Unlocking New Revenue Streams: Entering New Markets

In 2019, the share of gross merchandise of B2B ecommerce transactions in Asia amounted to 80%, according to Statista. If you’re still doing business the old west way, perhaps it’s high time you look to the east. Going global is no longer a luxury but a necessity. Unfortunately, the path to international markets is not easy but fraught with many challenges and questions like where, how, and how much to invest. There are no straightforward answers because different markets bring different challenges, from culturally adapting your product or service to complying with local legislation. In this article, we’ll describe what bottlenecks are the most common and how the choice of an ecommerce solution can help you address and ultimately solve all those problems.

Situation

If your company is successful in your home region, you may want to explore new market opportunities beyond your original boundaries. First of all, selling internationally unlocks new revenue streams because of a wider audience. Secondly, the growing sales volume establishes and cements your market presence and asserts your company as a global player. And thirdly, as your production volume increases so do your suppliers’ purchases, which can lead to higher profit margins through volume discounts and lowering of procurement prices. But to reap all the above-mentioned benefits, you have to start somewhere.

There are several approaches your company can undertake when it comes to B2B marketing and sales in a different region. Still, regardless of where and how you begin, it is vital to establish your priorities and end goals. One of those things to consider is your brand name and whether you want to remain consistent with it or adapt it to accommodate other country’s mentality and cultural preferences. We’ll go through some of the other challenges below in more detail.

Challenges

The most obvious challenge is language: your partners, customers, and international distributors expect to see information about your products and company in the language they speak. Localization is the process of adapting your product or service to a specific location or culture. While translation is certainly a big part of the process, it’s not synonymous with localization, since the latter involves not only the written word but imagery, design, and formatting as well. For your website, localization procedures might include decisions about the layout and design of your pages, images and graphics, descriptions of products and services, and so on. Besides your website, you’ll need to localize your catalog and admin panel (in case you expect to hire employees in the destination country).

You should also decide whether to choose a country-specific domain (example.cn) or subdirectory (example.com/cn), both of which have advantages and disadvantages. Although a country-specific domain can prove costly, it will rank higher in local searches. On the other hand, subdirectories are easier to create and maintain, but they do rank lower.

Your website should allow for another language but also currency, which leads to the necessity of maintaining separate prices or price lists for that country.

Moreover, your B2C or B2B ecommerce platform has to account for other country’s tax rules. Before entering a market, consider researching trading standards and regulations, because failure to do so can not only lead to a halt in your international operations but may also have legal ramifications in your country. For example, when entering India, you should think of it as a series of interconnected markets rather than a single state, because 29 of its provinces have different state taxes with their own regulatory and investment environments. Any foreign company looking for expansion into the Chinese market has to consult the China foreign investment catalog that delineates foreign investment projects and describes what is encouraged, restricted, or prohibited. For example, China severely restricts foreign involvement in such industries as petrochemicals, energy, and telecommunications. It is therefore critical to conduct thorough research to understand the regulations in the markets you intend to enter. As mentioned above, each tax law or regulation requires its own specific business logic that needs to be adopted and stitched into your ecommerce solution.

Another challenge is partnering with shipment providers in the destination country and, subsequently, organizing seamless shipments to customers using the local couriers. The same applies to banks and payment processing solutions because different countries tend to have their own financial service providers. Since your ecommerce solution needs to have a payment gateway to communicate the transaction information between the customer and the merchant (you), your platform needs to support integration with different payment providers. For example, popular payment gateways in Europe are BlueSnap, 2Checkout, Klarna (especially in Scandinavian countries), Adyen (particularly in the Netherlands), and Vapulus, among others. Using local shipment and payment providers is essential because your customers will feel more comfortable doing business with you when seeing familiar payment processing systems and shipment companies (which are well integrated with local business processes already).

Your ecommerce catalog, which can consist of different brands, might also need some adjustment for specific countries. Brands can allow you to sell in your region but restrict your operations where they have their own exclusive supplier that represents the company overseas. So whenever you enter a new market, you will need to do a thorough reassessment of your catalog to understand what can and cannot be sold in another country. Needless to say that your ecommerce solution has to account for those interconnections and complexities so that your products can only be shown and sold in the jurisdictions where you have the right to sell them. Instead of having catalogs per each specific country, your solution needs to differentiate between products, categorize them, and display only relevant products for international customers.

Different countries tend to have different workflow management and business practices. What can be approved by a junior manager in the Netherlands might require senior management approval in China or Russia. Therefore, your solution has to allow for different approval workflows and access levels. It must adapt to the cultural differences and business practices of a particular region, on a bigger scale, and to your customer’s specific internal practices, on a minor scale. The more steps there are in an approval process, the more control mechanisms and tools you need to provide your customers to get through ordering: from user permissions and approval tracking to mobile access (so that concerned parties can step in and perform necessary actions anytime anywhere).

