Ansoff’s matrix suggests there is a set way in which growth is achieved. It starts with, what Ansoff calls, Market Penetration. Market penetration is whereby a company maximizes the opportunities available to them in existing markets. The grocery sector in the UK is a good example of this. Morrison’s only operates in the UK, and their strategic aim is to have as large a percentage of the UK grocery market as possible.
The next step is product development, to develop new products for the existing market. Continuing the example of the grocery sector, this is what Tesco has done. Think of the number of other Tesco products there are: Tesco Bank, Tesco Mobile, Tesco Hudl etc. They branched out into supplementary products and services beyond their core offering.
This is followed by exporting existing products, referred to as Market development. Tesco has tried this too, in some cases successfully (in Hungary they have over 80% of the grocery market), and in others unsuccessfully (making loses in both the US and China).
The final step is diversification, to develop products exclusively for the international market. McDonalds often follows this strategy in new markets. For example; chicken nuggets in China are made with dark meat, in the US and Europe they are made with chicken breast.
This is a very linear and simplistic approach, many companies are able to pursue several strategies at once, or even bypass steps all together. However, it does suggest two different strategies in new markets. Market Development or Diversification.
Amazon’s product is broadly similar in the UK to that in the US, and in France, and Italy, and Australia etc. Amazon have gone with a strategy of Market Development. Pushing an existing product in new markets. Although the products that they sell may be different, Amazon’s own service is almost identical.
An example of a similar company following a different strategy is Taobao and AliExpress. Most people in the UK would be unlikely to buy from Taobao, yet they might consider purchasing something from AliExpress. Despite both Taobao and AliExpress being owned by the world’s largest online retailer, Alibaba, both sites have been developed with very different target audiences in mind.
This approach depends on how similar the markets are. In the US and Europe (where Amazon is king) we have similar societies. We have similar cultural norms, religions, levels of literacy, wages, likes and dislikes. Amazon.com works across all of these, it doesn’t need to change its product too much from place to place.
Now consider AliExpress and TaoBao. The US (AliExpress) and China (TaoBao) have very different societies. To people in the US, Chinese websites look busy and badly designed. Someone in the US would not want to pay in RMB or have to read Chinese. Both countries are very different, Alibaba understands this, hence they have developed different offerings to diversify their product offering.
When looking at your own international e-commerce strategy, it is beneficial to analyse why purchasing decisions would be different in your different markets. For example, some people might claim that Taobao “looks dodgy”. They may be right, but what makes websites like Taobao acceptable to 1.6bn people and not to us?