How to enter new markets: A quick guide for ambitious fashion brands
Scaling a fashion ecommerce brand globally can be an exhilarating journey, but it also comes with a host of challenges connected with growing the supply chain, localization, merchandising, and marketing.
In this article, we will share insights, considerations and examples from successful fashion brands to help you navigate the challenges of scaling your fashion business responsibly and sustainably.
Fashion ecommerce and globalization
Is scaling internationally an important step for fashion ecommerce brands? The answer is yes, and partly results from the rapid globalization of fashion ecommerce over the years and the unique dynamics of the market:
Customers’ demand for variety and accessibility
Fashion consumers around the world seek variety and unique fashion products, and no longer want to be confined by borders. Ecommerce platforms enable customers to access a wide range of products from different international brands.
Cultural exchange and the dynamics of global fashion trends
Fashion trends often spread quickly across the globe, thanks to social media and the internet. This cultural exchange drives consumer demand for global fashion products, fueling the growth of fashion ecommerce.
Lower barriers to entry
Ecommerce platforms allow smaller and emerging fashion brands to reach a global audience, making it easier for them to enter and compete in the market.
What are the potential benefits of expanding into new markets for fashion ecommerce brands
By expanding into new markets, these brands can reap several potential benefits, such as:
Tapping into new markets allows fashion ecommerce brands to access a larger customer base, leading to higher sales and increased revenue.
Brand recognition and awareness
Expanding globally helps fashion brands build a stronger presence and reputation internationally, ultimately enhancing brand recognition and awareness.
By entering multiple markets, brands can reduce dependence on any single market, mitigating risks associated with economic downturns, political instability, or other unforeseen events.
Larger operations can lead to production, procurement, and logistics cost efficiencies, as businesses can negotiate better deals with suppliers and streamline their supply chain management.
Innovation and learning
Exposure to diverse markets and cultures can inspire creativity and innovation, enabling brands to learn from consumer preferences, tastes, and trends to improve and expand their product offerings.
What are the potential challenges of going global?
Aside from all the benefits, entering new markets still poses a host of challenges and pitfalls for brands, which need to navigate the diverse complexities of entering new markets:
Understanding of the new market
Conducting thorough market research to identify suitable target markets, understanding local consumer preferences, and adapting product offerings can be challenging and time-consuming.
Adapting products, marketing strategies, and website content to suit each target market's language, culture, and preferences is essential for success but can be resource-intensive.
Brands must be prepared to face both established local competitors and other international brands in the new markets, which can be intense and challenging.
Legal and tax compliance
Non-compliance with trade laws and regulations impacts your business's bottom line and consumer experience. For example, product misclassification causes delays for 56% of cross-border shipments. In addition, navigating different countries' legal and regulatory landscape can be complex, with varying import/export regulations, taxes, and labeling requirements.
Logistics and distribution
Establishing efficient and reliable logistics and distribution channels in new markets can be challenging, particularly when dealing with cross-border shipping, customs, and inventory management.
Solving the regulatory and tax challenges of global ecommerce
To streamline legal and tax compliance, brands scaling internationally can use either:
1. Merchant of record services
Merchant of Record (MoR) service providers manage the intricacies of sales tax, VAT, and other relevant taxes across various jurisdictions. They are responsible for calculating, collecting, and submitting the necessary taxes on behalf of retailers, ensuring adherence to local tax laws and minimizing administrative tasks.
MoRs oversee the complexities of sales tax, VAT, and other pertinent taxes in multiple jurisdictions. They compute, collect, and submit the required taxes for retailers, guaranteeing compliance with local tax regulations and lessening administrative workloads.
Additionally, MoRs can enhance cash flow by consolidating transactions and guaranteeing prompt settlements. This allows retailers to manage their finances more efficiently and allocate resources more effectively.
Moreover, MoRs typically offer specialized customer support for payment-related concerns, saving retailers time and effort in addressing customer questions and resolving disputes.
A proficient merchant of record platform should offer a variety of features to streamline payment processing, tax management, and regulatory compliance for businesses. Key features to consider when evaluating an MoR platform include:
|Compatibility with a variety of payment methods (credit/debit cards, digital wallets, bank transfers) and multiple currencies to enable global transactions.
|Automated computation, collection, and submission of sales taxes, VAT, and other relevant taxes across diverse jurisdictions.
|Solid measures to guarantee adherence to local financial regulations, including anti-money laundering (AML) and know-your-customer (KYC) protocols.
|Fraud detection and prevention mechanisms to reduce chargebacks and safeguard against unauthorized transactions.
|Support in managing chargebacks, disputes, and associated customer inquiries to minimize revenue loss and maintain a stable merchant account.
|Reporting and analytics
|Comprehensive reporting and analytics tools for merchants to track transactions, revenue, taxes, and other essential metrics.
|Effortless integration with widely-used e-commerce platforms, content management systems, and other pertinent third-party tools to optimize operations.
|Global expansion support
|Features and resources to assist merchants in growing their businesses into new markets, including currency conversion, localization, and region-specific payment options.
|Responsive and well-informed customer support to help with issues and inquiries related to payment processing, tax management, or compliance.
|Scurity measures such as encryption and tokenization, to safeguard sensitive customer data and payment details.
There is a lot of interesting information to unpack here, so head over to a more detailed article on merchant of record services on our blog for more information.
2. Third-party payment service providers with automated tax compliance
Third-party integrations such as Stripe, Adyen, Qliro, or Klarna provide automated tax compliance solutions to assist you in navigating the intricate tax environment when growing your business internationally, ensuring compliance with local tax laws and regulations.
3. Ecommerce platforms that support cross-border sales
An increasing number of e-commerce platforms integrate various merchant-of-record features and processes. For example, Centra is an e-commerce platform that enables fashion brands to manage taxes natively and utilize transparent pricing to boost sales. This encompasses validation and calculation of EU VAT and US sales tax, including origin state, destination state, and hybrid state tax.
With Centra serving as the back end, each local ecommerce store can use a different checkout with local payment methods, delivery options, and price lists based on the customer's location. Centra also permits retailers to develop separate price lists per territory or currency and direct customers to the most suitable PSP based on their location to optimize conversions.
For instance, Centra allows brands operating on the platform to handle global taxes natively, including:
European VAT, comprising real-time validation of EU VAT numbers and utilizing the results to determine applicable taxes
US sales tax, including origin state, destination state, and hybrid state tax calculations, as well as support for sub-zip-code rooftop precision without plugins
Canadian sales tax, including presenting the necessary tax breakdowns on issued commercial documents
Many of the features that helpt to streamline cross-border ecommerce operation, like payment processing, tax management, and regulatory compliance for businesses, are covered by Centra natively of through third-party integrations from established vendors.
|Covered by Centra?
|Payment processing: MoRs support various payment methods such as credit and debit cards, digital wallets, and local payment options, enabling businesses to provide a seamless payment experience for customers worldwide.
|Yes, through a Stripe, Adyen, Qliro or Klarna integration
|Global coverage: MoRs facilitate transactions in multiple currencies and countries, making it easier for businesses to expand their ecommerce operations internationally.
|Yes, through a Stripe, Adyen, Qliro or Klarna integration
|Tax management: calculation, collection and remittance of sales taxes, VAT, and other applicable taxes on behalf of the merchant, ensuring compliance with tax regulations across different jurisdictions.
|Compliance with local financial regulations, including anti-money laundering (AML) and know your customer (KYC) requirements.
|Yes, through a Stripe, Adyen, Qliro or Klarna integration. Payment processing platforms and financial service providers integrated in Centra are required to comply with anti-money laundering (AML) and know your customer (KYC) regulations in the jurisdictions where they operate.
|Advanced fraud detection and prevention tools to help businesses minimize chargebacks and protect against unauthorized transactions.
|Yes, through a Stripe, Adyen, Qliro or Klarna integration
|Handling chargebacks, disputes, and related customer inquiries to minimize revenue loss and maintain a healthy merchant account.
|Yes, through a Stripe, Adyen, Qliro or Klarna integration
|Comprehensive reporting and analytics tools to help merchants monitor transactions, revenue, taxes, and other key metrics.
|Integration with popular ecommerce platforms, content management systems, and other relevant third-party tools to streamline operations.
|Customer support to assist with any issues or inquiries related to payment processing, tax management, or compliance.
|Payment providers integrated in Centra (e.g. Stripe, Adyen, Qliro, and Klarna) provide customer support to assist with issues or inquiries related to payment processing, tax management, and compliance. Their support services may vary in scope, responsiveness, and communication channels, but they generally offer help and guidance to their merchant clients.
|Security measures, such as encryption and tokenization, to protect sensitive customer data and payment information.
|Yes, through a Stripe, Adyen, Qliro or Klarna integration
Native features for cross-border commerce
Centra is not only purpose-built for fashion products – it also gives brands both modules for DTC and wholesale ecommerce with a range of native features facilitating international ecommerce across both channels.
|English US and English UK handled separately
|Default language based on country
|Customer can change language
|Currency independent of language
|Language independent of market
|"Ship to" destination can decide currency
|Automatic global tax calculations
|Validation of EU-VAT numbers as input to tax rules
|Tax rules on sub-zip code level (e.g., for US sales tax)
|Multiple specified taxes (e.g., for Canada sales tax)
|Local size units for each size chart, e.g., cm/inches
|Different VAT for different countries, independent of market
|User management for translators
|Segment your products by market
|Shipping cost specified per country or region
The going global blueprint
Going global is a critical and very nuanced step for ambitious fashion ecommerce brands, so it is important to pursue it carefully and iteratively, one step at a time. Brands need to figure out which features and solutions are most critical to their success and knock those out first. By overcoming the challenges of customer acquisition, customer service, pricing and currency, warehousing, shipping, duties, and payment methods, fashion ecommerce brands can scale globally and remain competitive in new markets.
Let's now look at a few key areas worth considering when entering new markets:
1. Market research and analysis
A robust market research and analysis process is the foundation of a successful international expansion strategy. By understanding your target markets, you can make informed decisions and tailor your approach to maximize your chances of success.
A thorough market research and analysis allows fashion ecommerce brands to identify the most promising target markets, understand their unique characteristics, and develop tailored strategies that resonate with local consumers, ultimately laying the groundwork for a successful global expansion.
Begin by analyzing the demographic makeup of potential target markets, including age, gender, income, and education levels. This will help you determine if there's a suitable customer base for your products and identify any adjustments needed to cater to their preferences.
Evaluating regional fashion preferences and trends
Research the fashion trends, styles, and preferences unique to each target market. This information will enable you to tailor your product offerings to resonate with local consumers and stay ahead of the competition.
Evaluating the target market's potential
Assess your target markets' size and growth potential by considering population, disposable income, and ecommerce penetration. This will give you a better understanding of the potential revenue opportunities and help you prioritize markets for expansion.
Investigate each target market's competitive landscape, identifying local and international competitors. Analyze their strengths and weaknesses, market share, and strategies to uncover potential gaps and opportunities for your brand to differentiate itself.
2. Customer acquisition and awareness
One of the biggest challenges of going global is acquiring customers across different countries and cultures. This is especially difficult for young start-ups with limited marketing budgets. To overcome this challenge, fashion ecommerce brands must adopt creative strategies focusing on low-hanging fruit.
3. Cultural considerations and localization
Cultural differences play a significant role in consumer behavior and preferences. Successfully navigating the expansion to a new market requires a proper understanding of local customs, traditions, and fashion sensibilities to ensure that your products and marketing strategies align with the local culture, demonstrating respect and knowledge about your audience.
Translate and localize all website content, product descriptions, and marketing materials to ensure effective communication with your target audience. Invest in professional translation services, as well as native speakers who can provide insights into local language nuances and colloquialisms, to maintain an authentic and engaging brand voice.
To offer a better shopping experience, many brands implement a form of geographic segmentation in their ecommerce stores. A good example of how geographic segmentation improves customer experience is Härkila, Europe's leading premium brand of clothing, footwear, and equipment for hunting. Härkila’s store displays a map of local dealers, physical stores, and pickup locations close to the shopper based on their IP. This is an excellent example of omnichannel integration, which caters to customers who prefer the old-school, brick-and-mortar shopping experience.
Geographic segmentation helps you understand where the user is located, what time zone they might be in, and the current season in their country. Knowing all this, you can then show them relevant information. Users shopping from Europe should see all of the prices in euros, while US shoppers see the prices in dollars – with all applicable state-specific taxes and shipping rates.
Geographic segmentation will also help you plan holiday promotions in the store. For example, a July 4th or Memorial Day weekend sale in the United States won’t apply to other countries. Mother's Day, strangely, falls on a different day ocross countries.
