Taking your established Amazon marketplace business to the next level by taking your products to new international markets can be an exciting and rewarding endeavor. However, there are a lot of things to learn and consider before you jump into the new Amazon marketplace. If you don't do your research ahead of time, you may end up spending unnecessarily.
This article will take you through some of the biggest mistakes Amazon sellers make when starting a global operation, and how to avoid them.
1. Assuming international indicators will match domestic indicators
The Amazon marketplace can cover multiple countries, each with its own consumer trends, cultural norms, and market potential (the number of potential consumers and their average spending). Even if you boil down sales forecasts as a science for the domestic Amazon marketplace, you can't assume they apply to the international marketplace.
Before sending products to a new FBA warehouse in a foreign county, you will need to do your research. You want to avoid running out of stock and hurting your listing potential, but you also don't want to order too much inventory and end up wasting money on unsold units.
Make it easier for yourself by simplifying your product early. Focus on one product and one new market. You're already familiar with how to track your sales-related metrics for future forecasting (if you're not, you should get started now). You just need to populate your model with new data, which you can get by having some international listings and sales.
Once you're familiar with the process of selling on Amazon marketplaces abroad, it's much easier to branch out into other marketplaces, and you'll have more accurate forecasts before ordering or shipping products.
2. Think of markets as countries
It's important to know that each Amazon marketplace serves multiple countries, especially those outside of North America. Not doing this could be a big mistake.
For example, Amazon.de (the Amazon marketplace in the Netherlands) serves Germany, Austria, Belgium, Luxembourg, the Netherlands, and sometimes other countries within the European Union. While these cultures may have similarities, they belong to different countries with different consumption habits that you need to understand if you want your products to perform well.
When you start your business overseas, one of the best investments you can make is to find a partner or service provider who can localize your listing. You'll find many automated tools, some directly on Amazon's website, but if you've ever seen a list translated into your first language by a tool rather than a native speaker, you know how unprofessional and unprofessional it can look. Awkward. A native speaker who can localize your listing can do more than translate it. They can ensure that the tone and message of your listing is what you originally expected.
Between cultural considerations, list translation, and new business practices, a lot of research can be done. Before investing in the international Amazon marketplace, make sure you understand your specific business. A basic list for any given country includes:
Foreign Industry/Consumer Trends and Forecasts
Traditions and cultural norms that may influence how consumers view your listings
Legal requirements and regulations, including business operations, taxes or VAT, and shipping/customs requirements
Competitive and production environments, service providers, suppliers, shippers and competitors that may affect your international sales and listings
Marketing channels include popular social media in the new country you will be selling to, and a website that your new potential consumers can easily access (and again localize)
3. Don’t treat expansion as an investment
Just like your first foray into Amazon selling, navigating the new Amazon marketplace takes time. You'll definitely have more knowledge and experience, but product rankings, listings, forecasting, and marketing still take time to get off the ground.
Additionally, if you start selling your Amazon locally, you will begin to familiarize yourself with consumer trends, the competitive landscape, and the laws or regulations you need to run your business. In a new country, you don't have that advantage without some serious research. You need to consider your first few global launches as a business expense and a learning experience. You might make some money on your first try, which is great, but if you don't, don't get discouraged because as your business grows, the income will follow.
With so many new variables in consumer preferences, taxes/VAT, customs, etc., even if you do a lot of research, you're likely to incur some unforeseen costs. Avoid going all-in on global expansion if poor results hurt your domestic business. Hedge your bets by ordering a conservative number of units and avoiding unforeseen charges.
Also, be sure to seek advice from business experts and services to guide you through the process of going global. Foreign business service providers such as PingPong can help you open bank accounts, prepare foreign currency exchange and VAT, and give you feedback on how to prepare for an international business venture.
Global expansion can be extremely rewarding, but it won't happen overnight. Don't assume it will be a big mistake.
4. Change money too often
You probably know the importance of reinvesting in your business and preparing for sales taxes. In order to do this in foreign markets, you may need to exchange currencies on a regular basis. Foreign exchange is not easy. They involve an extra layer of complexity, namely time.
It may be tempting to sit down and let Amazon automatically convert your international sales revenue back into your local currency, but here are a few things to consider before you do so:
Currency Conversion Rates and Fees – How much does Amazon (or your bank) charge you to convert from one currency to another, and do they offer you the best exchange rate? Services that seem convenient and built-in may not strive to get you the best price — they already do it for you. Look for services that offer both.
