If you’ve built a business selling on Amazon’s US Marketplace over the past 12-24 months you are likely reaching the point where you feel like you (and your business) can handle something new. One of the most interesting opportunities that being a small business owner using Amazon offers is the ability to expand to new countries with (comparatively) little work. Don’t get the wrong idea, there will still be plenty to do, but with a bit of research and some preparation on your part you could open up your business to a broader market and new revenue opportunities.
Why would you want to expand to new Amazon Marketplaces? The first and most obvious answer is that it expands the potential market for your existing business and products, which in turn means more sales and revenue for you. In addition it allows you to develop, market, and sell new products that otherwise may not have done well on your domestic marketplace. Finally, it's a unique way for you as a business owner and professional to learn more about new countries, cultures, laws, and business expectations. Experience like that can not only help your Amazon US Marketplace business grow, but prove invaluable for future endeavors as well.
Getting started can be a bit daunting, but if you do your research beforehand and consult with experts along the way you can put together a plan that gives you confidence as your business approaches a new region. Experts can be found in many different fields and places, and will be a key part of your success by not only supporting your business, but providing you with feedback that can help you grow. For example as you evaluate how your business will handle new currencies and foreign banking, a company like PingPong can remove the mystery and provide some much needed simplicity to the process. Here is a list of where to start:
1) You need a business plan. While it is absolutely possible to branch out into international Amazon Marketplaces, there are a lot of different variables, time sinks, and costs to consider. You need to understand and physically document these variables to ensure you don’t cut into your profits unnecessarily, or worse end up losing money due to unforeseen expenses.
a) Treat your international business almost as a new business. The good news is you’ve likely already created a successful business selling on Amazon’s US Marketplace (or your domestic marketplace if not the US). Take your business plan from that venture and adapt it to your international growth plans. Growing internationally is like starting a brand new business, but that new business is still something you have considerable experience in if you have already been selling.
b) Understand the time and expense required. As mentioned above, expanding your business to a new international Amazon Marketplace is going to be about as much work as starting over, at least for the first few months. In addition you are going to have some added, or at least different rates of, expenses to operate internationally including business licenses, insurance, taxes, payroll (if applicable), and foreign currency exchange rates and fees.
i) Before you actually begin operating in a foreign country be sure you understand (at a minimum):
(1) What can you likely sell your product for on a new market?
(2) What is the cost of licensing and insuring (if applicable) your business in the new country?
(3) How are sales taxed, at what rate, and when for the new country (or countries for some marketplaces).
(4) What conversion rate and fees do you expect for revenue in the new country? Don’t just let Amazon exchange your currency by default, instead look for an expert like PingPong who can offer more competitive rates with lower fees.
(5) What is the minimum amount of time you can invest in your domestic Amazon Marketplace business without losing >5% of revenue? Does that plus non-business obligations give you enough time to spend 20-40 hours per week on your global expansion for the next few months?
2) Research the culture, because it can have a big impact on what consumers in a new marketplaces buy, how they shop, and what information they look for before making a purchase.
a) Updating your product listing is going to be the key to success in any new marketplace. You’ve likely put a lot of time and effort into creating, re-writing, and improving your current product listing. You can’t assume that the same listing will work in a new region or country, however. The words, selling points, and overall tone may come across differently in a new language or region and it is important to understand that enough to write an appropriately targeted listing.
b) Translation and localization means more than just putting your English product listing into Google translate and posting the results on Amazon. If you’ve seen listings that have broken English, nonsensical descriptions, or generally unprofessional you know that it is a huge turnoff as a potential customer. Having your listing not only translated but localized professionally into a new language is a great investment to ensure your new listing looks professional and that the ton matches what you are looking to accomplish in your native language. A professional will be able to tell you where you should tweak your phrasing to better suit a new audience as well.
c) Marketing and social media channels can vary from country to country as well, especially across different regions (Americas vs Europe vs Asia). You can certainly try many of the marketing and branding tactics that you used to promote items on the Amazon US Marketplace, but just know that there may be other sites that are more popular in other countries that you need to adapt your marketing efforts (and budget) to accommodate. For example, Facebook remains the most popular social media site in Europe as of 2020, but in Asian countries Weibo is used much more often.
3) Utilize international experts to make handling the various tasks for international growth as easy as possible. This may be new information and challenges for you, but there are plenty of businesses and experts that have expanded their own business or helped other Amazon sellers expand many times before. There may be a small upfront cost, but the time saving and peace of mind that you will gain by having someone tell you exactly how to approach these complicated topics is well worth the cost. Many times these experts come paired with additional services, and there won’t necessarily be an added cost at all!
a) Business registration/incorporation might seem similar to that of the US, but laws and regulations are going to vary from country-to-country. Finding a firm or partner that is already familiar with the process is key to avoiding wasted time and (even worse) possible legal mistakes.
b) Taxes are also going to vary significantly from country-to-country. This can become even more confusing when you consider the fact that some revenue will be taxed in the country sold, and others might be paid to your home country. Anyone who has done it for personal finance knows that mistakes in taxes can be very costly, and can even cause you to lose money if you aren’t careful. Make sure you understand how much your product will be taxed, and when you need to pay those taxes, before you choose what to list your product at on the new Amazon marketplace.
c) Foreign currency exchange (FEX) is unavoidable and one of the most potentially costly variables that you will need to manage. Essentially, consumers in other countries are going to purchase your product in their own currency (such as the British pound (GBP) or the Euro across much of Europe) and you need to convert that revenue back to dollars (USD) before you can use it. There will be both a conversion rate (how much is 1 unit of currency worth in the USD) and a conversion fee (a business cost to helping convert currencies) to consider. However, you are still going to be responsible for taxes, fees, and other costs of business that may be best served in that foreign currency. Finding an expert that can not only manage conversions for you, but provide expertise on managing foreign finances is key to retaining as much revenue as possible. As mentioned above, some companies can offer both services at no additional cost. PingPong offers access to support experts alongside competitive rates and low fees, and there is no cost to sign up.
i) Understand how FEX will impact revenue and need to adjust prices. Don’t just charge the same as you do on Amazon’s US Marketplace, because there is a chance it won’t even be profitable after you convert the revenue back to USD.
ii) Avoid “Double FEX Fees” that come from converting currency too early. As an example, when you earn revenue in a European Union country you are going to need to pay taxes in that country in Euros. If you convert your revenue at the beginning of the year to USD as soon as you receive it there will be a conversion rate and fee associated. You will then have to pay that fee again to transfer the currency back to Euros when tax time comes around, meaning double conversion rate considerations and fees.
iii) NOTE: Converting currencies can be quite expensive for you. You can sign up with a professional cross-border payment company that will save you a ton in the long run!
PingPong is many Amazon sellers first stop when looking at a global expansion. With a free account that can be set up in as little as one day, you will have access to competitive foreign currency exchange, international banking options, and expert support to make your transition as easy as possible. Set up your account at PingPong today to get started on your #internationaljourney.
Summary: There is a lot to consider, and a lot of work that goes into expanding your Amazon small business to an international market. Laws, taxes, foreign currency, cultural norms, and marketing are all things that need to be figured out before you make your move, but with some research and prep work you are opening your business to a fantastic new revenue stream.