Is localisation a farce? For every example of a company that has successfully expanded overseas and localised their offering, there must be ten companies who have spent vast sums of money and failed to see returns. So how can companies establish whether they can benefit from localisation.
What is localisation?
Localisation is, in essence, changing your offering to fit in with a new market. This includes areas such as translation, but goes far beyond that encompassing other areas such as trust and preferred payments.
How to know when localisation is right for your business
What stage are you at?
Lessons can be taken from Ansoff’s Matrix when looking at the whether or not localisation can increase your ecommerce profit. Essentially, Ansoff provides a linear model for expanding internationally. This model has limitations; however, it provides a useful framework to think about the issue.
The two stages with most relevance here are Market Development and Diversification. Market Development is defined as taking an existing product into a new market, and Diversification refers to developing a product for the new market.
In the case of localisation, we should think of the website (or offering) as the product, rather than the individual items for sale. Ansoff suggest that companies should engage in Market Development before attempting the Diversification stage. With a website, there is a suggested added step: the use of a marketplace.
Selling on a marketplace is a simple and inexpensive way to test an international market. If it sells on Amazon in Germany, for example, it is sensible to assume that you can sell products on your website to Germany.
The next step is to make products available through the website. To do this, only basic logistics need be in place. If you can ship internationally, you will have access to approximately 40% of your potential market.
Finally, you can engage in properly localising your ecommerce site for international markets, making sure that you are selecting the methods that will provide the highest returns first. This will allow you to capture the remaining 60%. However, be aware of costs versus benefits. For example, translations may not provide the returns you are looking for if you are not already selling in volume.
Why do overseas customers buy your product?
Customers can’t get your products in their home market
The number one reason for international customers purchasing products online from the UK is that they cannot buy the product in their home market. If this is the reason that customers are purchasing from you, then localising your offering is not going to have such a large impact on ecommerce sales. Indeed, the sales may very well be eclipsed by the cost, because the consumers decision is to buy the product from overseas or not buy the product. However, this is not the only reason customers purchase from the UK.
Are you competing with local companies?
If you are, for example, a retailer selling a range of internationally available products, international expansion requires more input.
Assume you are able to provide products more cheaply that suppliers in their own country are able to, and this is why you are generating international sales online. Localisation may will have a far more profound effect. This is because customers have more choice, and buying overseas has barriers beyond simply price, for example trust. Here is some more information on how to build trust.
Localisation is not right for everyone, right now. Establishing what stage you are at, testing your market and then delving into why customers are buying your products online will give you a far clearer idea of whether or not you can generate more profits from your international ecommerce through localisation.