European expansion is a critical strategy for retail buisnesses
The retail market moves fast. Retailers are constantly being asked to do more for less. Looking for opportunities and making calculated risks is traditionally key to making it in the retail space. If you’re not thinking about Europe as an expansion opportunity, it’s likely that you’re missing out. Here are few things to take into consideration as you craft your next move:
Understanding the challenges of shifting from domestic to European markets
After you’re done considering the market conditions that can impact your current retail strategies, you’ll also want to understand what challenges you’ll be facing as you turn from domestic to European markets.
The new retail Technology matters. Being proactive and innovative in your partner choices will impact your performance. For example: companies that have been using traditional online commerce systems for the past ten years are not going to perform at the same level as a company that adapts and makes the change to something newer and more flexible. So keep up with current market technologies to ensure your product gets seen. Avoid the anonymization of your brand You’ll also want to avoid being a faceless, nameless product in a sea of products. Product aggregation sites might ensure that you’re selling a product, but it doesn’t mean that you’re building a brand. Not to mention the simple monetary aspect: platforms take a cut of the revenue sales – anywhere from 6-18% – plus whatever other partners you may use that charge more. You could be losing almost 40% of your sales revenue. If you’re like most retailers, that cut means little to no profit. And little to no profit means that you are likely going to lose money. It probably won’t work there What works in the U.S. may not work in Europe. Shoppers in Europe will turn to the U.S. for items they can’t get. Where U.S. shoppers have come to appreciate free shipping as a given, you won’t be able to use that as a differentiator with European customers. Free shipping doesn’t exist between Europe and the U.S. Customs in Europe want their import duties and taxes. This makes shipping a long, expensive and painful process with the a surprise behind every door. It only takes one item to make or break the first impression for your new European customer. After you’re done considering the market conditions that can impact your current retail strategies, you’ll also want to understand what challenges you’ll be facing as you turn from domestic to European markets. How to beat the complex challenges
Here’s a checklist of ways to beat the heat when it comes to transitioning to European markets:
The future of international retail expansion
There are a host of shifts in the market that will directly impact those retailers looking to expand their markets. First, millennials are bringing change to the global market faster than ever. They don’t have the perception that China or Morocco are that far away. They give new meaning to "it’s a small world,” and it’s impacting the way they buy. This makes ordering online from an international company feel more “lock and key” and less “Nigerian prince.”
Another emerging trend that will impact retailers in the near future: fewer retailers from around the world are geo-blocking. That means your international competition is getting more fierce. Don’t wait much longer. One more thing to consider is the fact that there will be new customs and shipping laws going into effect for Europe, starting by the end of 2020. As the world shrinks and governments recognize international tax potential of online retail sales, everything will come with duties and taxes. All cross-border commercial items shipped into Europe will be taxable from the first cent. In years past, outgoing Chinese export trips were crossing the border, dropping off products, and returning empty. With better logistical controls, air freight has the potential to be less expensive to ensure that every trip – whether to and from the US, or to and from Europe – is being utilized at maximum capacity. What's Next?
Learn more about international retail and trade by reading our Source Paper: “Beginner’s Guide U.S. Retailers in China.”
About our Partner
If expanding your retail presence from a domestic to a European market is your next step, consider the benefits of working with a partner who can help make the transition a smooth one. GO EU Commerce is an easy-to-use, cost-effective ecommerce platform that provides shipping and logistical solutions for organizations doing business in Europe. GO EU Commerce is equipped to handle all challenges most businesses will encounter – even businesses without European registration. Get in touch with Kelly at Remodista if you’d like to be connected with Jordie Geuyen and write the first chapter of your European success story.
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