Guide to international SME eCommerce expansion step 4: Essential details
So, you’ve researched foreign markets, identified your target markets, pulled together a comprehensive business plan and even sorted out your financing. Now it’s time for the nitty-gritty. In this fourth installment in our SME toolkit for international expansion, we’ll take you through everything from international pricing, taxes and duty, cultural considerations, and more.
Step 4: International pricing, regulations, and cultural norms
Cultural, social, legal, and economic differences can have a huge impact on how you do business overseas, and they can be a headache to navigate for those with much international experience. Here are some of the key things to consider before you set up shop overseas:
To be competitive in a new market, your pricing strategy needs to reflect pricing in the local market. That means you need a dedicated pricing strategy for each new market you enter. Research typical pricing structures of competitors in your target markets to get a better picture of how much you should be charging, and don’t forget to factor in exchange rates and taxes when putting together your pricing structure.
Taxes & duty
Local standards for taxes and duty can differ greatly from market to market, so use government resources for each of your new markets to find out:
Whether it has a tax on sales, commonly referred to as goods sales tax (GST) or value-added tax (VAT)
Who is liable to account for the sales tax, the recipient or the provider of the goods/services
Whether the market has one sales tax rate or several sales tax rates
What tax exemptions are available to you
Whether you have to pay customs duty or other similar taxes
Your legal obligations and trading regulations are likely to differ for each market you trade in. Make sure you understand:
Local customs, import, and export laws
What your annual tax filing obligations are
Whether your current contracts are valid overseas
Whether your trademarks are valid overseas
All regulatory requirements for traders in each market
Payments & currencies
Accepted payment methods overseas may be different than your local market, so be sure to check what’s accepted ahead of time. Don’t forget that you’ll most likely be trading in different currencies as well, so you’ll need an order management system that can handle multiple currencies.
Keep in mind that every culture is different, and it’s important to understand local customs and differences if you want to build a solid reputation in international markets. Do your due diligence in getting to know how things work in each of your target markets, and you’ll be in a good position to make informed decisions about product offerings, customer service approaches, marketing tactics, and more.
Stay tuned for Step 5: Identifying your sales and distribution channels
To start from the beginning, read our previous steps to international SME expansion: