By Amanda David | Senior Consultant

With the current state of the UK retail landscape, brands and retailers are increasingly thinking about growing their international footprint and entering new markets. The Middle East and Asia have seen particular interest in recent years, as they continue to see considerable ecommerce growth; between 21-25% in 2019.

The rewards of entering new markets are clear: it can significantly bolster sales, find new customer bases and offer major growth opportunities. Visa recently conducted a Global Merchant eCommerce Study which showed that 66% of businesses already sell cross-border online, and this accounts for around a third of sales.

Entering new markets however is no easy task. There are several examples of large brands who have launched in new markets and failed. This is often due to being ill-prepared for differing customer expectations and operational changes needed to meet the new demand. Before a brand makes a final decision on whether to expand and where to expand, we recommend addressing the following four key areas to optimise your online market entry strategy.

The potential when entering new markets

How big is the ecommerce market? What share of the market does the target audience represent? Is it growing or declining?

Undertaking a detailed market assessment is key to understanding what potential a region holds for a brand and whether it is worth the investment. A macro assessment will give a high-level view of the markets in question, enabling prioritisation, and can be done for as many or as few markets as the business sees fit.

This should then be followed by a micro assessment, or a ‘deep dive’ comprehensive analysis for select markets to define the required proposition, and whether the brand has sufficient resources to enter the market.

Consider Domino’s Pizza. Although its products are fulfilled by physical stores, 77% of its sales come from online orders.

However, Domino’s recently pulled out of Iceland, Norway, Sweden and Switzerland after a 2.7% reported decline in sales. The firm suffered from high labour costs and failed to grasp the consumer dynamics in international markets.

Such failures can be avoided in advance through deep market analysis, to truly understand the landscape of the market you want to enter.

The competition

Who and what is the competition within the considered market?

This applies to both direct competition; brands and retailers targeting the same customers with similar products, as well as indirect competition; the ‘disruptors’ who are raising customers’ expectations. What are they doing well and what are they doing badly? Where is the opportunity for new brands?

A high-profile example of this is online fashion retailer Asos. The firm withdrew from the Chinese market after 3 years and at a cost of £10m, after it faced strong local competition and lacklustre sales. Asos underestimated the high cost of acquisition marketing to bring new customers to the brand, which is especially important for new entrants to an already saturated market. Asos still serves the Chinese market but does so via the .com website and ships internationally to save cost.

The proposition

How to localise for different markets?

One aspect the micro market assessment should address is the customer demand for a brand’s product, and current shopping habits. The customer proposition will likely need to be adjusted according to specific market expectations. This may include different content formats, delivery times, preferred social media channels, payment methods and language. All of these are proven conversion drivers, so it is important to get the proposition right at launch to ensure market entry success.

Practicology recently produced a snapshot report Global Online Customer Report 2019 addressing key differences in buyer behaviour.

The ease of doing business

How easy is it to trade in the prospective market? Are there any product-specific barriers to entry? What duties and taxes are there? How long does it take to get product into the market? Is a local warehouse needed?

Establishing the ease of doing business is crucial to success. For example, if importing products takes 3 weeks, the supply chain needs to be adjusted accordingly, so ‘out of stocks’ don’t become an issue. Or if there is instability in a particular region, be it political or economical, the brand must react and attempt to minimise the potential effect on sales.  

An example of this came with tech giant Apple, which experienced problems trading in Russia due to currency fluctuations. After a series of sharp drops in the value of the ruble in 2014, Apple increased the prices of certain products by 20% to compensate. However, this meant that the gap between prices in Russia and the rest of the EU widened and made price monitoring unmanageable. This sort of incident is not only isolated to Russia and is happening more and more in today’s uncertain economic climate. This is why thorough market analysis is necessary before, during and after new market entry. 

While these four areas do not address every facet of entering new markets online, they do underline the complex issues brands need to consider when looking to diversify. Expanding outside of domestic markets can be profitable but should not be attempted without in-depth analysis and a solid business plan.

Are you considering entering new markets? Practicology is expert at assessing the landscape and trading environments of international markets. If you would like help with your market entry strategy or commercial planning, contact us at

Meet us at White Label World Expo

27th November 2019

ExCel, London

We'll be presenting at the event on cross-border selling and international strategy.

Register here and join our session in Opportunities & Investments Theatre Three.

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