Laurel Delaney has been helping companies expand globally for many years and now she shares what she’s learned in the excellent new book Exporting: The Definitive Guide to Selling Abroad Profitably.
I consider this book a “must read” for marketing and global business development teams — as well as any small business exec with global aspirations. It weighs in at more than 500 pages, covering everything from logistics and pricing to cultural challenges and emerging markets.
Here’s a recent Q&A I conducted with Laurel:
Q: What led you to found GlobeTrade.com (a Global TradeSource Ltd. Co.)?
My first real job was working at a small manufacturing company where we contracted the manufacturing of a highly specialized crystal chandelier cleaner. Back then, that’s what you called it when you farmed out your production. Now, it tends to be referred to as outsourcing if it involves a business function, especially if it’s done across borders. Contract manufacturing gave us the ability to focus on what we were good at: marketing and selling the products all over the world. Within three years, we were able to achieve $4 million in sales, sell to 27 countries and generate more than 33 percent of our overall business overseas. We did all that with only four people on staff: a general manager, myself (the export manager), a bookkeeper and an administrative assistant.
So when I look back, I realize how much that whole experience changed my life. I could not get enough of learning everything there is to know about exporting.
My intrigue with international trade was because I found it so challenging. It forced me to think about running a business in a whole new light. Plus, I feel that doing business with the world has infinite growth possibilities, which means you are never lacking for cool ideas.
That passion along with the fact that 96 percent of the world’s consumers and 73 percent of the world’s purchasing power lies outside the United States is why I started Global TradeSource Ltd. and later, GlobeTrade.com. Further, according to the International Trade Administration, fewer than 1 percent of U.S. companies export (Source). The timing is ripe to make a difference in our world.
Q: What are the more common mistakes that companies make when expanding globally?
Moving too fast—leaping into a foreign market without doing any homework in advance to figure things out such as: is there a demand for your product, how will you get paid, can you scale, et al? Another is that small business owners fail to take a pulse on where their business stands currently. Or they divert attention to the overseas market to the detriment of their local business. These are just a few of the many ways in which small business owners get tripped up when attempting to export. Let’s face it, there are a lot of scary tunnels, twists and sharp turns involved in exporting. You can’t just think that leveraging technology will bring you export success. You must prepare in advance with some prior knowledge on what is the best way to enter a new market, and that’s where my new book comes in handy as a reference.
Q: What companies have done the best job of going global with their websites and why?
This question begs to defer to your popular 2013 Web Globalization Report Card, which I also reference in my book. I agree with your analysis that Google, Hotels.com and Facebook (the top three on the list) all do a fabulous job globalizing their websites by giving users the most relevant results, as in the case with Google.com; offering a flag symbol for a user’s country of choice, as is the case with Hotels.com; or providing words in different languages for a country of choice, as is the case with Facebook.com.
A quick visit to NIVEA.com (also on the 2013 Globalization Report Card list) and you will see a country list where you can select a local website. You can choose from seven different continents. Under each continent, there is a country listing. Country listings are in English, the country’s native language or both. I recommend individuals go through the process slowly click by click. NIVEA gives you an enlightening web-globalization education on how each country’s website differs in design to accommodate that market. A person can use the tour as an example on what you should be considering when translating a website to serve an audience in Tanzania, France or Paraguay, for example.
Q: I find that companies manage currencies (and conversions) in a range of ways (real-time conversion versus nightly updates). Do you have any recommendations regarding best practices managing currency conversions?
Transacting business via e-commerce in multiple currencies spanning several countries might be beneficial to a big operation interested in hedging against currency fluctuations on repeatedly large-volume transactions, but for a small business, if not managed well, it can hurt the bottom line. For a small operation it’s best to negotiate terms in your own country’s currency. This transfers the risk to the other party—the customer. Let me be super clear here: That still means you can accept currency from all over the world provided your e-commerce store does. Check because most but not all e-commerce storefront platforms accept payment from all around the world, whether dealing in your own currency or another country’s.
Whether a company elects to manage its currencies in real-time versus nightly updates (especially if it is automated) is a decision that should be made largely based on achieving greater cost efficiencies, cost savings and even cost gains. I always recommend consulting with your banker and top finance person before making a choice. One must be knowledgeable about this aspect of the sales process to make it happen accurately, seamlessly and with minimal risks involved.
