In an article that appears in our latest e-Info magazine for online sellers, Fraser Harper explains that while many online retailers think international growth is too expensive and complicated, it is simple to reverse-engineer a low risk international growth strategy in 2016.
Where to grow your business: 5 steps to help you decide
- VAT All sales outside the EU do not attract VAT from HM Revenue & Customs. So a £100 sale in the UK would net a business £83.33 after VAT, thus leaving an additional £16.67 for shipping, translation and duty costs if a UK business makes a sale outside the EU.
- Identify Duty Free Zones Hong Kong is duty free, Australia has a A$1,000 duty free threshold for consumer purchases, USA is $200 and South Korea is £7,000. These are all well developed e-commerce countries.
- Identify cheap shipping lanes Some countries are cheaper to ship to than the UK and others are much cheaper than retailers often think. See the graphic below to see how much it costs to ship from the UK to various countries around the world (sample prices from E-Gistics, part tracked pkts).
- Use Google Market Finder, Amazon and eBay analytic software… or the international daily deal sites to establish the demand and competition in each country and see if they are relevant to your product offering.
- Financial Appraisal Assuming that there is demand for your product in one of the countries which you have researched, then as long as the following formula is positive, it will make complete sense to launch a “low risk” sales strategy in that country. VAT BENEFIT (minus) TRANSLATION COSTS (minus) SHIPPING (minus) DUTY = POSITIVE.
These five simple steps can establish very quickly whether there is logic and demand to export to new countries.