Breaking Through Borders: How To Start Selling To Customers Abroad
The goal of any business, large or small, is to reach the largest audience possible. Regardless of whether you’re a niche brand only wanting to sell to likeminded people or you offer a product for the masses, accessing said masses is important. Of course, if your local market in the population of the US (323 million), you already have a readymade mass market on your proverbial doorstep. However, if you’re a UK-based business for example, there may come a time when sales to a consumer base of 65 million start to plateau.
When success has been had on your own shores, the inevitable step is to look to other regions. There’s a whole world of trading opportunities beyond the European Union. Naturally, if you want to sell your products abroad, you need to have a means of doing it. For most small businesses, that will mean a website with a platform that directly targets specific foreign markets. Although you can continue to use basic SEO tools and tips, you may want to conduct some research for the country or countries you’re selling to. Similarly, there may be social media outlets that are more popular in one country than another. For example, China banned the use of Twitter in 2010. Despite workarounds, the general population doesn’t use the platform so any marketing tweets are completely lost on the Chinese population. Fortunately, there are alternatives and it’s your job to explore them if you’re planning on selling to China from another country. Weibo is the biggest name in social media over in China with a 30% increase in traffic in 2017 to 380 million active monthly users. Understanding and then learning the nuances of which platforms are used or preferred in which country is crucial to the success of your business abroad.
Understand How Money Talks
Establishing an online presence will likely be the first port of call for most business owners, but too much focus on this can cause you to ignore the obvious: money. That’s right, anytime you do business abroad, you’ll need to think about the financial implications on a variety of levels. The first is the currency you’re trading in. While you don’t have to necessarily become an expert in foreign exchange to sell things in other countries, it helps if you understand the concept and the market well. Indeed, a swing in one direction or another can dramatically affect the profit you make from a sale. In this respect, taking some time to learn forex trading principles such as profit/loss limits and money management are crucial.
By learning how to think like a trader, you can scour the daily currency markets and not only adjust your prices accordingly, but know when to make moves based on a currency’s strength. For instance, if you were selling in Europe and held an account in Euros, analysing the market like a trader would help you withdraw to GB Pounds at the right time – i.e. when the Euro is strong against the Pound. Once you’ve built up an understanding of how currency rates can affect your margins, you can then start to factor in any potential fees you might be liable for when you trade abroad.
Don’t Fall Foul of Fees
Due to international regulations, the fees you pay will differ from country to country. If you’re an online site selling goods made and shipped from the UK, VAT rules change depending on whether your customers are inside or outside of the EU. Shipping to customers within the EU may require you to register for VAT in the country you’re selling to if you’re registered for it in the UK. Additionally, you may have to sign up for VAT in the UK if you’re selling your services to EU clients, but you shouldn’t be charging them VAT but adding a few lines of legalese to your invoices. If that’s the case, you can zero-rate the goods, otherwise, VAT is applicable as normal. The upshot of this is that you’ll then be required to declare and pay VAT on all domestic and EU sales. In contrast, if you’re selling outside the EU, it’s generally the case that you can zero-rate any VAT. In turn, this means you can reduce the price of that item because you won’t have to pay your own VAT charges on it.
Immerse Yourself in the Culture
Beyond VAT charges, you’ll also have to consider shipping and customs fees that will also eat into your margins when you’re selling abroad. In reality, learning about currencies, VAT and shipping costs is relatively simple and only takes a little bit of time and effort. However, the one thing that international sellers often struggle with is cultural differences. Understanding your own market is fairly simple since you know the culture and how consumers generally approach the shopping experience. However, when you start to look further afield, things can change. According to DHL, around 80%n of the Australian population use the internet to shop. Moreover, the core demographic is 30 to 49-year-old urbanites. In contrast, Polish people are wary of using credit cards, with 58.4% refusing to pay with the method, according to research. However, they do value speed of delivery and don’t typically tolerate late packages. These cultural differences are something that you need to take into consideration when selling to a foreign country. Indeed, even if you create the perfect website, understand how currencies work and get your fees in order, a misunderstanding on consumer trends will cost you dearly.
Selling your goods or services abroad is one of the best ways to grow your business. However, without an understanding of the market you’re entering, things can quickly go wrong. In fact, as we’ve shown, you can’t simply rely on some fundamental principles to get you through. Yes, you need to know the basics when it comes to charges and the like, but you also need to adapt when required. Whether it’s new legislation, currency shifts or consumer trends changing, you need to keep your finger on the pulse if you want to successful trade beyond your borders.