Geographical segmentation is not very specific, but it can still be useful to help you personalize your offer, determine the display language of the store, and localize things like:
For more about the localization of ecommerce websites, head over to another blog post on the Centra blog.
However, accessing the website from a certain country does not necessarily mean the user understands the language well – they may just be traveling. It's a good practice to allow users to freely change the online store's language and currency.
A product information management system that supports localization
On the back end of things, global expansion may be hindered by a cumbersome product information management (PIM) system, which is the central element of an ecommerce platform. A PIM is critical for online store localization as it allows you to save, enrich, and handle complex product information. That’s something particularly important for fashion and lifestyle brands that want to display precise descriptions of their intricate products in many variations.
Centra has a built-in lightweight PIM with specific handling of lifestyle products. Centra's Displays feature allows products to be shown in different ways in different channels or categories.
Localized customer service
Your chat, help sites, and FAQ pages will become more useful to international consumers if you localize them. Resolving consumers' problems improves trust in your brand and improves satisfaction rates. In addition, you can improve your customer support resources by analyzing help, FAQ pages, and search queries.
Parts of the store, such as legal and policy pages, should be written in the consumer’s native language. This way, consumers will feel safe and comfortable understanding how your business works and what they can expect from you. Plus, ambiguous policies and product details often cause you more returns or even fewer return consumers.
The help center of Nudie Jeans available in one of the localized versions
Going global requires a 24-hour customer service team in place that can communicate in the target audience's languages.
Language support is also crucial for customer service, as well as for the website itself. Fashion ecommerce brands should start small by offering the website in a few major languages and gradually adding more as the demand grows.
Localized payment methods (PSPs)
The online market gives multiple payment options such as credit cards, e-wallets, transfers, “buy now, pay later,” and gift cards. Depending on the country, payment methods and providers may differ. Most consumers want to buy in their own currency, with their favorite payment methods and payment service provider (PSP) they know. For ecommerce brands with cross-border ambitions to suit these preferences is no easy feat.
When going international, fashion ecommerce brands need to offer payment methods that local consumers are used to. Again, start small with only major credit cards, and gradually add additional payment methods to better serve your growing international customer base.
If your consumers cannot choose a payment gateway they trust, you cart abandonment rates will grow. Global brands look for an easy way to combine various payment methods such as Adyen, Klarna, PayPal, Qliro, or Stripe for the best local payment solutions in every market.
By using a headless ecommerce platform like Centra, you can simplify cross-border transactions, and improve conversion rates by routing payments according to customers’ location. You can use a local bank account with your PSP to lower your fees and get a better authorization rate – the percentage of your transactions that successfully pass through the authorization process with approval.
A variety of payment service providers can be integrated into a headless ecommerce platform. Centra offers integrations with Klarna, Stripe, Adyen, PauPal, QuickPay, and DIBS.
Banks charge hefty fees for currency conversions and international transactions, making global growth more difficult and leading to higher shopping cart abandonment levels. Using local currencies is a way to avoid these issues.
Centra empowers you to sell products in local currencies in every market. This makes transactions as fast and as frictionless as possible to avoid abandonment.
The phone accessories brand Ideal of Sweden applies localization based on visitor IP addresses to display local currencies.
Optimizing your site for local search engines is essential to drive organic traffic to your fashion ecommerce website and increase visibility in a market you’re entering. A localized SEO strategy will help your brand rank higher in search results, attract potential customers, and boost sales.
Conduct thorough keyword research to identify popular search terms and phrases relevant to your products and target audience in the local market. Incorporate these keywords into your website content, product descriptions, and meta tags to improve search engine rankings.
Local link building
Establish relationships with local fashion blogs, magazines, and websites to generate high-quality backlinks to your site. Guest posting, collaborations, and sponsorships can be effective ways to earn valuable backlinks and increase your website's authority in the local market.
Localized social media content
When posting on social media, use content tailored to the local market that addresses region-specific fashion trends, events, and cultural insights. This improves your site's relevance to local search queries and helps establish your brand as a valuable resource for local fashion enthusiasts.
Localized transactional emails and email campaigns
Ensure your email content is translated and adapted to each target market's language and cultural nuances. Personalize your messaging to address region-specific interests and preferences, making your communications more relevant and engaging to local consumers.
