Market analysis provides the basis for everything, it is the building blocks of a successful ecommerce strategy. It is vitally important that you do not just skip market analysis. There is a tendency, or temptation, for companies to make statements like “I know my target market” or “my target market is the same abroad as it is in my home country”. Sadly, this is not the case. The chances of your international target market being the same as your current local market are very slim. You need to be aware of the differences between your existing market and your international target market, or you are setting yourself up for failure.
Even multinational companies, with vast marketing budgets and resources, get this wrong on occasion. An example of a company that thought that their existing market (and marketing) would translate into a new culture is the House of Barbie. Back in 2009 Mattel, the owners of the Barbie brand, opened what was referred to as the ultimate Barbie dream house in Shanghai. Although this idea may have worked in the US or even Europe, the Chinese market was not interested in Barbie to the same extent. Two years, and a lot of money later, the House of Barbie closed its doors. Although there were a number of reasons for its demise, the principle one was that Mattel did not understand their target market, and they assumed that it was the same market they were already engaging in the western world. Unfortunately for Mattel, this was not the case.
Market analysis is split into two sub sections: internal analysis and external analysis. Internal analysis is, as its name suggests, inward looking. Establish how you are currently competing, i.e. where you fit on the scale of cost to differentiated. You can get an idea of this by using our Strategy Calculator. You will then need to look at strategies that you could use to move from a cost centric business to a differentiated one. Followed by looking at international ecommerce strategies that are applicable to where you are and where you want to be. You can see more on this here
It is crucial to understand the ways in which it is possible to successfully compete online. The core of this is the idea that the only way to make substantial profit in international ecommerce, that is to provide something that is different. Many companies, especially those online, are too eager to compete on cost.
In fact, the single biggest pull factor for customers purchasing products from overseas online is: “I can’t get the product in my own country”. Proof that it not cost that motivates people to buy products online from other countries.
The second part, external analysis, is focused on the marketplace which you are planning to enter. Just as internal analysis has a question which we try and answer, namely: should you be cheap or should you be different, so does external analysis. External analysis ponders the question: should I be entering the market with an existing product or a new one? The answer to this is less concrete, but depends on a number of factors and how similar those factors between your current market and your proposed international one.
The factors that we will look at in the external analysis section are: culture, competition, openness too online, and logistics. You can find out more about each of these sections in our downloadable guide