Going global with your e-commerce might be tempting, but the road is fraught with obstacles.
How to conquer a new market is much more difficult than just selecting one.
Local marketplaces can simplify this journey, offering a direct path to international markets without the usual headaches of cross-border commerce. With essential infrastructure, from payment systems to legal compliance, they actually make global expansion not just possible but practical.
As we move forward, we’ll examine the challenges faced when expanding abroad, with a focus on local marketplaces.
Challenges of International Expansion in E-commerce
Expanding internationally in e-commerce is rife with complexities, from language barriers to cultural nuances. These factors make it difficult to connect with and cater to a global audience effectively, requiring substantial resources and local knowledge to overcome.
#1 Adapting to Local Cultures
E-commerce stores aiming for global expansion must tailor their products and services to local cultures. This involves more than translating website content. Businesses need to understand local customs, consumer behavior, and preferences. Due to cultural differences, products that sell well in one region might fail in another.
This applies not only to products, though. For example, what is considered an appealing website design in one country could be perceived as cluttered or garish in another. On top of that, marketing messages need to resonate culturally to evoke the intended response from local consumers.
#2 Handling Payment Diversities
Different markets prefer different payment methods. E-commerce businesses need to integrate these various systems for a smooth checkout process – for all parties. Failing to offer preferred local payment options can lead to high cart abandonment rates.
For instance, offering mobile payments is crucial in regions where most online purchases occur via smartphones. Similarly, providing cash on delivery can be essential in markets where digital payment penetration is low.
#3 Compliance with Local Regulations
Each country has its own set of regulations that e-commerce businesses must follow. These can include consumer protection laws, customs regulations, and specific product standards – just to name a few.
Complying with these laws can be complex and costly but is necessary to operate legally in different markets. Not meeting these standards can lead to fines, shipment delays, and a damaged reputation. Businesses must invest in legal expertise to navigate these waters successfully.
#4 Competing with Local Retailers
Breaking into a market with established local competitors is often one of the main challenges that retailers need to face. New entrants need to understand the local competitive landscape thoroughly. They must offer something uniquely compelling to gain market share.
Pricing strategies, for instance, need careful consideration to attract price-sensitive consumers without sacrificing profit margins. On top of that, understanding and leveraging local shopping occasions, advertising channels and influencers can make or break each e-commerce business.
#5 Managing Logistics and Distribution
Setting up efficient logistics networks in a new country is a step that cannot be overlooked. E-commerce businesses must provide timely and cost-effective delivery to maintain customer satisfaction. They often cannot do it alone – so, for them, it means partnering with local delivery services or setting up local distribution centers.
Mismanagement here can lead to delays and increased costs, further affecting customer loyalty. Returns management also becomes complex and requires establishing local processes to handle returns swiftly.
#6 Overcoming Language Barriers
Operating in multiple countries often involves dealing with several languages. E-commerce platforms need to ensure accurate translations not just for product listings but also for customer service communications. Poor translations can lead to misunderstandings and lost sales.
At this point, it is also important to have multilingual support staff who can provide customer service in the local language to further build customer trust and satisfaction. All legal and compliance communications must also adhere to linguistic accuracy to avoid legal issues.
#7 Building Trust with Local Customers
New market players need to establish trust with local customers who may be wary of foreign brands. It goes without saying that this requires marketing efforts and may involve adapting branding to align with local values and expectations.
Trusted payment gateways and clear, honest product descriptions help build consumer confidence. And then, obtaining local certifications or endorsements can further assure customers of the quality and legitimacy of the products offered.
In light of all these challenges, one might ask: does it even make sense to go global? Fortunately, local marketplaces might offer a solution.
Choosing Marketplaces vs. Own E-commerce Shop
Deciding whether to expand globally through local marketplaces or by setting up a dedicated e-commerce shop is a major challenge.This decision impacts not only operational complexity but also long-term growth potential. We have created a handy comparison for this article to further elaborate on.
| Aspect | Local Marketplace | Own E-commerce Shop |
| Initial Setup Cost | Lower costs due to shared infrastructure and resources. | Higher costs associated with developing, launching, and maintaining a platform. |
| Customer Reach | Immediate access to an established customer base, enhancing visibility. | Requires time and marketing efforts to build customer base and gain visibility. |
| Logistics | Often handled by the marketplace, reducing complexity for sellers. | Requires self-management or separate arrangements, increasing overhead. |
| Local Market Integration | Enhanced local engagement due to the marketplace’s regional focus and marketing. | Requires targeted efforts to penetrate local markets effectively. |
| Ease of Use | Simplified selling process with support and tools provided by the marketplace. | Requires understanding and managing all aspects of e-commerce independently. |
| Scalability | Easier to scale with access to various market segments and regions through one platform. | Scaling involves significant investment in technology and marketing. |
| Competition | High competition with other sellers in the same marketplace. | Direct control over competitive positioning without direct platform competitors. |
| Payment Processing | Simplified through the marketplace’s built-in solutions providing variety and local preferred methods. | Must set up and manage their own payment systems, which can be complex and costly. |
Initial Setup Cost
The initial setup cost for a local marketplace is generally lower than for an own e-commerce shop. Marketplaces provide the necessary infrastructure, reducing the need for individual investment in website development and server maintenance. This shared environment means costs are spread among many sellers, making entry more affordable.
