Opening up your product to a worldwide audience is an exciting time, and an obvious way of growing your customer base and revenue. It can, however, come with costs both in a financial sense and at a practical level. Your company may never be the same again, but that can be a great thing.
As ecommerce specialists, we have helped many UK companies navigate the murky world of exporting. These are some of the common areas to consider when you’re thinking about selling your products into foreign markets.
Currency
The difference in currencies abroad is an obvious starting point. For UK businesses, all foreign countries use different money, and not only will your revenue and profits be at the mercy of fluctuating exchange rates, your customers will be put off having to pay for your products in UK sterling.
Your ecommerce site will need to be set up to accept foreign currencies, and foreign payment methods, such as alternative credit cards. A popular option is to use PayPal as this converts the local currency rates at the time of purchase, but not everyone has PayPal and you as the merchant will pay a fee on each sale.
Making it easy to check out and pay for your products is essential to maximize sales, and is a fundamental part of any ecommerce business.
Language
For the language issue, you could just have one site and hope that Google Translate does a good job for you, but this could mean that the nuance in language is lost on your foreign audience.
You should make the effort to get a separate site set up for each country to account for the different languages, and you need to get a native speaker to make sure your website copy sounds right for your foreign audience. You should also take account of local culture – tongue-in-cheek copy which may work on those with a British sense of humour may be lost on others, or even mean you commit an alienating faux pas.
Tax
Local taxation will need to be considered when exporting goods. You need to find out who is responsible for paying which sales and import taxes before your customer gets the nasty surprise of an import bill. These taxes really can vary between countries, so it’s best to get expert advice for specific markets. HMRC is a good starting point for information.
If you export goods outside the EU, you should not need to collect VAT but you must keep proof that the goods have left the EU.
Paperwork
To export certain goods and services, for example agricultural goods, you need a licence. A professional export company should be able to tell you whether your products will need a licence or not, or you could check with your trade association.
For exporting goods outside of the EU zone, you will need to register and submit a declaration form. An ecommerce fulfilment company or a freight forwarder can do this on your behalf.
Logistics
Once your company starts exporting and your sales volume increases, you will need to make sure that your admin system is fit for purpose. Keeping on top of the multiple orders from different ecommerce sites, paid for in different currencies, coupled with the requirement to keep good paperwork for tax purposes can put a real strain on a growing business. Be sure to upgrade your ecommerce system if necessary, and make sure your staff are able to use it correctly.
An ecommerce system with intelligent reporting can keep you up to speed with the current status of your business on a country-by-country basis, and you can soon assess which regions are proving more profitable for your business, making tweaks to the appropriate ecommerce sites to maximize sales potential. It’s also useful to know when each country is going to run out of stock of your product so you can plan better.
For deliveries, it is highly likely you will need to appoint several courier and freight companies, and dealing with each of them can become burdensome without a good admin system in place. You need a company that is reliable in collecting the proof of deliveries you need for tax purposes, and one which knows the local delivery area to minimize unsuccessful deliveries and keep your new customer as happy as possible.
Exporting to foreign markets is a fantastic opportunity to grow and develop your business. Getting the fundamentals of your ecommerce business right before you expand abroad will help you avoid some of the potential pitfalls that may lie in your path.
James Hyde is Managing Director with James and James Fulfillment.