Optimizing your website for local search engines and implementing a segmented and localized email marketing strategy allows you to effectively reach and connect with consumers in new markets, ultimately increasing sales and brand awareness.
4. Marketing and promotion strategies
To successfully penetrate new markets and resonate with local consumers, fashion ecommerce brands must develop and implement localized marketing and promotion strategies. You can build strong connections with your target audience and drive brand awareness and sales by tailoring your approach to each market's unique preferences and trends.
Email marketing remains a powerful tool for fashion ecommerce brands to maintain customer engagement, build loyalty, and drive sales. To maximize the effectiveness of your email marketing campaigns in new markets, consider implementing customer segmentation based on factors such as location, preferences, and purchasing behavior.
Utilize marketing automation tools to send targeted and timely email campaigns based on customer behavior and preferences. Personalize your emails with the recipient's name, purchase history, and other relevant information to create a more engaging and memorable experience for your subscribers
Social media marketing
Social media platforms are powerful tools for reaching and engaging with your target audience. To create a localized social media marketing strategy, identify the most popular platforms in your target market and tailor your content to suit local preferences and trends. Consider collaborating with local content creators to develop region-specific content that resonates with your audience. Additionally, ensure that you engage with your followers by responding to comments and messages, and addressing any concerns or questions they may have.
Fashion and lifestyle brands are well suited to use social media when promoting products and strengthening connections with consumers. With a localized media presence, you will encourage consumers to share their reviews and recommendations.
Instagram and Pinterest are direct brands’ allies in publishing tailored content that engages consumers across countries. You can use different videos, images, and hashtags to address different markets. You can even create separate social media accounts to target audiences more precisely.
Local influencer partnerships
Partnering with influencers can significantly boost your brand's visibility and credibility in new markets. Identify local influencers who strongly connect with your target audience and collaborate with them to promote your products through sponsored posts, giveaways, and other promotional activities. Choose influencers whose values and aesthetics align with your brand to ensure a seamless and authentic partnership.
Local events and collaborations
Participating in local events, fashion shows, and pop-up stores can help raise your brand's profile and connect you with potential customers. Look for opportunities to collaborate with local designers, retailers, or other industry players to create limited-edition collections or co-branded products. Such collaborations can generate buzz around your brand and provide valuable insights into the local fashion scene.
By developing a well-rounded, localized marketing and promotion strategy, your fashion ecommerce brand can effectively establish a strong presence in new markets, creating lasting connections with local consumers and setting the stage for continued growth and success.
5. International warehousing, shipping, and duties
Shipping costs and inventory management can be significant pain points for fashion start-ups. As the company grows, it is essential to invest in logistics, and it's important to understand that if you don't get it right, you can hurt yourself by not being able to satisfy demand.
When consumers receive their orders on time, they will be more inclined to become loyal customers. But this is not easy to achieve. International shipping and delivery is challenging with all the logistics, customs, supply chains, compliance regulations, and product returns.
One of the big decisions fashion ecommerce brands need to make when selling merchandise internationally is where to store inventory. Selling products worldwide can be very expensive when you consider the costs of warehousing and shipping, as well as duties that are typically applied to commercial goods when they arrive in the country of destination.
The easiest way to ship to the world is from local warehouses. You can even group multiple warehouses to fulfill deliveries to the same market. Some ecommerce platforms offer integrations with third parties to fulfill orders according to configured allocation.
An inventory management system will help you manage multiple warehouses globally. Modern ecommerce platforms often possess integrated order management systems, so you can track orders, sales, fulfillment, and inventory for timely deliveries.
To reduce costs, fashion ecommerce brands should project where their core customer is located at launch and warehouse their product in that market. As they grow a customer base elsewhere, they can expand accordingly.
Fashion brands should also carefully calculate who will cover shipping costs, as these costs can add up, especially if they also offer a generous returns policy. To help international customers anticipate any duties they may be asked to pay on receipt of their order, brands should partner with an international shipping company to help calculate and communicate these costs prior to purchase.
Using stores as part of the supply chain
As demand increases, the supply chain must follow. Planning for the worst-case scenario and building redundancy across suppliers while ensuring regional diversity is essential. Some brands operate their own factories to reduce the chances of surpluses or shortages and ensure production matches their quality standards and ethics. Having control over your supply chain gives you extra flexibility.
