Ops and supply chain strategist, Jennifer Polce, digs into when, why, where and how to go about it.
Summary
- Financial health, steady historical growth, indicating signals, macro trends, geopolitics and more all go into the international expansion equation.
- Pick your first new markets wisely.
- Think about how you’re going to get inventory to where it needs to be as efficiently and cost-effectively as possible.
- The right internationalization tech makes a massive difference.
- Standard pitfalls include expanding into too many markets too quickly and misreading demand, but there are softer hurdles that can often go unaccounted for.
Jennifer Polce knows a thing or two about international expansion.
While studying international finance with the University of London, she found her way to Singapore and then Melbourne, Australia. There her operations journey began, working with a growing consumer electronics distributor.
“I got a ton of exposure to Asian manufacturing and managing freight,” says Jennifer. “One of the more pivotal moments in my career was when we launched our own brand. It really put me in the shoes of the brand leaders and ops professionals I work with today at Izba.”
Izba?
Izba. They’re an ops consultancy that helps startups and Fortune 500s alike with sales and operations planning, factory and production management, transportation, omnichannel expansion, fulfillment network design and management and…
International expansion – which for ops professionals, can be one of the most daunting experiences of their careers.
But it doesn’t have to be. In fact, with the proliferation of accessible and affordable tools and tech, international expansion is easier than ever. (Or at least less brutal.)
Here’s Jennifer’s framework for ops leaders on the cusp of international expansion.
When Do You Know the Time is Right?
“When I’m working with brands on international expansion, it starts with basic economics. We want to see a healthy P&L; a healthy balance sheet. Consistent year over year growth. We’re also looking for demand signals like international web traffic, inbound inquiries and social chatter.”
What Indicates You Should Wait?
“If any of the criteria that tell you the time is right are off, it might not be the right time to expand internationally. We’re also considering market volatility, macro trends, economic roadblocks and geopolitical challenges.”
You’re Expanding Internationally. What Do You Focus on First?
“At this point, we likely already know where we’re expanding to, but I urge all brands to be thoughtful about market selection. Expanding into English speaking countries first will make for smoother internationalization and customization.”
“Then we’re weighing our channel approach. D2C ecommerce? Through international retailers? Both? We model out all the options.”
“Product size factors in as well. This will impact inventory holding and shipping strategies.”
“We’re getting familiar with market regulatory requirements and international returns flow too.”
Where Do You Start Once You’ve Decided to Expand?
“This is such a big piece of the puzzle. Do you ship from within the U.S.? Does your domestic fulfillment provider have presences in your new markets? If not, do they have partner providers that do? Alternatively, do you consider shipping from somewhere closer to manufacturing? Every scenario needs a cost analysis.”
What KPIs Do You Need to Track When Expanding Internationally?
“Largely you’re tracking the same metrics you’re watching for domestic sales, but you want to be able to parse things out by different markets. If we’re talking strictly about ecommerce, you’ll want to monitor customer acquisition costs, conversion rates, AOV, churn, sell-through rate, order accuracy, shipping and delivery times. We’re also measuring the cost of holding inventory elsewhere, overseas. That is somewhat unique to international market expansion.”
What are the Most Common Pitfalls that Slow International Expansion?
“There are obvious ones like entering too many markets too quickly and misreading demand, but I think the cultural nuances are really interesting. Stuff like market-specific customer support requirements, accounting for regional dialects in customer communications. Even in English-speaking international markets, consumers have different expectations and behaviors. The more ops leaders can get familiar with the nuances and norms of each market, the better.”
What Tools are Non-Negotiable for International Expansion?
“It wasn’t that long ago that brands expanding into international markets had to figure everything out on their own. Taxes and duties, payment options, pricing and currencies, regulation and tax compliance, returns, support… It’s a lot. Internationalization platforms like Passport, Global-e and OpenBorder have made the entire process so much easier. For ops professionals, these solutions are game-changing.”
Editor’s Note: Passport, Global-e and OpenBorder are Capacity partners.
Final Thoughts?
The good thing about standing up an international expansion is that you don’t have to go it alone. Strategize with your fulfillment partner. Engage with organizations like Izba. Dive deep into the data. Scenario plan. Build the right tech stack.
And then go conquer the world.