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No fail-safe recipe for international e-commerce

Online sales have taken off during the COVID-19 pandemic, and for many small and medium enterprises in Sweden, the international market promises new and sorely needed customer groups. But there isn’t a fool-proof way for success on the international market, researchers at SSE’s Center for Retailing explain.

Between January 1 and June 14 of this year, international e-commerce grew by 21 percent, compared to the same period last year. For many SMEs, who have seen their income from physical stores dwindle since the start of the pandemic, the international market offers new opportunities, researchers Sara Melén Hånell and Daniel Tolstoy say.

“It’s a way of reaching a bigger market, which is important for Swedish companies who want to create volume. But it means extra work. You need to build your brand again, create trust in service and transaction, and overcome logistical challenges,” says Daniel Tolstoy.

Can be an economic necessity

For decades, the EU has worked to create a single European market. This has largely been a successful process when it comes to the physical market, but when it comes to the digital world, the EU is far from achieving the goal.

To some extent it is about resources and working with the capacity of the company, Sara Melén Hånell explains. And to some extent it depends on the type of product or service.

”For smaller companies, launching internationally can be an economic necessity, but they don’t have the resources to invest in researching local markets or understanding local culture. In those cases, an established retail platform can act as a middleman,” she says.

An established platform offers companies the possibility of reaching a large and established customer base from one day to the next. The downside is that the company gets cut off from customers and gets limited access to data about their interests and behaviors. For companies with very specific products or services, such as for instance auction firms, it is often necessary to instead create their own platforms.

“In these cases it doesn’t work to have a distributor. It has to be more personal. The experience component is so important at a physical auction and you need a niche platform to convert the personal trust a customer feels during an in-person auction to a digital setting,” says Daniel Tolstoy.

A learning curve

The same goes for products who are not clearly linked to a specific market, but rather to groups defined by special interests or tastes. When it comes to more emotionally charged products like baby products, many still prefer to buy them in physical stores. But in this case a web shop can work as a branding tool and increase visibility on the international market.

You can also have your own web shop at the same time as a distributer. The important thing is for companies not to get stuck in the idea that you need to find the correct strategy straight away, but rather that experimenting is part of the process, the researchers emphasize.

”You have to keep seeing it as a learning curve. What’s great about digital processes is that there is more flexibility and scalability in these companies. You can afford to try out different things. It might even be a necessary process to fail a little on the way,” Sara Melén Hånell concludes.

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