In contrast, setting up an own e-commerce platform involves substantial expenses. These include designing the site, acquiring hosting services, and securing the platform. Such costs are borne solely by the business owner, making the initial financial barrier significantly higher compared to using a marketplace.
Customer Reach
A local marketplace has an advantage when it comes to reaching volume. Through joining a marketplace, sellers immediately tap into an extensive, pre-existing customer base. This built-in audience enhances visibility without the seller needing to invest heavily in marketing or outreach initially.
On the other side of the coin, owners of independent e-commerce shops face the challenge of attracting customers from scratch. Building a customer base requires strategic marketing, search engine optimization, and quite a bit of advertising. Such a process not only demands more resources but also takes time to yield results, in result making it a slower route to market penetration.
Logistics
Marketplaces handle shipping, returns, and even customer service, greatly reducing the logistical burden on individual sellers. Through this integrated approach, sellers can focus more on sales and product development, rather than order fulfillment.
Online shop owners cannot make the same claim. They must establish and manage their logistics systems. This involves negotiating with shipping providers, setting up warehouse operations, and handling returns – which can be both costly and complex. Managing logistics independently also adds a layer of operational challenges that can distract from core business activities.
Local Market Integration
Integration with local resources is more effectively achieved through local marketplaces. These platforms are often designed with a regional focus, which includes tailored marketing strategies that resonate with local consumers. They also tend to offer features and support that help sellers adapt their offerings to meet local tastes and demands, thus enhancing engagement and boosting sales.
Operating an own e-commerce shop requires the owner to independently develop insights into the local market – a more resource-intensive and cash-consuming activity.
Ease of Use
Intuitiveness is a significant advantage when opting for a local marketplace. These platforms come equipped with user-friendly interfaces, tools, and resources that simplify the selling process. Sellers can easily list products, manage inventory, and track sales without needing specialized technical knowledge. Marketplaces also typically provide complex support systems, including customer service and technical assistance, which further ease the operational burden for sellers.
In contrast, running an own e-commerce shop demands a deeper level of involvement in every aspect – from website management to handling transactions and customer inquiries. This requires both technical proficiency and a greater time investment.
Scalability
Scalability is more straightforward in local marketplaces due to their expansive infrastructure and reach. Sellers can leverage the marketplace to access diverse market segments and geographic regions without the need for significant individual investment. Its systems support growth, allowing sellers to expand their product offerings and reach without having to deal with logistical and technical challenges.
Scaling an own e-commerce shop is not that easy – and requires substantial investment in technology upgrades, marketing strategies to reach new customers, and perhaps even international shipping logistics. Each step of scaling up demands careful planning and financial resources, which can pose a barrier to rapid expansion.
Competition
The level of competition within local marketplaces is undoubtedly high, as numerous sellers often offer similar products. However, this competitive environment also drives innovation and quality, compelling sellers to enhance their offerings to stand out.
Marketplaces often form a competitive but fair environment with systems like customer reviews and ratings, which can help reputable sellers gain visibility and build a strong reputation more quickly than they might on their own platform. The competitive nature of marketplaces can benefit sellers by providing direct insights into market trends and consumer preferences based on the performance of various products. This data can be invaluable for adjusting strategies and improving offerings.
Payment Processing
The whole process of payment processing is another aspect where local marketplaces often have a distinct advantage. These platforms generally handle all aspects of payment processing, providing a secure and streamlined transaction system for both buyers and sellers.
Sellers no longer have to set up their own secure payment gateways, which otherwise could be costly and time-consuming. Marketplaces also typically offer a variety of payment methods, making it easier for customers to make purchases and for retailers to offer payment diversity to increase sales.
Furthermore, the robust infrastructure of a marketplace can handle high volumes of transactions reliably during peak times, such as holidays or sales events, without the seller needing to worry about payment system overloads or security breaches.
Marketplaces offer immediate access to established customer bases and take care of many logistical details, making them an attractive option for quick entry. With Allegro, it might be easier than you think.
