Export Vision 2010

How to dip your toes into international sales …

and not get them bitten off

Global Expansion is Within Reach
•  Why all the fuss about Exports?
•  What are the big markets?
•  Are my products a good fit?
•  3 Options to “deliver the goods” to international buyers
•  Key markets to look at are Canada and Europe/UK
–  Large markets and established marketplaces
–  Good transportation modalities
–  Growing online and e-commerce penetration
•  Key questions
–  How to sell internationally?
–  Risks and rewards of entering these markets
–  What to sell in these markets?
–  How to build a “business engine” in these markets?

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A Presidential Call to Action
•  Obama, 2010 State of the Union:
–  “We will double our exports over the next five years.”
–  “…an increase that will support 2 million jobs in America.”
–  A ground-swelling of small business growth

•  Similar calls to action in the UK, Canada and China…expect

growing competition in the U.S.

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What Markets should be on your radar?
•  USA
–  Largest B2C e-commerce market
–  Projections of $223-250B by 2014
•  UK (Gateway to Western Europe)
–  Internet Retailer (June 2009) “Online retail sales will grow at a compound
annual rate of 10.5% through 2013, when they will total £31.2 billion (US
$51.3 billion) and account for 10% of total retail sales in the U.K.” (Excludes
Travel)
•  Canada
–  Most web enabled country as a percentage of total population. E-com still
slow at 3% y/y (Comscore, 2/09)
•  Others: Australia (big market, long distance); Germany (central with
good shipping); Spain is growing, but economy is hurting; China has a
growing B2C
•  Maybe give them a few years: China, Eastern Europe, Brazil

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UK Market Info
Overview
•  Estimated 2009 GDP of $2.2 trillion.
•  Sixth-largest economy in the world, the third-largest economy in the European Union
•  The UK market is the largest in Europe and the fifth largest in the world for U.S. goods
exports.
•  With few barriers, the UK is the entry market into the EU for more than 40,000 U.S.
exporters. (Largest for services exports)
•  Annual U.S. exports of both goods and services are valued over $100 billion
•  Positives: Language, known Customs/Duties/Tax, easy access to Europe)

Challenges
•  4.8% contraction of the UK economy in 2009. (Banking and Financial services impacts)
•  U.S. exports in goods decreased by 15% in 2009. Recovery will grow exports.
•  The relatively weak British Pound affects the price competitiveness of U.S. goods/services.
London is expensive.
•  Not a fit for all products. There is strong competition. Regulatory requirements differ

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Canada Market Info
Overview and opportunities
•  Great place to start exporting to: proximity, transparent and open market, common
language and culture
•  Biggest border with the U.S. ninety percent of Canada's 33.5 million people live within 100
miles of the border.
•  Represents the number one export market for 35 of our 50 states and is among the top
five export markets for another 12 states.
•  Weather the downturn well. In 2009 Canada's GDP growth rate was 2.4 percent and is
predicted to grow 2.5 percent and 3.2 percent in 2010 and 2011, respectively.
•  Due to NAFTA, American products, with the exception of a few agricultural products enter
Canada duty free. Still Check!

Challenges
•  Mistake to assume that doing business in Canada is identical to doing business in the
United States
•  Export.gov “An important key to achieving market penetration and expanding export sales
to Canada is to minimize the Canadian customer's work by making the transaction
resemble a Canadian domestic transaction as much as possible”

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Australia Market Info
Overview and opportunities
•  Total merchandise trade in 2008 (Jan-Sept) USD 1.2B (13% increase over 2007).
•  U.S. Exports to Australia in 2008 – USD 21 B (9% increase over 2007).
•  Australia’s rank as a U.S. export market in 2008 – 14th largest.
•  Australia-U.S. Free Trade Agreement (AUSFTA) elimination of tariffs provided new market
opportunities for U.S. companies. Australia enjoyed annual economic growth without
interruption for nearly two decades. Growth of about 3.2%percent continued in 2008
(down from 4.3% in 2007), however, most economic forecasts expect growth to be
negative in 2009.
Challenges
•  Many larger firm dominate certain economic sectors.
•  American companies will find that Australian and third-country competitors in Australia
have some long-established brands with strong reputations and existing supplier
relationships.
•  Export.gov “Australia has ready access to Asian and other, low-cost producers. American
firms must therefore demonstrate sufficient added value to overcome the costs of getting
the product to market, and to compete against lower-cost producers in the region.”

