An internationalisation strategy pursues the systematic tapping of foreign markets through individual, country-specific concepts. As a rule, internationalisation takes place in connection with a growth strategy in which additional dimensions – products & services and distribution channels – are incorporated into the strategic considerations.
Against the wider backdrop of a focus on e-commerce, the specific strategic focus here lies on a combination of the growth dimensions of “internationalisation” and “distribution channels”. This results in a simplified 3×3 matrix as shown in Figure 1:
Figure 1: Growth options within the scope of internationalisation & distribution channel expansion
As illustrated by the dark-blue arrow, in the context of internationalisation from an e-commerce perspective, obvious growth options result from the tapping of adjacent and new markets via online distribution channels.
- Expansion of the offline channels in the direction of online channels (vertical arrow, Figure 1): In view of the existing growth dynamics of the online channel at the expense of existing offline channels, corresponding channel expansion in the direction of the online channel (vertical arrow movement in Fig. 1) makes complete sense. Depending on the industry, online retail already accounts for a substantial proportion of sales – and this trend is only on the rise! Accordingly, it is recommended that companies develop a holistic e-commerce distribution strategy taking account of all online channels. Essentially, e-commerce can be divided into three pillars: online marketplaces, third party e-retailers and direct sales + affiliates. As Figure 2 shows, each of these pillars has different characteristics. Depending on a range of factors (e.g. product, target group, implementation expertise, etc.), they also have different degrees of strategic relevance for manufacturers or suppliers.
Figure 2: Classification of existing e-commerce sales channels
- Expansion of the online channels in the direction of adjacent and new markets (horizontal arrow, Figure 1): Compared with the international expansion of offline distribution channels – which typically means the establishment an extensive branch system, and therefore high costs – internationalisation via online channels requires much lower output. Leading online marketplaces like Amazon offer the relatively simple introduction of additional language versions. Furthermore, in its core markets, Amazon offers additional logistical support to manufacturers in the form of “Fulfilment by Amazon’ (FBA). If product data is amalgamated in a central data system, international third party e-retailers can be linked and managed. With regard to the direct sales + affiliates column (see Figure 2), e-commerce systems are typically designed in such a way that new language versions can be integrated at a reasonable cost.
Even though, in the case described, few (or no) “bricks & mortar” are required for internationalisation via online channels, a growth strategy of this nature is nevertheless associated with a not-inconsiderable amount of effort (legal analysis, analysis of differences in customer behaviour, etc.). Thus, it is also necessary to develop individual, country-specific concepts and to prioritise internationalisation according to corresponding country potentials.
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Markus Fost, MBA, is an expert in e-commerce, online business models and digital transformation, with broad experience in the fields of strategy, organisation, corporate finance and operational restructuring.Learn more