The best part about owning an ecommerce business is that you can reach customers all over the world. Where there is demand, there is opportunity. And when direct-to-consumer (DTC) brands based in the United States start to consider new markets to launch into, Europe is usually at the top of the list.
There is a ton of opportunity to expand your ecommerce business to Europe, but it can be a challenging process. If launching into European markets is part of your overall ecommerce fulfillment strategy, much of the challenges will be based around navigating on cross-border shipping and logistics.
Rules, regulations, and laws for selling in different European countries continuously change, and there are a lot of unexpected costs that can occur if you’re not paying close attention.
Fortunately, in this article you’ll learn the ins and outs on how to successfully expand your ecommerce business to Europe and avoid unnecessary headaches along the way.
Why more and more ecommerce businesses are expanding to Europe
Selling in Europe provides an opportunity to launch into all the countries that are part of the European Union (EU). This allows you to significantly expand your customer reach and offer products in less saturated markets. Here are some of the most up-to-date facts about the European ecommerce market.
European ecommerce sales are projected to reach 717 billion euros in 2020.
The rise of ecommerce is a global phenomenon. What we’re seeing in the United States is also occurring across Europe. The COVID-19 pandemic impacted how consumers shop, pushing more people online than ever before. Although ecommerce has been growing for years, the pandemic sped up the growth at a rapid pace.
The United Kingdom continues to make up the vast majority of ecommerce sales in Europe, but there is also a lot of opportunity in other European countries including Germany (15.1%) and France (10%). Much of this is due to their larger populations as compared to other European countries.
Housewares and home furnishings online retailers grew 25.8% to $8.29 billion in 2019.
The fastest-growing vertical market in Europe is housewares and home furnishings, followed by food and beverage (22.9%), apparel (18.9%), consumer electronics (17.5%), and health and beauty (16.7%). These market trends differs by country, but if you’re selling a high-demand product in your home country, most likely there is demand for it in different countries and regions within Europe.
The 4 factors that influence success in Europe
To ensure a smooth expansion into Europe, there are several factors you’ll have to consider first, from identifying cultural differences in buying behavior and regulations, to understanding complex cross-border shipping rules that differ by country. Here are the top factors that influence ecommerce success in Europe.
1. Cultural understanding
Understanding cultural differences in buying habits, pain points, and personal needs can take some work. Do consumers in a particular country have a need for your product? You will need to do research and develop a marketing plan that will resonate with international customers. Additionally, not all products are considered acceptable in certain cultures or legal in certain countries.
Taking the time to research similar products sold internationally and other market trends will help you make better decisions on which products you should offer to European customers.
2. Marketing consistency
When researching how different countries market and advertise, spend some time learning about how other ecommerce businesses in the country market and what channels have the most opportunity. You’ll also want to keep an eye on your competitors — are any of them selling internationally?
Since your store’s website is the buying hub, you might need to make some content changes or tailor your messaging based on different markets. Depending on the size of your business, you could open unique online stores tailored for each country or region. Another option is to optimize your current website for European buyers with a multi-language translator tool or create optimized landing page that are tailored to buyers in different countries or regions.
Effective marketing in different countries can happen through channels you’re not used to working with. For instance, paid social media might not be as effective in other countries where, for example, traditional TV advertising might work better.
“Our marketing is visual-based involving very little text, so nothing gets lost in translation. We rely heavily on imagery, feel, and energy to carry our message across, making marketing internationally easier.”
Nikolai Paloni, Co-founder of Ombraz Sunglasses
3. General demographics
Understanding demographics in different European countries and regions will help you navigate which European markets make the most sense to launch into. There are several tools and resources you can use to help get more insight into demographics in certain areas and regions, such as worldometers.info, which includes a thorough breakdown of European demographics.
4. Legal understanding
Many countries restrict the types of products that can be imported from other countries. It can even come down to a single ingredient found in your product. On the other hand, even if your product can legally ship to a country, it doesn’t mean it will be cheap.
When expanding internationally, make sure you do thorough research on import laws, taxes, and import duties (which vary by country) to determine where you can legally sell your products and how much it will cost you to do so.
Because of the costs associated with international shipping and trade agreements between countries, tariffs for shipments from the US to the UK can get expensive. The value added tax (VAT) for these products can be as high as 20%.
Note: When Britain exits the European Union (EU) on January 1, 2021 (known as Brexit), consumers outside of the UK will soon be faced with VAT and customs duties when buying products from the UK. These changes can highly impact international buying behavior since consumers will be more reluctant to purchase items that ship from the UK. You can learn more about these changes here.
Here is more information on tariffs, duties, and customs:
A tariff is a tax on imported or exported goods, which raises the price of an imported good. Different countries have various tariffs for incoming shipments, and tariffs are constantly changing and being updated. You can prepay international tariffs or pass the costs onto to your customers.
A duty is a payment or tax that must be paid before a shipment can be delivered. Import duties vary in each country and have their own set of requirements. It’s important to note that customers may be asked to pay additional duties before a cross-border shipment can be delivered. These costs can be unexpected and can steer customers away from paying more money to receive their package. If a customer doesn’t claim their package, you are still liable for packages that get held up at customs.
Customs refer to a country’s import and export laws and regulations. The customs department administers and collects the duties imposed by a government on imported goods. When a shipment arrives in the destination country, customs will inspect the shipment and review the commercial invoice.
This process involves a substantial amount of paperwork, and you must include the right details (e.g., tariff codes, dollar value, and product descriptions). Once customs approves it and the duties are paid, the package can be delivered to its shipping destination.
