As the e-commerce market in the United States becomes more saturated, online entrepreneurs are looking to penetrate new markets abroad. A quick SWOT analysis will reveal that there are numerous opportunities for e-commerce brands in other parts of the world. Online retailers are encouraged by the new opportunities available. However, they must also be aware of the challenges they face catering to these markets.
Here are some factors that e-commerce companies need to consider while they pursue markets in other regions.
There is an untapped market in many developing economies
The global online retail market is growing much faster in developing economies than the United States, Canada, Europe or Australia. Market growth is especially strong in southeast Asia. The number of e-commerce customers in Indonesia is expected to rise 75% by 2025. Market growth is also expected to exceed 50% in India, Thailand and Vietnam. The e-commerce market in Africa and the Middle East is also remarkably strong.
Although the market is rising rapidly in these parts of the world, competition is still scare there. This gives e-commerce marketers an excellent opportunity to grow cost-effectively.
advertising costs are cheaper in most countries outside the United States
One of the key benefits of advertising outside the United States is that the ROI is usually higher. Although the customer base tends to be smaller, e-commerce companies with smaller budgets can have a higher chance of success by choosing to market to many countries outside the United States.
One of the biggest reasons for this is that advertising costs tend to be lower. However, there are some exceptions that marketers need to be aware of. According to an analysis from Adspresso, The United States had the 10th highest Facebook advertising costs in the world last year. Surprisingly, advertising costs were higher in all three Scandinavian countries, as well as many Eastern European countries such as the Russian federation, Georgia and the Czech Republic.
Of course, advertising costs on other platforms vary for different countries. Advertisers that are promoting offers with Google AdWords will find that the CPC is lower in Sweden and Russia than the United States, even though it is higher for marketers using Facebook. On the other hand, the cost is higher for AdWords marketers in Switzerland, although the costs of advertising on Facebook are cheaper there.
Marketers need to understand the costs associated with different platforms. If advertising costs for a specific country on their chosen platform are too high, they may need to either choose different countries to target or a new advertising platform.
Privacy concerns are different
Americans have expressed greater concerns about privacy than ever before, which is unsurprising the increasing dangers privacy risks pose. However, they aren’t as militant about their privacy rights as people in many other parts of the world. Europe recently passed the Global Data Protective Requirement to safeguard consumer privacy. Australia has recently started going after Google and Facebook for privacy violations.
Growing privacy concerns have increased the demand for VPNs. Privacy Australia founder and CEO, Lucas Johnson, who reviews the best VPNs in Australia, talked about the growing use of this type of service. “If you’re not using a VPN, expect that you’ll soon be in the minority. Though it’s difficult to put hard numbers on it because, well, these are security companies and they don’t like to share, an article in Slate estimated about twenty-five percent of people online already use a VPN. This technology is on the way to becoming standard for internet browsing,” Johnson said.
E-commerce companies that intend to expand into these countries need to understand the privacy laws. The consequences can be severe for those that violate them. If you don’t follow the GDPR, you could be fined up to €20 million or 4% of global revenue.
Meeting various compliance standards in different jurisdictions
Online commerce is still sparsely regulated in many developing parts of the world. However, existing laws are still applicable.
Online retailers must familiarize themselves with different regulations in every market they intend to serve. Even small, developing countries can have a complex array of policies governing e-commerce practices. Entrepreneurs must decide whether it is worth the intense learning curve to operate in these regions without violating any of their policies.
Being realistic about technological limitations of target customers
E-commerce companies must also recognize that Internet access is more limited in some parts of the world. Customers also have less sophisticated devices, which can make it difficult to use intricate websites and marketing funnels.
You might be surprised to find out that some other countries with the most limited Internet access are those with more developed economies. Australia actually has a less dependable Internet infrastructure and than most of Africa. This is a hurdle that you must be aware of if you intend to operate in these countries.
International Markets Are a Great Opportunity for E-commerce Marketers – But They Have their Challenges
The global e-commerce industry is growing at a remarkable pace. Many entrepreneurs realized that they can grow significantly by reaching people abroad. However, they are also going to have to overcome a number of difficulties, including learning new sets of regulations. They must do a cost-benefit analysis and decide whether it is worth the extra investment.