If your business has products or a service that can be marketed and sold beyond the boundaries of the U.S., then expansion into developing international markets may bring the possibility of new growth and profits for your company.
Gary is a gym shark living in a small-town in the USA. Nearly every day you can find him lifting weights, sprinting laps in the pool or joining in a yoga class, notably the same days when Sheila the other gym shark works out. He wasn’t always this energetic though. One day he invented an energy food bar with a secret ingredient and soon his workouts looked like a wild hare bouncing around on spring coils. Everyone in his local community wanted that kind of energy. So, he registered his secret recipe and began selling his bars. The business grew into a nationwide sensation. With interest from developing markets in other countries, it was time to consider going global.
What are global sales?
Global sales are transactions that take place outside the country in the international marketplace.
Depending upon demand, if Gary were to successfully begin selling his energy bars in Europe, Asia or Australia, his global expansion would be realized.
Why would I be interested in growing my sales world-wide?
World-wide growth can potentially generate new avenues for sales and profits.
Online sales for example, customers spent nearly $4.9 trillion dollars in 2020, up from $3.46 trillion from the year before.
There are various ways a business can grow into a global company. Depending on the size and customer fulfillment volume, business should consider the following:
- Online orders from the company’s home base. This would require logistics for international shipments for either single parcel or bulk shipping.
- Exporting and Licensing. Exporting allows a business to establish their brands and products in foreign markets with little or no direct investment in each country. A service-oriented business may find this option more challenging unless the services they perform are over the internet. Licensing allows a foreign company to sell and market your brand in their country.
- This may require creating strategic partnerships, a wholly owned subsidiary or multi-national expansion where the product is produced and distributed from another country.
- Source a hybrid marketplace such as an Amazon, Costco or Walmart that sell their own inventory and offer a platform through which other retailers can sell their products in other countries.
How can I manage costs if I’m shipping globally?
For Gary to ship his gym shark bars the best option appears to be direct to customer via a global carrier like FedEx, UPS, or DHL. However, after striking fame and employing half the small town, the company has expanded into sports equipment, clothing and a special yoga mat designed by Sheila. His shipping needs have changed. A few options to consider are:
- Air freight:
- Expedited or next day out freight will likely have the highest premiums. For shark bars with an expiration date this may make sense.
- Consolidated where cargo is grouped together with other manufactured products and shipped when the container is full. This is a slower and more cost-effective method better for bulk orders shipped to fulfillment centers or distributors.
- Deferred or low priority shipments that are placed on planes when space becomes available. This is best for non-time sensitive shipments and may be the least costly.
- Ocean shipping:
- Containers shipped across sea are 20-40 feet and usually charged a flat rate. While cost effective, shipping time can be slowed greatly and there are risks with reliability such as weather and rough seas.
- Recent side-effects of the pandemic have brought shipping containers to a complete standstill, waiting to be offloaded. Make sure you know if your container will take months to arrive at its intended destination.
What regulations should I be aware of with global sales?
Each country has differing regulations, taxes, and compliance issues to consider. They are constantly changing. The following are a few ways to plans for global sales and regulations:
- Hire or consult an experienced compliance-centered broker to help with bonds, duties, international freight filings and other complex processing.
- Employ experienced and well-trained staff.
- Prioritize documentation to avoid costly delays.
- Understand compliance fines. Many of these are due to improper valuation, classification, and misunderstanding of trade agreements.
Keeping my “US base” happy while expanding world-wide:
To lose core customers by overextending the company into the global market and slowing customer fulfillment at home can be catastrophic. Always remember to grow at a pace the business can handle. Even with a financial backer, all the money in the world will not keep a business alive without consumer spending. Some things to implement include:
- Hire when necessary.
- Prioritize key sales regions that generate the highest profit.
- Head off any foreseeable issues. Many times, a call ahead of an issue will salvage an otherwise lost relationship.
- Prepare to deal with the emotional side of customers.
- Use customer feedback to shape future problem solving.
Need more information? Paris SBDC can give you ideas and expert advice on how to grow your sales globally. Let us help you understand how and when to expand your business and “Go Global.” Contact Paris SBDC today!
For additional information on going global while keeping your at-home customers happy, please contact us at the Small Business Development Center – SBDC – Serving Paris area: Lamar, Hunt, Hopkins, Delta, and Red River counties.