Going international one country at a time

Zia Daniell Wigder | March 28, 2008, 08:45 AM

Over the past couple of weeks, I’ve had a series of conversations with online retailers expanding outside of their home markets, as well as with vendors assisting with this international expansion. One issue we've discussed is how quickly online retailers are rolling out offerings in new markets, and whether these companies are expanding one country at a time or into several countries simultaneously (the latter being typified over the past year by UGC-oriented companies such as YouTube and MySpace that have launched new localized sites in tandem or in relatively short succession).

It's obvious that launching a retail site overseas entails far greater complexity (see previous blog post); it’s therefore not surprising that almost every company I’ve spoken with so far has elected the more guarded approach of single-country rollouts. Indeed, many of the retailers have chosen to focus on one market outside of North America - often the UK - for the first 1-2 years, then built on their experience to consider expansion into other markets.

This limited global expansion is not limited to the retail sector alone. In his book Redefining Global Strategy, Pankaj Ghemawat writes that,

“…managers seem surprised to learn that U.S. multinationals typically operate in just one or two foreign countries and that for those that operate in just one, there is a 60 percent chance that this country is Canada.”

Indeed, if US multinationals overall are slow to launch internationally, retailers are unlikely candidates to lead in rapid global expansion. Companies such as those in the media or travel sector that don’t face online retailers’ logistical issues are often better poised to engage in simultaneous, multi-country launches; those that simply translate frameworks for UGC creation are in an even more advantageous position.

Retailers will rightly take a measured approach and view each new market as providing unique opportunities, but also a complex set of hurdles to be understood prior to market entry.