Data processing is yet another challenge when entering new markets. In 2020, several data protection acts were enforced, most notably, the California Consumer Privacy Act (CCPA) in the US and the decision of the Court of Justice of the European Union (CJEU), which put an end to free data flow between the United States and the EU. Several other countries, such as the UK and China, are expected to review their current standards or come up with new data protection legislation. As of January 2021, more than 130 jurisdictions around the world had their own privacy laws enforced, with some countries having sectoral coverage, which means that certain industries and trades have their own data protection laws. General Data Protection Regulation (EU GDPR) is perhaps the most famous set of data privacy rules imposed on European countries since 2018, which deals with collecting, storing, and processing EU residents’ personal data. Failure to abide by GDPR can lead to a 17-million euro fine or 4% of a company's annual turnover. Some countries have data localization laws in place, which require data about their citizens to be collected, processed, and stored inside the country before being transferred internationally. For example, in Australia, health records must be kept within the country, whereas in Russia, all personal information should be kept within borders. Monolithic SAS solutions hosted in a single location will not work for companies willing to explore other markets where residents’ data should be hosted within that country’s borders. Then, you’ll need to look at other options when choosing your B2B ecommerce platform.

Solution

To quickly and efficiently tackle all the above challenges (as well as any other not mentioned that you will undoubtedly encounter on your way), you need to choose your ecommerce solution carefully.

Your B2C or B2B ecommerce platform needs to have the following features and functionality:

  • Support for multiple languages and currencies;
  • Price module that supports different pricing strategies categorization and granularity of price-lists (per country, per customer, per other business units);
  • Flexible (extensible or retractable) catalogs;
  • Support for multiple integrations through APIs;
  • Cloud-native and modular.

Virto Commerce is exactly such B2B ecommerce platform: it is localization-friendly and comes as multi-currency out of the box. The platform has a pricing module that can be further configured and customized to include as many price lists as required.

Moreover, Virto Commerce is a headless solution which means you can attach the same back end to multiple front ends through APIs and connect your ecommerce solution to different channels with varying business logic.

Virto Commerce has virtual catalogs which are based on their physical counterparts, but which can also display different items or categories as preconfigured for different websites, countries, customer groups, and so on. The availability of such virtual catalogs prevents data duplication and inconsistencies. It also minimizes the overhead costs associated with catalog management across the board as all catalogs are tied up to one master catalog.

Virto Commerce is an API-first and integration-friendly solution which means you can safely and seamlessly integrate with third parties, such as shipment, payment, and tax providers of your destination market.

Because of its modularity and cloud based nature, Virto Commerce supports data hosting and processing wherever needed without compromising system performance or security.

Discover Virto Commerce architectural guidelines

Proffsmagasinet, a leading ecommerce company in the Nordic region that sells construction equipment, needed a new ecommerce platform. This should help the company expand to other countries, extend the catalog, scale up during promotion campaigns, and integrate with third party systems. After choosing the Virto Commerce solution, the teams performed seamless migration from the legacy platform that didn’t affect daily operations. After the teams ensured the platform worked flawlessly, the company began its expansion into the nearby markets. Within a year, Proffsmagasinet opened up its stores to Norwegian and Finnish customers, acquired its Swedish competitors, and attached the competitor’s website (front end) to Virto Commerce’s back end. It’s important to note that the three countries have their own currencies, where only Finland operated in euros, different VAT rates, other languages, and their own popular shipment and payment providers. With Virto Commerce, Proffsmagasinet has been able to account for all the differences and developed seamless operations across Scandinavia.

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Bosch Thermotechnik, which traditionally relied on distributors to complete a final sale, wanted to build a loyalty program for end customers to gain access and better insights into its consumer base. With Virto Commerce, Bosch has developed a loyalty portal where customers can exchange their loyalty points, which they earn by buying Bosch products, to purchase products from Bosch partners. The portal now unites 25 countries across the EU; each country has its own website in the local language, currency (where appropriate), tax rules, and suppliers which are responsible for uploading product information, maintaining catalogs, and organizing logistics to the end customer. Indeed, suppliers (or fulfillment centers) are only capable of delivering products across a single country (or two to three countries at most). The portal essentially serves as an integration hub that keeps all parties united and in sync, whereby the platform only displays relevant suppliers’ catalogs to customers from a specific country.

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Marina Vorontsova
Technical author and eCommerce advocate