Q: What services, such as fulfillment, do you generally recommend that companies outsource to third-party partners?
If you are currently seeking better-skilled workers than you currently have on board for less money, that’s the time to outsource. As it relates to e-commerce fulfillment, a couple of questions to answer to know for sure are:
- Is there a competitive advantage to doing the job in-house (preparing your products to ship, for example)?
- Is the task at hand related to your core competency (“we provide outstanding service,” for example)?
- Is the task at hand a one-off situation (an order for 20 million hats, for example, with a special logo design for the Olympics)?
- Would it be cheaper to have the task at hand be outsourced versus performed internally (getting your website operational for worldwide commerce, for example)?
- Do you look forward to the idea of getting rid of a responsibility that can easily be done by a more experienced firm that does it all the time and at a much lower rate than you would pay internally (collecting payments on e-commerce, for example)?
Q: For a US-based company that is just beginning to expand beyond borders, what markets do you generally recommend considering and why?
Canada, Mexico, the UK, Australia and New Zealand are good countries to target starting out with exports. Canada and Mexico are geographically close in proximity to the United States. Our North American Free Trade Agreement (NAFTA) helps improve foreign market access to these markets by removing most barriers to trade and investment in those regions. For the UK, Australia and New Zealand, these are all English-speaking countries, so it’s good practice for a small business owner to select a market where the people speak the same language. But just because consumers speak the same language doesn’t necessarily guarantee sales. You should always measure your progress against the market reality, which can be highly unpredictable. For example, you might sell soaps via your e-commerce site, emphasizing distribution to English-speaking countries such as Australia and New Zealand, only to find out quickly that the bulk of your inquiries are in French, the native language of the majority of your prospective customers. Whatever country you select, have backup Plan B, C and D in place. Stay flexible and adaptable.
Q: What are the most challenging markets to expand into and why?
For small businesses it’s Brazil, Russia, India and China (BRIC). It takes time, knowledge, money and patience to make headway in these markets. It took Intel, KFC and GE years to make inroads in emerging markets. They invested millions of dollars during a protracted period of time before ever seeing a dime in profit. But they did this because of upside potential down the road.
The biggest stumbling blocks for most small business owners (and large corporations alike) are: unpredictable market conditions; limited human resource capabilities; corruption; high-income inequality; weak infrastructure (poor transport systems that make shipping goods particularly problematic, for example); spotty retail systems (small local retailers and kiosks versus small number of big chains); lack of credit card penetration (the vast majority of purchases, including online ones, being made in cash); electrical shortages; and weak fixed-line telecommunications. The bottom line: In many instances, the countries are too underdeveloped to get into. Still, it is worth a try to beat your competitors from getting the first-mover advantage on new customers.
For even the poorest markets in the world can generate revenue for small businesses provided they tailor their products and services to meet the needs of the consumers. If you target countries that have a healthy GDP, are Internet savvy and have a population with a high percentage of people using the Internet (China, for example), you will greatly improve your chance for success.
Q: China has proven to be a particularly challenging market for many American companies. What advice do you give companies that have prioritized China for expansion?
Take it nice and easy, do your homework and plan to invest a significant amount of time and money to build and monitor sales, marketing and distribution. I offer 11 hot tips for exporting to China in my book, which might also apply to other countries in BRICs as well. One tip is to create desirability with your product or service. Another is to get to know your customer in order to determine which of your products offers the greatest appeal for the Chinese consumer and fits best with the local culture.
Q: Global e-commerce is a two-way street. What companies have done a particularly good job of expanding into the US recently and why?
South Korean technology company Samsung comes to mind. Its success in the US comes from a mutually advantageous alliance with an unlikely ally. Many companies make conscious decisions to form partnerships with complementary or even competing companies that can offer them a market share in countries they have been struggling to break into for years. In this example, Samsung and American-based Best Buy have entered into a broad global strategic alliance that involves setting up 1,400 ministores selling Samsung products in Best Buy and Best Buy Mobile locations across the United States. In addition, Samsung products are sold via e-commerce stores not only through Best Buy, but through other retailer’s sites such as Amazon and direct at Samsung’s site. By using their complementary strengths and expertise, these companies ensure their mutual survival and foster continued growth in their respective industries.