You’ve done your due-diligence and decided to expand your brand internationally. You’ve pinpointed which regions or countries you want to target. Now it’s time to figure out how to set up your shop. There are two ways you can set up your Shopify store to support international sales. There’s a time and place, and pros and cons for each approach. The trick is asking the right questions to determine which is the right option at the right time for your business.
“Roughly three quarters of world purchasing power and over 95% of world consumers are outside America's borders.”
Option 1: Localize your main eCommerce site
The simplest, least expensive option is to continue to have just one eCommerce site, and layer on language and currency conversion functionality. While not an optimal long-term strategy, this approach can be a great first step if you want to start by testing the waters in just a few countries and learning about markets and consumers before committing to the time, effort and budget of a full-blown international business strategy.
Language versus currency
Often the first concern brands bring up is language – but that’s actually the easy part! Translation applications like Langify or Weglot make this pretty streamlined. What’s more complicated to figure out is currency. When discussing how to set up your shop, it can be helpful to shift the conversation with the developer or agency to selling by currency and not languages or countries.
Challenges of a single-store solution
While a single-store approach is the simplest way to go, there are some potential drawbacks to consider:
- Automatic price conversion and rounding gives you less control over pricing (Update: Shopify Plus recently released the ability to set country-specific pricing)
- Price conversion may not make sense in specific markets (i.e., limited ability to match prices of similar products in the market/market pricing)
- Price conversion can reduce your margins (converting to other currency and then back to US dollars for payment)
- Converted prices may fluctuate over time, as exchange rates change, which may not be a great user experience for returning customers
- Can’t offer different products for different markets
- Must comply with additional privacy regulations like GDPR (e.g., for the EU, UK)
- No ability to customize on-site offers, sales, etc.
Challenges of a US-only warehouse solution
- Taxes incurred by shipping across borders increases “total landed cost” for the customer. This includes the cost of the product, shipping fees, import and export customs/duties, and other taxes – which can result in customer “sticker shock.”
- International shipping incurs customs fees or duties, and tariffs can be high; for example, VAT (value-added tax) or goods-and-services tax (GST), which are a fixed percentage per country; and customs or duties levied by governments on the international sale of goods (i.e., levied by the US).
Option #2: Create expansion stores
If you’ve committed to growing your business internationally, creating multiple Shopify expansion stores is the approach for you. It’s a common practice for many brands on Shopify Plus; in fact, Shopify Plus gives you nine expansion stores as part of your contract.
The beauty of multiple expansion stores is that while they operate independently as separate businesses, giving you more control over products, pricing, payment options, marketing, and more, you can connect all of the stores to your main site to centrally see sales performance and reporting while giving each region control over the content, navigation, products, and manage inventory.
Creating expansion stores has a big impact on the way you structure your business on the backend. Each expansion store must be managed as a separate account, with separate settings, taxes, etc. Therefore, your company must first be set up this way to support an expansion store model. Also, consider setting up local warehouses to avoid tariffs and taxes; Shopify Shipping Profiles automates local fulfillment for you.
Regarding pricing, Shopify recently announced improvements to international pricing functionality. Brands can now set price and/or margin adjustments or import a price list for product-specific pricing using CSV. Customers also will see taxes broken out on the checkout screen – as they would when shopping at a local store.
Challenges of an expansion model
An expansion model offers lots of flexibility, but also brings additional complexity and costs. For example, you’ll need to consider:
- Additional technology costs for separate stores, such as multiple third-party apps; more robust search tools; ERP or separate inventory, product information, and warehouse management systems; data management/analytics platforms
- Additional marketing costs for different marketing creative, content, and promotions
- Foreign exchange (FX) costs when converting local currencies into US dollars
- Global returns logistics and costs if you don’t have a local warehouse/fulfillment center
Shopify Plus is a great platform to support an international expansion of your eCommerce store, whether you want to sell in two countries or 10. However, the way you go about it will have an impact on your business structure, and the way your business is set up will guide how you structure your websites. A good resource for more detail on how to comprehensively consider how to successfully go global is Shopify Plus’ Global Ecommerce Playbook. Looking to go international on Shopify Plus? We’re happy to help you get to the next step – contact us!