You are an e-commerce business operating in Canada. Now you plan to expand into a new marketplace. But which marketplace is likely to be your best bet? How do you decide? The simple answer: do your research!
This blog explains why research is vital before entering a new marketplace. It will also show you how you can select a location where you can maximize sales and earn a healthy profit.
Go on!
The Importance of Choosing the Right Location for Your E-commerce Business
Suppose your e-commerce company sells winter clothing like woolen jackets and mittens in Canada. Now you plan to expand to two other countries: India and Australia.
But are these the right target locations for your products?
All three countries have hot summers and mild winters, with just a few places where winters are actually “cold.” So, are the people in these locations likely to buy your products in droves? Or are sales more likely to be occasional and limited to a few locations?
You must find these answers before you invest time, money, and resources into your expansion ambitions. Of course, the weather is just one aspect that will determine whether your products will be welcomed in India and Australia. There are many other factors you should consider when selecting a new marketplace for your e-commerce brand. Let’s explore these next.
Physical Location and Supply Chain
You should give importance to physical locations due to the complexity involved with the e-commerce supply chain. Regardless of your company size or product type, you are most likely to work with any third parties for procurement, manufacturing, distribution, and fulfillment. The sheep farmer who supplies the wool for your products and the manufacturer who produces your scarves are your supply chain partners, and so are the companies that manage your inventory, distribution, warehousing, and shipping.
It’s vital to choose a location where all these parts of the supply chain work well. The right location that assures a robust supply chain and nimble delivery systems is vital for the success of your brand. You want to operate in regional hubs where upstream and downstream processes are streamlined and you are assured of fast manufacturing cycles, quick delivery, and hassle-free shipping. You also want proximity to shipping hubs to ensure a quick and efficient transfer of stock and finished goods to warehouses, distribution centers, and ultimately, to customers.
Taxes
Like any other business, e-commerce businesses must also pay taxes. Start by giving importance to taxes such as sales tax. For example, some states in the USA only charge sales tax, whereas others charge a sales tax plus an extra tax.
Moreover, in the past, e-commerce businesses in the USA only had to remit sales tax if they had established a physical presence. But now, they also have to consider economic nexus, meaning if you sell your jackets and mittens in a state that collects sales tax, you must also collect sales tax and remit it to the government once you cross a certain sales threshold. This threshold amount varies by state, and so does the definition of a “taxable item.” Before stepping into a new marketplace, you must educate yourself on these requirements to ensure that you remain compliant and don’t make costly mistakes.
Availability of a Skilled Workforce
As you expand your presence into new locations, you will require a motivated workforce of smart managers to continue operations, resolve supply chain and other challenges, and keep your business moving forward.
Furthermore, with the growth of your firm, relying on manual labor may become too expensive. So, you may decide to automate a variety of tasks and workflows. Digital tools to tag customers for marketing, streamline tracking and reporting, streamline order fulfillment, halt high-risk orders, etc. can help you lower your cost per order (CPO), increase order fill rate, and secure a favorable ROI for the business. But are these tools available in the new marketplace? What about human workers? You must consider these aspects before moving into a new market. Otherwise, you will struggle to operate your business, and it may even turn out to be costly.
E-commerce Brand Aggregators Can Help!
The “right” e-commerce marketplace will have a good customer base, a favorable tax system, and a robust supply chain ecosystem with reliable distributors, manufacturers, and fulfillment partners. By doing your research, you can successfully sell your winterwear to your target audience and leverage their interests to boost sales and profits. But if this sounds overwhelming, you should consider partnering with an e-commerce brand aggregator like Ergode.
An experienced brand aggregator will provide operational support and assist you with location and audience research. They have expertise in various aspects of local supply chains, distribution networks, marketing best practices, taxation, and more. So if you lack the expertise or resources to research a new marketplace, a brand aggregator can easily fill in these gaps.
Conclusion
The web makes it possible for e-commerce firms to reach their target customers, regardless of location. But just because you can sell your products to customers in different regions doesn’t mean you should. It’s vital to identify the right marketplaces and do some legwork before you step on their shores.
As a brand aggregator, Ergode understands international audiences and knows what it takes to replicate success in multiple marketplaces. Contact us if you need information or support to expand your e-commerce business into a new location.
