Entering a new market can be an incredibly lucrative and rewarding opportunity—if done correctly. Founders who identify a previously untapped market will be tempted to jump into things head first, but expanding into unknown territory doesn’t come without its challenges.
While it can be a viable way to scale your business, you’ll need to assess the risks and opportunities before dipping your toes into international waters. We’ve put together a few tips to help you navigate the ins and outs of entering a new market for the first time.
Tip #1: Consider local consumer behaviour and trends
Regional and cultural habits linked to your target market will impact consumer behaviour, and by extension, how successful your business will be in that market. Before setting up shop in a region, it’s important to ensure your product is aligned with local consumer trends. Consumer behaviour and buying habits will also provide insightful information when it comes time to market and sell your product in the region.
Tip #2: Keep an eye out on the competition
Never enter a new market without doing your homework! Getting a glimpse of how your competitors have done in the target market will shine some light as to your business’ potential. Start off by identifying your key competitors, then analyze their performance over the past three to five years. Examining price, distribution, and market maturity helps you grasp how your product will resonate in the same market, particularly with consumers who may already be seeking an alternative to existing products. Plus, if your competitive research identifies little to no competition in your vertical, it’s a sign you’ll need to move quickly to capture the market share.
Tip #3: Traffic data speaks volumes
Before you rush into a new market, it’s critical to lay the groundwork by looking at existing data. Website traffic, sales from other countries, and search engine data will give you a good baseline of existing interest in your product and demand from specific markets and regions. Even if you ultimately decide not to expand into the new market, the data you’ve analyzed can be helpful in creating localized online experiences for your users visiting from another country, thus enhancing the overall customer experience.
Tip #4: It’s all about buying power
Before calculating the potential revenue of your target market, you’ll need to determine consumer purchasing power in that region. For example, consumers in larger markets might have deeper pockets and thus higher incomes relative to the price of your product, but what if the market you’ve identified is saturated? If that’s the case, it could end up costing you more to target specific individuals. On the other hand, consumers in a smaller, emerging market will have limited buying power but a higher growth rate—meaning you could focus on long-term aggregation.
When zeroing in on a new market, always consider the economic stability of the region. Fluctuations in inflation and interest rates will impact the buying power of consumers within this new market, so you should be monitoring those factors closely.
Tip #5: Don’t forget to forecast demand
Purchasing power doesn’t equate to demand. For that reason, it’s important to forecast demand when entering a new market. Not only will this help you understand the demand in your target market today, but it will illuminate future demand and its projected evolution over time. Valuable insights like future market conditions will help you pinpoint what drives demand in that specific region, and how it could change further down the line.
Tip #6: Lock down your distribution channels
Before you start shipping your product internationally, it’s a good idea to plot the supply chain journey of your product—from manufacturing all the way into the hands of the customer. Expanding into a new market will likely offer a few options in terms of distribution, including shipping internationally from your market, having local distributors in your target market, or even a joint venture with local partners.
For example, you might want to consider leveraging a local warehouse, introducing local final mile couriers, or even extending the supply chain closer to the new market. This would shorten delivery time, and could reduce overall costs associated with any intermediate businesses supporting the supply chain.
Tip #7: Localize, localize, localize
Perhaps surprisingly, going international involves thinking locally. Language and local payment options are just a couple examples of factors that should be addressed before expanding into the market. Consider, for example, adjusting your customer service team to include native speakers of the language spoken in the target market. Not only will this enhance the overall customer experience, but it can improve staff productivity by reducing any potential language barrier issues. Another consideration is an optimized, region-specific UX; users are more likely to come away with a positive experience on your site, for example, if it’s translated to their language of choice.
Tip #8: Ask your partners for support
Tapping into your network for support is always a great way to take advantage of their expertise. That's why we recently partnered with THG, an end-to-end technology platform that powers leading brands as they look to move to the international stage. From e-commerce to fulfillment and everything in between, they support businesses every step of the way as they reach their next growth milestone of becoming a world-recognized global brand.
By partnering with THG, Clearco is offering founders at the right growth stage the opportunity to leverage a highly effective platform to enter new markets and expand globally. You can learn more about the partnership here.