, it's time to meet OPLOG's global fulfillment network. OPLOG, with its 10+ years of experience in e-commerce logistics, helps you to grow globally and focus on your brand while bringing your products together with new buyers in new markets.