The #1 reason business expansions fail in Europe? Bad logistics
Shipping outside your home country comes with a long list of challenges, especially if you’re looking to expand to Europe. Though shipping to Europe opens doors to other countries to launch into, every country still has their own set of rules and regulations, which can make international shipping (even within and throughout Europe) hard to navigate.
Without a proper logistics strategy in place, you can be hit with major shipping delays, higher costs, higher cart abandonment rates, and unhappy customers.
If you’re looking to expand to Europe, a tech-enabled fulfillment partner like ShipBob can help you prepare for a successful expansion. ShipBob offers the fulfillment infrastructure, technology, support, and expertise to help you navigate the complexities of global shipping and fulfillment.
By partnering with ShipBob, DTC brands of all sizes have successfully been able to expand their customer reach and offer affordable international shipping. Once ShipBob merchants are ready to fully expand into Europe, they have the option to store inventory in our European fulfillment center located in Ireland. This allows merchants the ability to simplify cross-border shipping and worry less about the high costs of duties and customs for every EU-based order.
3 ShipBob customers who succeeded after their European expansions
We have helped our customers expand globally by supporting them throughout the process. ShipBob offers best-in-class international fulfillment and logistics services, so you can worry less about logistics operations and focus on continuing to provide an exceptional customer experience.
Many of our merchants start out shipping international orders from the United States. Once they see high demand in a European market, they can decide to expand their fulfillment footprint by storing inventory in ShipBob’s European warehouse to cut down shipping costs and speed up last-mile delivery times.
BAKBlade: A men’s personal care brand
BAKBlade started with ShipBob by fulfilling and shipping orders domestically in the US. Once they saw a high demand for their products internationally, they moved some of their inventory into two international ShipBob fulfillment center locations outside of the US.
Having a physical presence in other countries has helped them sell more, as their customers order more when they know the order ships from within the same country they’re in so they do not need to worry about additional taxes if the order comes from the US for example.
“As we’ve grown internationally and in our general order volume, we’ve seen satisfaction go up. ShipBob was a key player and significant partner in helping manage what became unmanageable when we were shipping orders out ourselves.”
Matt Dryfhout, Founder & CEO of BAKblade
Ombraz: A sunglasses brand
Ombraz has an international ecommerce presence and ships to 55 countries. With ShipBob, Ombraz is able to efficiently ship international orders, while simultaneously expanding into ShipBob’s international locations to dramatically reduce transit times and costs.
“International shipping is very important to us — not only in terms of costs but also the customer experience. When I found out ShipBob was expanding into both Canada and Europe, I knew we wanted to expand our physical footprint with them.
This offers us the ability to reduce taxes and tariffs that come with international shipping. Now, these orders see a large reduction in shipping costs.”
Nikolai Paloni, Co-founder of Ombraz Sunglasses
Kula Cloth: The original pee cloth
Kula Cloth is a US-based brand with customers around the world. Since partnering with ShipBob, the process of shipping internationally has become much easier, as well as more cost-effective than it would be to self-ship international orders.
“I’m fortunate to ship orders to customers around the world. The process of shipping internationally to optimize costs has been easy. There’s no difference on my website for international shipping except adding tariff codes on products. Otherwise ShipBob handles everything for me.
Best of all, the price that ShipBob charges to ship internationally is less than it costs for me to print a USPS label myself.”
Anastasia Allison, Founder of Kula Cloth
How ShipBob makes European expansion easier
ShipBob has a growing global fulfillment network, including a presence in Europe. Our fulfillment network is powered by proprietary technology that allows our merchants to manage inventory and orders all from a single fulfillment platform.
ShipBob can help you navigate the complexities of expanding to Europe every step of the way by helping you understand VAT, customs, duties, and transportation options for your business. You also get access to negotiated domestic and international shipping rates from major carriers to help keep shipping costs down.
Best of all? You have one central 3PL and login to manage all fulfillment locations.
Here is a closer look at how we help our merchants expand internationally:
Reduce shipping costs and transit times
ShipBob customers have the ability to ship orders to customers all over the world. We also provide international fulfillment services with a European fulfillment center. This helps to reduce shipping costs and transit times for European-based customers, rather than dealing with expensive and complicated cross-border shipping processes.
Manage inventory and orders from one dashboard
When you’re shipping from multiple fulfillment centers, you have visibility into inventory tracking to view your stock levels and ensure you have enough product in each location for accurate inventory accounting. ShipBob’s fulfillment technology includes built-in inventory management tools to help you keep track of stock levels, set automatic reorder notifications points, and access advanced data and analytics.
Take advantage of international shipping discounts
The costs to ship internationally will depend on the destination country, among other factors. You’ll have to consider additional shipping costs, such as getting your inventory from the manufacturer to the fulfillment center location by air or freight. No matter where you’re shipping to, ShipBob partners with major global carriers to offer shipping rates for standard and expedited shipping options for both international and domestic deliveries.
“As our customer base grows, so does our global reach. Having orders shipping internationally, ShipBob’s affordable rates solved our need for international fulfillment capabilities.”
Carl Protsch, Co-Founder of FLEO
Get access to a best-in-class logistics support team
Expanding your brand globally is no easy task. ShipBob offers logistics expertise and a support team that can help you navigate the unexpected when it comes to international shipping and fulfillment, as well as provide you with fast assistance if any issues arise. If it’s your first time expanding outside of your home country, our fulfillment experts will partner with you to help make the process as simple as possible. This way, you can expand into new markets with ease.
Partner with ShipBob
ShipBob is a tech-enabled 3PL with an international distribution network powered by proprietary technology. You can learn more about our international fulfillment services in Canada and Europe here. With ShipBob, you can worry less about logistics and focus your time and energy on growing your business — and reaching more customers around the world.
To learn more about how ShipBob works, click below to talk to a fulfillment expert and get custom pricing.