Expert Advice: Pros and Cons of Going Global Online

American businesses are reluctant to expand beyond U.S. borders. But given that overseas companies don’t feel the same qualms about entering the U.S. market, not to mention that some foreign economies are growing at a much greater pace than ours, such xenophobia may be bad business.

“The Internet lowers barriers to entry, but it also lowers barriers to competition,” says Mark Begin, president of global e-commerce service provider Asknet. Prior to the acceptance of e-commerce, only deep-pocketed businesses could afford to invest in overseas expansion. Now, though, any mom-and-pop Website can reach a global audience, whether it wants to or not.

But there’s a difference between reaching a global audience, which just about any Website does passively, and effectively selling to that audience.

Begin recalls a client that expanded into several overseas markets and was seeing good results in all of them except Japan. One problem was that certain areas of the Website relating to product specs linked back to English-language pages, while other pages weren’t translated very well. A more significant issue, however, was that the client’s marketing strategy was tied to discounting, and in Japan discounts are often seen as indicators of shoddy merchandise.

It’s also important to bear in mind that what is considered best practice in one market may not be so in another. For instance, in the U.S., a streamlined checkout process involving as few steps as possible is the ideal. But in Japan and some European countries, Begin says, “the process is more important, so a multistep checkout is more attuned for them.”

Payment preferences vary hugely as well. Visa may boast that “it’s everywhere you want to be,” but German consumers don’t want it, or credit cards in general, to be weighing down their wallets. Roughly 85% of German consumers use bank transfers, aka giros, as their principal method of remote payments, says Begin, “which raises different fraud issues as well.”

Then there are differences in sales-tax collection and disclosure, privacy and security regulations (in the EU, Begin says, prechecking the “subscribe me” box in a sign-up form, which is commonplace in the U.S., is considered a violation of opt-in requirements), and address formats (because addresses in Ireland outside of Dublin do not have postal codes, many UK e-commerce sites lost out on sales to Irish shoppers because they required a postal code to complete an order).

Given all the variables and complexities, you might think that sticking to the U.S. market is the wiser option. But that’s not necessarily the case.

For one thing, more than 40% of the world’s population resides in four countries alone: Brazil, Russia, India, and China. These so-called BRIC nations have enjoyed significantly greater economic growth during the past decade than those of North America and Western Europe. Failing to enter these markets sooner could make it much more difficult to expand there later. This is especially true if you cater to a distinctive niche or offer an unusual product. “If you have something great,” Begin says, “someone else is going to copy it and go to their local market with it,” beating you to the punch.

Besides, the differences and difficulties mentioned earlier are not insurmountable. Service providers and consultants can help ensure that your offering doesn’t get lost in literal or figurative translation. And while the ideal is to have every element of the shopping experience localized, it’s not necessary, especially when you’re testing the international waters. After all, English is a lingua franca for the professional and affluent classes in much of the industrialized world.

“Some companies are just too slow,” says Begin, who admittedly has a vested interest in encouraging international expansion. “They don’t realize that they could have a global presence in a couple of weeks. Even if they’re not totally localized they can start in English. And it’s not necessary to have a physical presence in each country.”

Expanding the number of countries to which you ship orders, offering pricing for a few common alternative currencies, adding a few more payment options, and optimizing your site for the major search engines of a few other markets could help you determine if and when to offer additional localization. Just as you probably are wary of relying on just one supplier for your merchandise, now might be the time to get away from having all your customers in just one country.