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How to enter new markets successfully

Tapping new sales markets is a challenge for business development and marketing.
By Tobias Weidemann March 15, 2019
How to enter new markets successfully

Are your product and business idea already working successfully in German-speaking countries and in some neighboring European countries? Great – then you can think about entering new markets. Even if certain European market segments have already reached a high degree of saturation, this does not have to apply to other countries.

Eastern Europe, the emerging markets in South America and Asia and, above all, China currently offer good opportunities for scaling your own business. Conversely, there are still a large number of business models that are already operating successfully on the US market, but are at best in their initial stages in Germany and Europe.

The Samwer brothers are masters at adapting ideas for new sales markets. Together with their associated company Rocket Internet, they have now conquered a large number of markets around the world – with a wide variety of business ideas. And by the way, these are often not even their own ideas, but a clever combination of working business models and markets still to be conquered. This earned them a reputation worldwide as copycats and imitators, but also economic success in business.

The success strategy, Marc Samwer explained to company founders in Munich last year, is often similar in principle: after extensive market studies, a product or service is tested in a new market – a mash-up, as it were, of the business idea and a promising sales market for the product or service. As much as possible is organized centrally and implemented according to tried and tested strategies. Only details concerning the respective mentality of the new market are adapted to the local conditions. But success often depends on another factor: “It takes a top manager on the ground who understands the local culture, has the right contacts to graduates at the relevant universities and can thus attract the right employees for the project.” According to Samwer, you can see quite quickly whether a start-up will be a success in a new market with the help of common KPIs.

 

Question of dimensions: Market entry via e-commerce platform

In this way, entrepreneurs can indeed open up new markets, even if they do not immediately think in the dimensions of Rocket Internet. There is no getting around market research and an observation of the most important KPIs. Those who already have experience in tapping other, comparable markets will certainly have reference values here.

However, the question arises as to whether a company needs to have its own local subsidiary and personnel, or whether a market entry via a central and suitable country in the respective region is more sensible. E-commerce platforms such as Amazon Marketplace also enable international sales and local storage of goods without legal obstacles. A list of 58 platforms that can make a launch in new markets easier is provided by Practical E-Commerce.

This may seem more expensive at first, but it is usually the more efficient method for tapping a new market directly, because it is easier to scale. Depending on the product, however, it may also make sense to look for a local distributor that does not offer any direct competitor products, but instead has complementary products in line with your own. Here, synergies can be quickly found from which an unknown company can profit in the target market, especially in the B2B environment.

 

Every target market has its own peculiarities

But even European markets often operate differently than you might expect. Just as German customers are more willing to buy when they can pay by invoice, customers in Scandinavia are used to paying even the smallest amounts easily by card. Italian and French customers, on the other hand, react sensitively to a website that is not consistently in the national language and does not provide detailed product information.

Conversely, there is a comparatively low rate of returns in Italy. Evidently, there are fewer and more targeted orders for clothing here than in Germany, where the rate of returns is more than half, depending on the retailer. And while in Germany marketing is only gradually becoming personalized and targeted, in Italy or France, for example, it is more common to address customers directly, even with more unusual campaigns. In France, for example, newsletter marketing by e-mail plays an even greater role than in Germany.

By contrast, market entry in Eastern Europe and South America is often marked by challenges in transport and logistics. Delivery times for the end customer cannot be predicted as reliably as in Western Europe. Conversely, very few customers react so sensitively to a delayed shipment as in Germany.

 

There is no sure formula

The examples show that each market entry must be considered on an individual basis, since the respective markets are not always the same and the products have to be evaluated differently. But the basic questions are always the same – no matter what product or service you want to sell and no matter whether your business focuses more on B2B or end customers.

 

You can download a checklist with fifteen important recommendations for tapping new markets free of charge.

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