Global expansion – with zero investment

shutterstock_104477534E-commerce has clearly transformed the potential global reach for fashion brands. But simply making this season’s stock available online in a new market is not going to deliver much incremental value.

Brands need to build up awareness in a totally new market; determine whether the bricks and mortar expansion should pre-empt or occur in tandem with the e-commerce offer; and quickly ascertain key market differences and synergies to inform strategy.

From the multi-million pound investment in marketing and stores to the time it takes to build brand value in each new geography and the challenges of responding to different customer experience expectations, traditional expansion strategies lack both the agility and responsiveness required in a fast changing global marketplace. As Chris Griffin, CEO, Anatwine, explains, there has to be a better way to rapidly maximise the global opportunity while minimising both cost and risk.

Strategic expansion

Given the increasing volatility of the global economy, prioritising international expansion has become challenging for fashion brands. Agility and speed of response are becoming key requirements in a market that can be transformed virtually overnight by a celebrity endorsement on social media. Yet while the rise of the global digital consumer has transformed the ease with which brands can reach new target markets in theory, in practice the challenge of raising brand awareness and building a market remains.

This model of global expansion takes time and demands a huge investment. Traditional marketing campaigns take months, even years, to build strong brand awareness in a country that has previously had no exposure. Campaigns also, by default, lack focus in an unfamiliar geography where marketers have had no opportunity or insight to refine the messaging. Yet timing is key: shareholders will not look favourably upon a brand that has made a multi-million pound marketing investment over many months to build reputation in a target country or painstakingly located and fitted out a new flagship store, only to see that economy fall into decline and another, that was further down the target list, suddenly improve dramatically.

Just consider those brands that started to build up a presence in China during 2014/15, only to see growth slow significantly – the time spent creating a market represents a significant lost sales opportunity.

Customer expectation

The differences in each market also create significant operational challenges. How can a brand identify not only the most valuable target audience but also determine how best to reach that audience in an unfamiliar environment? Furthermore, having found the customers, how can the brand gain insight into the different expectations in each market – from the way in which products are presented to the quality of customer experience, including fulfilment?

There are so many issues to consider – from the decision whether to create a local e-commerce team to ensure national sensibilities are addressed to determining the extent of the product range to offer in the first season. Without insight into the market, or strong links to key retailers, many brands struggle to quickly gain any traction in a new geography, irrespective of the level of investment.

For any brand, the chance to forge a strong relationship with leading retailers within each geography can transform that speed of expansion. Leveraging the retailer’s customer base and market insight enables a brand to gain immediate access to the key customer base which, by default, is already drawn to the retailer’s e-commerce presence.

The problem is, of course, that retailers are wary of over extending their portfolios – fearing unsold stock and the dilution of the overall customer offer. Retailers, too, want proof that a brand is going to generate significant incremental sales and reinforce the overall quality of customer experience – something that can often take a while to achieve as the merchandisers become familiar with the brand. While a strong brand/retailer relationship can deliver measurable value to both, the challenge is to get the right relationship – quickly.

Global logistics

Growing numbers of brands are now exploring the evolution in global logistics, which now makes both national and international product distribution both low cost and rapid, to evaluate a zero cost approach to international expansion. Rather than investing in local marketing and brand awareness, plus local ecommerce teams, brands can become part of a real time network of retailers that supplements the traditional wholesale model.

By enabling the retailer to extend the range on offer without the need to invest in additional stock up front, a brand has the chance to make a significant noise in a new market from day one. Suddenly, instead of just the handful of products preselected by the retailer a brand can also offer a far bigger subset of the overall range. Furthermore, access to real-time sales information across the entire retail network enables the brand to continually refine the offer to reflect the expectations of this new customer group.

The approach also fast tracks a brand’s understanding of local market expectations and idiosyncrasies. A fundamental part of this process is a brand’s commitment to both present products and fulfil orders from its own warehouse in line with the retailer’s policy – a process that ensures the brand understands and meets local expectations immediately.

Conclusion

In the increasingly fast moving world of fashion retail, speed and agility are becoming key. When even the traditional fashion houses are offering couture online before the catwalk show, the power of e-commerce to reach new, international markets is clear. The key is to find a way to reach those markets and leverage that massive global demand quickly, securely and without incurring untenable costs.

By building on the traditional wholesale approach to retail with real-time fulfilment, brands can enter – and leave – new markets in a matter of weeks, not months or years. Critically, taking a product led rather than marketing led approach enables a brand to leverage retailer’s local expertise and market presence without the constraint of limited range.  Combining fast track access to new markets with insight into local customer expectations and the chance to refine the product mix on the fly based on up to the moment sales data fundamentally changes the model. Brands can now take the risk out of global expansion – and achieve a significant reward.