Scaling Your Business for International ecommerce

As your business grows, you’ll likely have endless questions for every variable that keeps the wheels turning. How am I going to scale my product? How am I going to find more customers? Should I sell in other countries or grow my customer base for a more local business?  What you are assessing is how you will scale your business.

Maybe in the past, you’ve been able to handle everything. Product research, testing, supply ordering, listing creation, and taxes kept you busy, but with some late nights and forgone weekends, you were still able to handle everything. However, scaling is more than just finding more hours in the day; scaling efficiently is more than just hiring someone to take over what you used to do. Scaling correctly requires a plan and for you to find ways to manage daily business operations faster than ever before.

What does planning to scale look like, and what types of business operations should you attempt to streamline first? You can find ways to simplify just about every aspect of your business, but it is often easiest to start where others can offer their expertise. Relying on a company specializing in shipping, foreign language translations, or foreign currency exchange and banking will speed up your business operations and provide you with more peace of mind than if you were to hire and train someone. You’ll need a basic understanding of each of these worlds to make an informed decision and find the right company for your business.

This blog post will teach you the foundational knowledge necessary to scale a growing international ecommerce business.

Shipping

Often, you can find a company that will handle it for you. Still, if you need to learn the different types of international shipping and the associated terminology, you may put an unnecessarily significant dent in your profits.

Let’s start by looking at all the necessary steps  for a product to get from its manufacturer in another country to your door (or a warehouse):

1. The manufacturer has your product ready for pick-up.
2. The product is loaded onto a vehicle for transport to a port (air or sea).
3. The product is dropped off at the port
4. Export paperwork and customs for the foreign country that your product is leaving must be processed and dues paid.
5. The product is loaded onto a plane or ship and dropped off at a receiving port.
6. Import paperwork and customs for the country your product is coming into must be processed, and dues must be paid.
7. The product is loaded onto a vehicle for transport to you.
   

Carriers may have additional steps for their business efficiency, but at a high level, these are the steps you need to be aware of.

Let’s look at some shipping industry terminology to shed additional light on the above process.

The above covers most of the basics you’ll need to know, so how about recommendations? How can you use the knowledge above to streamline your shipping operations and scale your international business? As mentioned above, you should leave as much as possible to the experts. Look for a freight forwarder who can offer DDP to save you the most time, which allows you to focus on product research and sales. Your actual savings will come from how you have the product delivered.

You’ll likely only order a few units for a new product you want to test on an ecommerce platform. The real goal is to get a listing posted as quickly as possible. Launching a new product should be viewed more like a business expense and not as a revenue stream. Seek out air freight DDP for quick (often 3-5 days) delivery and minimal work on your end so that you can post the product immediately. Once you know whether or not you want to move forward with the product, find a freight forwarder that can give you ocean freight DDP based on your order size. The most common companies are ones you may be familiar with: DHL, FedEx, and UPS. Whether you go with FCL or LCL will depend significantly on your product, but as a general rule of thumb, use LCL unless you order 5,000 – 100,000+ units. Again, your freight forwarder can provide expert guidance on this.

Foreign Markets

Once you know how to move products from point A to point B (and possibly point C if you are selling internationally), you’ll need to alter your marketing and listings to ensure the product lives up to its potential. Not surprisingly, listings catered to American audiences may perform less well in other countries. Beyond just marketing, there could be rules and regulations that you need to pay attention to as well. The most significant factors that you need to consider as you expand are:

1. Foreign language translations and listings
2. International business set-up and management
3. Country-specific product and marketing rules and regulations

Just like shipping, you should also manage these business operations. It would help if you tackled them in a scalable way.

Foreign language operations are one of the biggest perceived hurdles many people have when expanding their ecommerce businesses. Hiring an expert translation service or partner to translate your listing for you is plain and simple. There are many automated tools, from Google Translate to other sites’ built-in tools, but none of them are likely to make your listing stand out from the pack. You don’t necessarily want a 1:1 translation from your primary language to the one that matches your foreign market. Suppose you think about online shopping that you’ve done yourself. In that case, it may not be obvious what product listings used a professional translation service (compared to descriptions written by a native speaker). Still, it is pronounced when an automated translation is used. The problem stems from differences in grammar and conversational flow between languages. A fluent translation expert will understand your messages, the intended tone, and how they should be conveyed in a foreign language.

When you begin operating internationally, you likely will only be able to sell under your current business entity. Managing an international business can feel a lot like running two separate businesses. The specifics will vary for different countries, but at a high level, you will need to prepare for the following:

1. Setting up a new Sole Proprietorship or LLC within that country
2. Obtaining a tax identification number within that country (called a few different things depending on what country you are selling in)
3. Preparing to pay VAT (value-added tax) within the EU or whatever taxes that country imposes on businesses
4. Setting up shipping and return address within that country
5. Tweaking your listing(s) to account for that country’s marketing rules and regulations
6. Evaluating your customer service and quality control policies to ensure you meet the standard for that country’s consumer protection laws

You’ll be able to find many service providers that can either walk you through or completely handle many of the above steps, but if you are planning to tackle anything on your own, this might be one of the areas to investigate. The main difference between establishing your business and handling other business operations is that many of these tasks only need to be done once per country. The exception is taxed, which you will need to do at least every year, and they have the added complexity of varying from country to country. For businesses worldwide, PingPong offers experts to help you manage a free multi-currency account.

Foreign Currency

Lastly, you will work with other currencies when you operate in a different country. Managing foreign currencies across your business transactions can unnecessarily lower your profit margin if you aren’t careful. You will have to pay a fee and a conversion rate whenever you transfer from one currency to another, and you want to minimize the impact. 

But foreign currency doesn’t have to be scary, especially with the help of PingPong. PingPong will manage currency conversions for you, making cross-border payments easy. As a globally trusted payments partner, PingPong helps online marketplace sellers keep more of their hard-earned profits. Open an account with PingPong today and let your currency conversion worries be a thing of the past.

Still, there are a few things to watch out for specifically when dealing with foreign currency exchange (FX):

1. Evaluate different conversion services
2. Avoid double conversion fees

You want to move money around as little as possible when dealing with foreign exchange. Obviously, at some point, you will want to convert your earnings into a currency you can use, but remember that you will need to pay taxes. Double conversion fees occur when you convert too much money in the initial transfer and have to move some back to pay your taxes. PingPong avoids this by helping you manage your money in one place without needing unnecessary conversions.

1. Find a partner with in-house experts
2. One of the most significant benefits of using a partner service is that they specialize in whatever realm of business they are supporting you in. Having in-house VAT/tax specialists or experience in foreign exchange money management will save you from spending time researching and operating on your own.

There are a lot of different variables to consider when you are looking to create an international ecommerce business. You won’t have time to run your business and expand without scaling your business operations. The best place to start is to find business partners or service providers already experienced in these aspects of the company. Managing something you are unfamiliar with will always be slower than focusing on your strengths, so be sure to utilize other people’s strengths.

Having a partner by your side allows you to move forward confidently while your business grows from a local operation to a global one. PingPong offers a full suite of services to help you manage currency exchange, supplier payments, settling foreign tax obligations, and more. Set up your free account with PingPong today and get started on your #internationaladventure.