Going global? Go with Allegro! Why to Choose Allegro as Your Local Marketplace
Allegro stands out as a premier online shopping destination in Central and Eastern Europe for several compelling reasons. Here are detailed insights backed by robust statistics that highlight its strengths:
Market Leadership
Allegro is not only the largest e-commerce platform of European origin but also the most visited shopping site in Poland. With a strategic expansion into the CEE region, Allegro serves a combined total addressable market of over $330 billion. Its platform manages to connect 19.6 million active buyers with 145,000 merchants, which speaks volumes about its widespread appeal and dominant market position.
Comprehensive Merchant Support
With Allegro, merchants have access to an extensive customer base and a range of services designed to increase visibility and sales. Due to the platform’s continual innovation, merchants and product ranges continue to expand, creating a thriving environment for businesses.
Financial Stability and Growth
Allegro’s strong financial performance is highlighted by its substantial EBITDA of 2.5 billion PLN in 2023 and an impressive cash conversion rate of over 80%. The platform’s Gross Merchandise Value (GMV) for 2023 stood at a notable 58 billion PLN (approximately $14 billion USD), reflecting powerful sales volume and financial health.
This financial stability supports sustained investment in technology and service improvements, making Allegro a reliable and progressive marketplace.
Superior Customer Experience
Allegro offers a best-in-class shopping experience with a Net Promoter Score (NPS) leading in the CEE. Customers benefit from a wide selection of products, competitive pricing, and delivery efficiency.
Allegro’s commitment to customer satisfaction is reflected in its innovative Smart! program, offering unlimited deliveries and free returns under monthly or yearly fee, which rewards customer engagement and loyalty, enhancing the shopping experience continuously.
All of that results in high customer satisfaction and repeat business – both extremely important for the e-commerce businesses.
Cutting-Edge Technology and Innovation
Leveraging more than 1,600 microservices, Allegro’s platform facilitates over 200 updates daily, maintaining high operational agility and responsiveness. This technological edge is powerful when it comes to driving innovations. Allegro supports a wide array of features from fintech solutions like Allegro Pay to efficient logistics options, all designed to meet the modern consumer’s requirements.
Commitment to Sustainability and Social Responsibility
Allegro is dedicated to sustainable operations, as evident by its use of 49% sustainable packaging and a reduction in CO2e emissions by 5% in its own operations versus the previous year. The platform’s corporate social responsibility initiatives are well-recognized, making it a leader in sustainable e-commerce practices in the region.
Expansive Product Offerings and Services
With around 500 million offers on the platform, Allegro meets diverse consumer needs ranging from everyday items to specialized products. Its fintech solutions like Allegro Pay enhance purchase convenience by integrating seamless payment options, further enriching the customer experience. Another service being One Fulfillment by Allegro granting comprehensive parcel management from warehousing and dispatching it to consumers to handling returns.
Strategic Expansion and Innovation
Allegro is not just growing geographically – it’s also expanding its service offerings. The platform continually introduces new features and enhancements, such as its in-house advertising platform and a comprehensive array of built-in products that cater to evolving merchant and consumer demands.
Sustainable and Responsible Operations
Allegro is dedicated to sustainable practices, as evident from its initiatives like using 49% sustainable packaging in group own operations and reducing CO2e emissions. Its corporate citizenship commitment goes beyond environmental concerns to include social responsibilities.
Choosing Allegro means partnering with a marketplace that not only leads in terms of scale and technology but also values customer engagement and sustainable growth. If you’re a merchant aiming to expand your business, Allegro provides the tools, reach, and environment to succeed.
Scaling Your Marketplace Business Across CEE with Allegro – Sign Up for a Webinar
On June 5th at 9:00 AM, Marketplace Universe, in partnership with Allegro, invites marketplace sellers to a pivotal webinar: “How to Scale Your Marketplace Business Across CEE Using Allegro’s Platform.”
This session is a must-attend for those looking to broaden their market reach within the rapidly growing economies of Central Eastern Europe.
Allegro, the leading marketplace in the region, connects over 19.6 million active buyers with quality sellers. During the webinar, their industry experts will share insights on tapping into this expansive consumer base.
They will cover a range of topics, from category-specific strategies for products in verticals like Home & Garden or Fashion, to optimizing listings and logistics for maximum impact.
Participants will also be introduced to Allegro One Fulfillment, which simplifies logistics and improves overall operational efficiency. The event will end with a Q&A session for attendees who seek advice and want to engage directly with marketplace specialists.
For marketplace sellers eager to expand into new territories and increase their visibility, this webinar provides a golden opportunity to learn how to leverage Allegro’s capabilities.
Sign up to secure a spot and start preparing to take your business to new heights – with a marketplace that has it all.
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