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Expand Overseas
•  Shipping Models for expansion
–  Direct international shipment
–  Move products in bulk to local market and “sell locally”
–  Consolidated Shipping
–  Find a distributor, wholesale freight.
•  Set goals and roadmap your expansion
•  Product selection
•  Prepare In advance
•  “Sell Internationally – Deliver Locally”
•  Testing the market

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Market Entry
Generally
•  Demonstrate a clear competitive advantage (i.e., price, quality, branding).
•  Pay close attention to both the obvious and subtle cultural differences between the U.S.
and the Country and adjust marketing strategies accordingly.
•  Evaluate prospective partners carefully and choose an experienced, well-established local
distributor or your own local warehouse
•  Have some flexibility working with distributors as they recover from the economy. Credit
check before you ship.
•  Express commitment to the market with a long-term perspective.

Product/Business checklist
•  Is there a market for your product?
•  Will your margins hold overseas?
•  Check for import restrictions
•  Local packaging/language restrictions
•  Language support
•  Shopping Cart support and payments (PayPal for low volume)
•  More on Customs/Duties/Tax and Business ID’s in a minute

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Direct Shipping from U.S. is Complex

  Good for merchants with DEEP catalogs that can’t focus

on best sellers
  Expensive shipping & returns nightmares
  Long time delays for buyers and CDT issues on buyer
  You will not “look local” to the buyer
  Save with: Consolidators, zone skipping

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International Shipping Challenges
PayPal and comScore Survey “43 percent of shoppers said they abandon their shopping
carts because of unexpectedly high shipping charges.”

International is bad for conversion:

1.  International shipping is too slow for today’s e-commerce sales. Even express
international shipping must go through customs, and most shipments must pass through
two to three carriers’ networks before reaching the buyer.
2.  International shipping is too expensive. Express international is even more expensive.
3.  International shipping is too risky. Each shipment must go through customs, where even
the best shipper has a loss rate.
4.  International shipping is too confusing for everybody. Duties, tariffs, customs, carrier
brokerage charges and various local and national taxes must be navigated, adding to
increased time, cost and risk.
5.  International shipping is not a good customer experience. International shipping does
not allow for a simple returns process, resulting in a major headache if the customer no
longer wants the product.

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Fortune 500 model
•  Goods stored locally
•  Save cost and time on import
•  Competitive local shipping options
•  Fast delivery times
•  Less customs, duties and tax implications on buyer
•  Local returns handling

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Set Goals
•  Past sales review
–  What have you sold internationally?
–  What buyers did you turn away?
–  Focus your international product catalog
•  Pick one market and focus
•  Focus & local research
–  What marketplaces will drive buyers to your website or listings?
–  Any local keywords or “phrases” that describe your products?
–  Pay-Per-Click prices for regional keywords
–  Directories and marketplaces to seed your keywords
–  Local comparison shopping sites

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Focus on Select Products

•  Questions to ask yourself

–  How complex is your product catalog?
–  What are your top sellers?
–  Will your top sellers do well overseas?

•  Start small and focused

–  Identify the top 5-10 products in your catalog
–  Reduce your inventory requirement
–  Higher value products that are hard to get

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Get Products Into Market
•  Move a small amount of product into the local market
•  Move products in bulk through customs
–  Trusted “National” customer broker
–  Customs, duties and tax
–  Know your “fully landed” product cost
•  Send to your outsourced order fulfillment provider in the
local market
•  Preparation
–  Customers, duties and tax
–  Business registration (aka “Tax ID”)
–  Tax advisor if necessary

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Power of Local Fulfillment
•  Focus on growth
•  Happy customers
–  Known shipping rates
–  No surprise Duties
–  Faster delivery
–  Local Returns
•  Scale without hassles
•  No infrastructure investment
–  Pay for what you use
–  Keep cash in your pocket
–  Scale or retreat sales as needed
•  Build a machine and repeat in new marketplaces

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Small Business Retail Revolution

•  1996 Home business re-invented

•  2000 Instant online store introduced

•  2002 Online payments start getting easier

•  2003 Finding new customers made easy

•  2005 China trade barriers reduced

–  Imports by SMBs surge:
5000 containers/day into LA port
–  Storage & shipping is still do-it-yourself!

•  2008 Storage and shipping solved

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Elegant Process
Simplifies the Complex

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 Resources
Shipwire Global Growth Micro Website
•  http://www.shipwire.com/globalgrowth
•  Case studies and a step-by-step guide to International export expansion for small
businesses.

Shipwire Blog
•  http://www.shipwire.com/blog
•  We provide ongoing advice to SMB online merchants regarding ways in which to sell to a
global marketplace of buyers.

Shipwire Guide to Outsourcing Order Fulfillment

•  http://www.shipwire.com/fulfillmentguide

Shipwire - would like to advise your expansion

–  http://www.shipwire.com
–  info@shipwire.com
–  888-SHIPWIRE

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