Here are some ways incorporating stores as part of the supply and fulfillment process can impact the fashion ecommerce supply chain when scaling globally.
Faster deliveries. Connected stores can help retailers fulfill online orders faster by enabling ship-from-store capabilities. This means that products can be shipped directly from a nearby store to the customer, reducing shipping times and costs.
Improved inventory management. Connected stores provide real-time visibility into inventory levels across all channels, helping retailers optimize inventory levels and reduce waste.
Better demand forecasting. Connected stores support retailers in predicting future product demand, enabling them to adjust inventory levels and production schedules accordingly.
Improved product visibility. Connected stores can give customers real-time visibility into product availability and location, reducing frustration and improving the customer experience.
Increased transparency. Connected stores provide retailers with greater transparency into the supply chain, allowing them to identify and address bottlenecks and inefficiencies.
Improved sustainability. Connected stores let retailers reduce waste and optimize their supply chain, leading to more sustainable business practices.
How multi-storefront ecommerce paves the way for scaling your presence globally
Growing your brand internationally no longer requires launching a separate back end for each market. Building a presence in new regions or customer segments – or launching unique brands can be managed from a single back end, resulting in several benefits.
By creating individual online stores for each region or language, businesses can make it easier for customers in these markets to find their products using their language and purchase them using local payment and shipping options. This can help increase sales and revenue in each region or market and improve the customer experience.
With multi-storefront, you can show different versions of the store customers around the globe using different:
Pricing with localized price lists
Product filtering options and apply custom templates
We explore the benefits of multi-storefront ecommerce setup in more detail in another article on the blog.
As for the benefits, a multi-storefront strategy can help you unlock:
Reduced maintenance costs
By eliminating the need to admin each store and copy product information between stores manually, brands save maintenance costs. Running a multi-storefront ecommerce store, brands can vastly streamline their operations and shorten time to market when launching in new regions.
Embracing local marketplaces as additional storefronts for your brand can help you build reach by attracting many customers that are already using the marketplace in the market you’re launching. This can translate into greater visibility and the potential for more sales.
Improved flexibility and scalability
With a multi-storefront ecommerce setup, a business can easily add or remove sales channels as needed without rebuilding their entire ecommerce platform. This allows businesses to quickly adapt to market or customer demand changes. Additionally, a multi-storefront can also help businesses expand their reach by allowing them to sell their products or services in multiple places at once.
Multi-storefronts allow online stores to use multiple websites across several domains. Each storefront can use different catalogs, products, and brands – but it’s all managed from a single ecommerce back end.
Higher revenue and conversion rates
By expanding the reach and enhancing the customer experience, businesses can attract more customers and grow sales. Separate online stores for different product lines or brands allow businesses to target different customer segments more effectively without cheapening the brand – which can help drive revenue and conversion rates.
Scaling a fashion ecommerce brand globally requires a careful and thoughtful approach to overcome the common challenges, including building strong internal teams, investing in logistics, backing up the supply chain, and optimizing direct-to-consumer channels are all key in scaling a business responsibly and sustainably. Finally, it's essential to be open to learning from others who have already scaled a business.
1. What are the key challenges when entering new markets?
The challenges of entering new markets include supply chain growth, localization, merchandising, marketing, customer acquisition, customer service, pricing, currency, warehousing, shipping, duties, and payment methods.
2. Why should fashion ecommerce brands consider going global?
The global expansion helps brands remain competitive, reach a wider customer base, increase revenue, and leverage the highly globalized nature of the fashion industry.
3. How do successful brands scale globally responsibly and sustainably?
By carefully planning their expansion, focusing on key features and solutions, regularly assessing progress, and making necessary adjustments, brands can ensure responsible growth.
4. What are the potential benefits of expanding into new markets?
Benefits include access to new customers, increased brand awareness, diversification of revenue streams, and the ability to adapt to changing trends in the global market.
5. How can fashion ecommerce brands tackle customer acquisition and customer service challenges?
Brands can invest in targeted marketing, localize content, provide multilingual support, offer various payment options, and ensure responsive customer service.
6. How can fashion ecommerce brands manage warehousing and shipping in new markets?
Brands can partner with local or international third-party logistics providers (3PLs) or establish their own warehousing and distribution networks in target markets.