Double Conversion Fees – Due to the fees associated with converting from one currency to another, you need to convert as little as possible. Converting foreign currency to your local currency and then having to convert it back later to pay for things like VAT is known as double conversion, and it costs you money unnecessarily. Before you transfer funds, consider upcoming charges that can be processed in foreign currency. You will be required to pay foreign VAT for the country in which you sell, you may have marketing charges processed in foreign currency, and you should investigate whether any of your suppliers or service providers can be paid in foreign currency.
Invest in your business – Just like your first Amazon business, it's important to reinvest in that business as you earn income to continue to see growth. Think about how much you can do with the foreign currency you collect (products, services, etc.) and don't transfer the currency back to your personal account.
5. Scale your Amazon business prematurely
Successful global expansion takes time, effort and money. It can be tempting to want to expand your business early in your Amazon selling career. But don't give in to this temptation; it can lead to a pretty big business mistake.
When it comes to big tasks like selling on the new Amazon marketplace, you need to stick to the "80/20" principle very strictly. The principle states that you can usually get about 80% of your total income from about 20% of the effort you put in.
The last 20% of potential revenue can be the hardest to reach, and that's when you should start looking for additional revenue streams for your product. If you haven't achieved at least 80% of your projected annual sales, you could be hurting your domestic business by expanding too early. Some things to consider include:
Do you have time to work on expansion while doing everything for your domestic business? First, starting an international Amazon business can take as much time and effort as your original business. You want to make sure that spending time on scaling work doesn't hurt your main business.
Are you simplifying your day-to-day business operations? This is similar to point 1, but important for anyone looking to scale. Overall, as your business grows, there are 5 things you should try to stop doing so you can scale more and more:
Admin – Data entry, record keeping and frequently repetitive tasks (especially if you can document how you do it) should be removed from your plate first. These are usually easy to hire and do not require specialized skills to complete.
Production – Once you have your suppliers and production managed (again, documentation is key), pass it on to your employees. Finding and negotiating with suppliers may require your expertise, but repeat ordering of existing products does not.
Marketing – Social media, content creation, and basic product pre-orders should be dealt with next. You may need someone experienced in this area or a service provider who professionally manages it. As you scale your marketing, it should take up less of your time.
Business Development – Market research, product development/research and supplier connection building are all things a skilled partner or service provider can handle. It should be one of the last things you hand over and it will add precious time to your day.
General management – this is when you have someone handle all day-to-day operations and oversee the business on your behalf. This role manages all people in the above roles. Most business owners will probably never get to the point where they want or need someone else to do it, but it's considered the last step in streamlining business processes.
You don't need to automate or simplify all five of the above business functions to see global expansion. Having the first to two phases (management and production management) handled by others or matured to the point where they can be done quickly will be the key to achieving international expansion.
Finally, similar to the time and effort mentioned above, you need to ensure that your business has the cash flow to support expansion efforts. You still need to make regular payments to suppliers and order inventory for your domestic business. Make sure you have enough money to invest in Amazon's international sales without compromising your business's sales and product availability.
6. Not having a proper growth plan
Lastly, it's important to have a plan so you can fully understand what it takes to expand your Amazon business into new markets. If you feel you are ready, you should not hesitate to grow. However, that doesn't mean you should go to work without the general process and expected results.
Additional research on rules, regulations, and costs to expand to certain countries. Take some time to understand the culture and consumer trends of the product you are looking to expand. Seek expert advice or help when building your business and listing for a new market, and be sure to listen to what you get. You may have lived in the local market area for years, maybe your whole life, but for new international markets this may not be the case and lack of cultural knowledge may slow you down.
If you're researching and feel like you might not be ready, you can still make the most of your time by preparing now for future expansion. Start thinking or finding ways to simplify your business processes. Start monitoring current sales metrics and trends to better understand how to manage international data. Start thinking about countries you might want to expand into and do some research on local cultures in your free time. If you compare manufacturers and shipping lines and both seem to be nearly equal, choose the one that might make future global expansion easier.
Finally, remember that when you have a plan for expansion, you can execute actionable projects. It contains pages of research that you are not sure how to utilize yourself if no plan is actually effective.
Before thinking about expanding to the international Amazon marketplace, make sure you and your business are prepared. Expansion can bring a lot of additional revenue channels to your business, and it can be very rewarding. But expansion also takes a lot of time, effort and money to do it the right way. When you're ready, be sure to do your research, make a plan, and seek advice from foreign experts you plan to sell to.
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