Checklist for bringing a product to the European market
By 2020, e-commerce accounted for 15% of the global retail trade and the market will almost double (to 22%) in 2023. This forces businesses to rapidly move online and expand their sales area, which forms a major global trend. If everything is going according to plan in the domestic market, how to enter the European market and overcome all the barriers? PANGEYA, specialists in the company for managing sales on the world's marketplaces, tell us.
1. Research the market
One of the difficulties of domestic business entry is the lack of knowledge of the foreign market and customer preferences. For example, size range, colors, models, etc. You need to analyze the niche and target audience to understand how much consumers need your product. From this analysis, you will also understand the countries where it might be in demand. If you skip this step, you will not see the effectiveness and sales that you wanted later on.
After this, you need to study whether there is a product similar to yours in this market and who are the direct competitors for you. If you are a perfume manufacturer, your direct competitor will be a perfume manufacturer and not a perfume store.
2. Research sales channels
At this stage, you need to understand how you can distribute your product. The surest option is definitely marketplaces. 58% of e-commerce sales are made on marketplaces, and by 2023 the growth will reach 75%, which will amount to $4.9 trillion. Working with e-marketplaces shortens the time to market for a brand because of ready infrastructure, traffic, in-house fullfillers and delivery to the customer within 24 hours. In addition, the era of the coronavirus has set a new trend in user behavior, 60% of the time users are looking for goods on marketplaces, and entering the European market through them is the surest way.
3. Consider the legal features of
You have chosen a market, a country and analyzed your competitors. Now you have to deal with legal issues, because working in the European market, you cannot conclude contracts with a Russian legal entity and make payments in roubles from a Russian account. Such problems are exactly what representatives of domestic business face. So, using the example of entering the European market, first you need to register your company and open an account in a European bank. As a rule, due to the language barrier, problems begin at this stage. Many companies turn to partners to conduct everything through their legal entity.
Next, you need to obtain an F22 certificate for electronic sales in the EU and a VAT number - (Value Added Tax) - is a value added tax, analogous to the Russian VAT. VAT must be paid when selling goods/services in the EU. It is mandatory for all marketplaces.
And also you will need EAN code - this is a unique number of goods, which serves to identify the product unit in the base of the production company or store. Simply generating barcodes is not enough. In order to sell goods in large stores and supermarkets, you need to officially register serial numbers. Your European partner can help with this too. In some cases, trademark registration will be necessary.
4. Register on marketplaces
Marketplaces are of two types: open and closed. If with open ones there is the usual registration procedure, with closed ones it is much more complicated. For example, such as Zalando will review your application to understand how much your product is needed on this marketplace. Therefore, it is very important to promote all marketplaces of the selected countries, categories and representation of similar products. After that you can proceed to the formation of documents and registration.
Then prepare data and fill out product cards in accordance with the requirements of marketplaces. It is very important not only to fill the card with information, but also to write a sales text and add high-quality photos of the product from the winning side.
5. Choose contractors, measure sales
If you are already selling on the domestic market, you know very well that to enter the European market you need a logistics operator (calculating the cost of last-mile delivery to different marketplaces), a full-field center (calculating the cost of storage, sorting, labeling, packaging, handling returns), a technical integrator, and a PIM system.
Sales measurements are needed to understand the market capacity of a particular segment and how competitive you will be in a given price category. How it is formed: the base price of the product + output cost + trademark registration + logistics + storage cost + marketing costs, etc. Considering all the costs, you can determine the sales plan. With the help of this information, you will realize that you need to change, for example, the packaging of perfume to be cheaper, or improve the recipe of production and quality of the product to move into the premium segment.
6. Monitor test orders and perform bugfixing via SaaS integrator on marketplaces
Logistics and fullfillment are important points, so you should pay special attention to them. If you have a warehouse in Russia, you should plan a delivery to a partner who has a relationship with marketplaces, and then calculate what is cheaper: to leave the products at the full-field office or to unload them directly onto the marketplaces. Test each point in the process to optimize and validate the entire supply chain.
"If you choose several marketplaces to work with, it will be very difficult to manage sales, to optimize them, as the process will not be automated. We use ChannelEngine integrator, with their help we can manage several accounts in several countries, logistics, prices, acts, returns in one window, which is very convenient. The service also offers the possibility to translate source information with the help of external automatic translation services," -
says Vladimir Yelkin, executive director of PANGEYA.
Only after all these processes have been launched and implemented can sales on marketplaces be launched. It should not be forgotten that the foreign market is very different from the Russian market, so it is necessary to study it well in order to avoid mistakes. It is important to constantly support the business, to study the marketing opportunities of European marketplaces, to promote your goods already inside the sites, as well as not to forget about customer service and promptly respond to users. This is very much appreciated in all foreign markets.
The original PANGEYA article is available here.