How can a seller enter the global market with minimal investment? Analysis of five risks.

Risk No. 1: Your product abroad will be of no use to anyone

I see the following problem: people go out into the country, set up logistics there, and then it turns out that sales are not coming. This happens when an entrepreneur does not know a new market well and acts at random. For example, some acquaintances told me that it is good to do business in the United Arab Emirates or any other country now. You can trust their words and take a risk, immediately find a warehouse there and launch. But in this case, it may turn out that for a number of reasons, sales did not go. And the entrepreneur has already spent six months and several hundred thousand dollars in vain.

We ourselves faced the fact that we entered Southeast Asia and after five months realized that we had little chance of building a large stable business there. The main reasons are that this region has a lower tattoo culture, there are many cheap Chinese temporary tattoos that people are used to. And they are not ready to overpay for our innovative product. Before entering this market, we did not expect such results.

The key to entering a new market is marketing. If a person wants to be on the safe side and understand which markets are better to enter with his product, then a number of tests can be conducted. They will help you find your market with minimal risks and operating costs. Then you need to evaluate the test results, choose a country where sales are already underway, and only then find a local fulfillment center there.

To make it clearer, I will tell you about our experience: first, we tested the markets before shipment. We made a website and advertised for different countries. Our goal was to see how people go to the site and how they behave there.

Then we compared the performance of buyers in different countries and made a list of where people most often left requests. It turned out to be 30 countries: the USA, Brazil, the countries of Western and Eastern Europe and Southeast Asia. In these countries, we decided to conduct further testing to see how real sales are going there.

• stores goods;
• processes and collects orders;
• sends them through its logistics partners;
• solves issues with customs clearance and returns.

We wanted to test 30 countries, and it turned out that then we needed to partner with several fulfillment companies in different regions of the world. But it's expensive and complicated, especially when it's just about the dough and small volumes of goods. Therefore, we decided to find one global warehouse from where we can ship goods all over the world.

While we were working with global fulfillment, we studied the specifics of different markets and found out in which countries it is comfortable and profitable for us to work. Our conclusions:

1. Due to the high level of price competition and the low purchasing power of the population, we have little chance to build a large stable business in Southeast Asia.
2. We refused to trade in the United States because there is high competition for advertising traffic. And we didn't have the same unit economics there.
3. Sales volumes grew steadily in Europe and Brazil. Because the audience liked our innovative production technology and they were ready to pay for our product. Therefore, in 2023, we focused on these areas.

When it became clear to us where it was better to do business, we switched from cooperation with one international fulfillment company to a partnership with local operators. In general, local warehouses are better than global ones for several reasons:

• The customer receives the goods faster. For example, shipping from Hong Kong to Germany will in any case be longer than shipping there from neighboring Poland;
• The customer receives the goods more easily. For example, the goods are shipped from Hong Kong to Germany. There, a person goes to the post office, he has to fill out something and, possibly, pay some additional duty. Accordingly, if you work for Europe and you have goods within the European Union, you have done all these operations yourself, the client receives the goods without any problems;
• The cost of logistics is reduced. Shipping from one region of Brazil to another is cheaper than from Hong Kong to Brazil.

Now we are building our work with local operators. One of them is in Brazil, the other is in Slovenia.

Risk No. 2: People won't buy your product because people might not be happy with your payment system

To accept online payments, we:

• connected the international payment system Stripe, which acquires, i.e. transfers payments, from Mastercard and Visa;
• installed Shopify Payments is an acquiring service from the Shopify e-commerce platform.

But we ran into problems in Indonesia. Even before the shipments, we tested marketing and clicks to the site and saw that advertising in this country worked well. Visitors come to the site, spend a lot of time there, and place an order. But when we set up logistics and connected payment systems, it turned out that the conversion to payment was very low.

It turned out that in order to trade in Indonesia, you need to connect the most popular electronic payment operators. But connecting each of them is a headache, because some do not work with foreign companies, and others are difficult to connect to the site and programmers are needed. Therefore, we found an aggregator that negotiated for us with these largest operators in the country. He accepted all payments from them and then transferred them to us.

In Latin America, the situation is different. People have plastic cards, and they are ready to pay for purchases with them. But payments may not go through due to the peculiarities of the local banking system. For example, we have come across the fact that some Brazilian banks do not allow payments to the accounts of a Hong Kong company that owns the American Stripe, for a number of reasons. One of them is that the bank may regard it as fraud. Therefore, in Brazil, we followed the same path as in Indonesia and found the Brazilian aggregator dLocal, which combines several Brazilian acquiring services.

Risk No. 3: Delivery deadlines may be missed

Even the coolest companies with large teams and investments can have supply disruptions. Fulfillment managers can tell you that they have excellent operations, that they collect orders in two days, and that they easily solve issues with customs clearance. In fact, orders are lost and delayed. It's hard to verify this until you start working with fulfillment. To protect ourselves, we paid attention to the following points:

• number of logistics partners;
• coordination of the work of logistics partners;
• impression of communication with fulfillment managers;
• Testimonials from other entrepreneurs.

Number of logistics partners. I advise you to pay attention to the number of logistics partners when choosing fulfillment — the more, the better. This is a safety net – if one partner fails, the other will still deliver the goods. For example, if a partner has a force majeure event and cannot deliver the cargo, then fulfillment can redirect the order to another company. If he has agreements with only a few carriers, then there is a risk that in the event of force majeure, there will be no one to deliver the order to and it will freeze.

Coherence of work between carriers. Integration between these partners is also important. Look: To deliver goods from Hong Kong to Germany, fulfillment sends them by Hong Kong Post to the hub in Frankfurt. There, the goods are picked up by the express delivery company Deutsche Post and delivered to the customer in Germany. Everything can only go smoothly if the work between the logistics partners is well established. There is no way to check this in advance. Everything is done only by experience.

We faced the fact that someone in the logistics chain incorrectly issued documents for customs clearance in Germany. About a hundred orders arrived in the country, people came to pick them up, but they couldn't, because there were bureaucratic problems. As a result, some of the goods lay in Germany and were sent back to Hong Kong.

If we see that there is a problem and it is being solved, then OK. If there are system failures, then this is a wake-up call. And you go to your partner, show them the numbers, and say, "Guys, what's going on? Let's do something about it." If your partner doesn't solve the problem or does something slowly, then either you accept it or change the fulfillment.

Initial communication with fulfillment managers. All control over shipments and interaction with fulfillment is built online. If problems arise at the initial communication stage, there is a risk that it will only get worse later.

About five companies took a long and difficult time to respond. For example, we wrote questions, and the answers came a few days later, and many things remained incomprehensible. We immediately brushed aside these companies because we were afraid that in the event of force majeure, we would be just as slow to respond. As a result, we had normal correspondence with only three fulfillments.

Reviews and recommendations from other entrepreneurs. The best way to be on the safe side when choosing fulfillment is to find real reviews about the work of the warehouse.

Another way is to meet entrepreneurs who have experience with international fulfillments. It's cool if they say: "You can work with them" or "Don't even bother with them at all, forget it, you'll only get into trouble."