So you have taken on the DACH market and succeeded. What is next? For many brands, European expansion is the next key step in their growth. The EU is an ideal place to scale your brand internationally, as the single market and customs union make moving goods much simpler than across other country borders.
However, there are many key operational decisions that can shape the way you expand and grow your business. Scaling internationally is not a one-size-fits-all scenario, so there are various aspects to consider for each step depending on your business case.
In this blog post, we will go into detail on three key decisions for DACH companies planning on expanding internationally, so you can decide according to your business needs. These are:
- Do you use one international store or multiple local shops?
- Should you distribute your inventory or keep it in one location?
- Should you engage with customers in their local language or keep all communication in English?
1. Setting up your international D2C shop right: one international shop or multiple local stores with local payment options?
One key question to ask is, how much do you want to localize your shop? The diversity of languages and shopping habits across Europe is vast, and your approach to fulfilling these needs should be carefully considered.
Sticking to one international shop
Having one international shop can keep things simple, especially if your website is in English. This means that customers from across the EU can understand your products and brand story. Plus, it can keep things simpler for you by only needing the capacity in your team to run one webshop.
However, some customers may feel less inclined to trust your brand if the shop is not available to them in their language and with their preferred payment options. For example, according to an ECC Cologne study on payment transactions, more than 50% of customers said they had previously abandoned a purchase because they did not offer their preferred payment method.
Think global, act local: setting up local stores
While being the more complicated option, opening several local online stores can help you to tailor your marketing and customer experience to the country where your customers are based. If you work with a 3PL partner, see if they can handle a multi-channel setup to connect multiple local stores to a single set of SKUs.
With Hive for example, you can easily set up multiple country online shops with the same physical SKUs in the fulfillment center using the multi-channel feature. With this feature, you can streamline orders from multiple sources so that the same inventory and Hive App can be used.
When setting up local shops, enable local payment options to increase checkout conversion
Payment preferences vary across the EU, and some provide more challenges than others. Many of these payment types can be set up via your online store, however some are more complex and require more operational input.
In the Netherlands for example, the most common payment type is iDeal, a direct bank transfer service little known outside the country. According to DPD Group, this option is preferred by 77% of shoppers there. The option to pay with iDeal can be integrated easily into your shop via Shopify or other platforms.
A more operationally complex payment method is Cash on Delivery (CoD). This method of payment is hardly used in the DACH market so may come as a surprise to DACH brands looking to expand. CoD means that cash is given once the goods are delivered, and if the payment is not made, they are returned to the merchant.
Enabling this method in Spain or Italy is important since it makes up around 30% of B2C sales, if enabled for multiple countries it could increase your operational complexity or cause confusion. Because of this, a local setup is needed.
Enabling this payment method also means that you need a trusted partner to handle your delivery. Check if your 3PL partner is used to handling cash on delivery if you plan to expand to Italy or Spain for example.
2. Setting up fast and cost-efficient delivery internationally: distribute your inventory or keep it in one place?
A second big decision to make is whether you will distribute your inventory across multiple locations, or keep it in a single fulfillment center.
Price sensitivity towards delivery varies across countries, with some places more accustomed to cheaper shipping than others. Passing on high delivery costs to your customers can be a real conversion killer, so planning your delivery strategy is crucial.
Shipping speed can be just as important as shipping costs. In a market dominated by big players like Amazon, many consumers have become accustomed to next-day delivery. Long wait times can lead to cart abandonment if the customer knows they can get a similar product quicker.
In fact, according to Shopify’s Future of Shipping and Logistics report, 60% of global consumers expect options for same-, next-, or two-day delivery, and 32% of European shoppers have abandoned a purchase because estimated shipping time was too long. Plus, they report that customers are likely to turn to competitors if goods may take too long or are unavailable.
So the question is, do you risk longer wait times by sending from one location, or distribute your inventory and deal with potentially higher complexity?
Single location fulfillment
There is no one-size-fits-all solution when it comes to your inventory distribution. It depends on the size of your business, number of international orders, and SKUs. For smaller brands without a large order volume in foreign markets, keeping your inventory in one place can make operations simpler.
For those testing the water with international orders, sending from one location can be ideal by using direct injection. This is a process by which international parcels are injected directly to the country where they are picked up by the local carrier. This means faster international delivery times as the packages do not have to be sorted before being shipped to the new country. It cuts costs by avoiding overheads from carriers from the country of origin.
Speak to your 3PL partner and see if they offer international orders via direct injection.
Distributing your inventory across markets
If you have a larger volume of international orders it may be worth distributing your inventory across the markets you are targeting. While this may involve more operational input, you will get access to local delivery pricing and speed, making you more competitive with local brands, and impressing your end customers.
If you choose to distribute your inventory, you will also need to consider freight forwarding: will you send from your supplier to one fulfillment center and then distribute it from there, or send out multiple shipments to different locations? Check in with your logistics partner to see if they offer either solution. If you fulfill with Hive for example, the team organizes freight for you with the best prices both from the supplier and between fulfillment centers.
3. Engaging with international customers: one language or local communication?
One final question to ask yourself before taking your business across international borders is whether you want to keep customer communication in one language, or use local languages. Communication may well seem like a mainly marketing focused decision, but it is a key part of your operations too.
Keeping your brand in one language
Keeping communication solely in English for example can simplify your processes such as order confirmation emails and promotional flyers. It can save on costs of translating your marketing materials and customer communications.
For brands looking to go international in countries with a high density of English speakers such as Scandinavia or the Netherlands, keeping communications in English is unlikely to damage your conversion. This is because countries such as these are accustomed to international brands communicating in English, especially with Millennial and Gen Z buyers.
Speaking the language of your customer base
However, customers across Europe can be resistant to communication that is not in their native language, though resistance varies across Europe. According to a survey, 72.1 % of customers prefer to use websites in their native tongue for most of their online activities, and are more likely to buy a product when customer communications are done in their native language. In fact, for 56.2% of shoppers, accessibility to information in the language of their choice seems to be more important than price.
The right operations partner may also be able to support you with multiple language communication. With Hive, for example, you can send out automated customer emails and an order tracking portal in the local language of your customer.
Using automated emails and tracking in your customer’s language can save you hours of customer support time and save you the need to get several speakers of your target market’s language in your customer support team.
In addition, consider personalizing orders and their packaging based on their destination. For example, you could use fulfillment add-on rules to automate the process of adding multiple language flyers to your orders. This means creating rules that dictate that when an order has been placed from a certain location, a certain add-on is added to the order.
For example, if an order has been generated in Spain, then the Spanish language care instructions are added to the order. Adding instructions on how to use or care for your product in your customer’s language can also save you hours of customer service time, as your product is more likely to be used in the correct manner.
Working with the right 3PL partner will help you grow internationally in the way that is tailored to your brand
When thinking about expanding your business internationally, there is much to consider and there is no perfect way to scale. It all depends on your order volume and complexity.
That is why having a trusted 3PL partner on your side that has supported many brands in their expansion can make all the difference. The ideal 3PL company will have a multidisciplinary team of country experts alongside an international network of partners that can assist you in your expansion.
About the author
At Hive, we help businesses scale internationally across Europe through our pan-European fulfillment solution. We have fulfillment centers located in key locations across Europe to give you access to the majority of the European market in just two days. Hive offers a holistic operations service that goes beyond fulfillment to packaging, freight forwarding, end customer communications, and more.
Interested? You can find out more on our website here. Plus, you can find us at the E-commerce Berlin Expo 2023 at booth D4.3 (Hall 7) and talk to us in person.