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Global expansion is the goal of most startups because it provides access to larger markets and a more diverse customer base. In fact, 60% of startups aim for international expansion inside the first three years of operation; nevertheless, only 4.6% successfully scaled.
Achieving Scaleup status increases your probabilities of success in international markets, but this is a challenge in itself. Only 2.5% of startups born in the activation phase ecosystem reach this milestone.
Your market selection will determine whether your expansion shall be a success or a costly mistake. This is very true for startups, where resources are often limited and early failures can have lasting consequences. But how are you going to make certain you are making the right decision? Here are seven key steps to guide you thru the process of choosing the most promising market for international expansion.
1. Assess market readiness for the product
How well was the market informed? Consider aspects similar to web penetration, the maturity of your industry and consumer purchasing habits to enable you to gain a comprehensive view of the local landscape. For example, if your company is involved in e-commerce, look for markets where people have already began ordering online.
An alternative strategy is to enter less developed markets that are not as used to your industry and are due to this fact less competitive. However, in this case it is a long-term game because you would like to invest time in cultivating recent habits among your customers and reaching early adopters. Your company may pursue alternative strategies depending on your location: We currently operate in each mature and emerging markets, each with different levels of e-commerce and e-gift use.
2. Analyze the competitive landscape
If three or more competitors share a market, it is a highly competitive environment that can require significant investment to achieve significant results. However, if there is one dominant competitor whose behavior is relatively rigid, you may try to secure second position in the market by using your flexibility, modernity and a different approach to customer engagement.
At this stage it is essential to assess the overall size of the market and its distribution among competitors in monetary terms. Key indicators include:
Total addressable market (THERE): Indicates the total revenue potential available in the market. In our case, it reflects the overall flower sales throughout the country.
A served, addressable market (ALONE): For Flowwow, this reflects current online sales data and revenue generated by our competitors.
A supported, accessible market (SEAM): This metric estimates the share you may realistically take, representing the portion of market revenues you may control.
3. Use scoring models
After assessing your product’s market readiness and analyzing the competition, you’ll discover several priority countries that may very well be considered potential scale-up markets. Scoring models will be very helpful in choosing the best one or two options.
For example, Amazon used a scoring model to assess key success aspects when: expansion into Asian markets. The focus was on India and Japan, where the company has made significant investments in infrastructure, local partnerships and adaptation of payment systems. In each countries, Amazon has develop into one of the market leaders, overcoming a complex and diverse environment.
4. Conduct field research
Field research is one of the key stages of the business scaling process, allowing you to understand the actual situation in the goal market. This method reveals real customer problems that is probably not apparent from general data. Customer development interviews allow for a deeper understanding of cultural nuances, local customs and the specifics of interaction with a product or service. If in-person meetings aren’t possible, interview customers online (find them on LinkedIn or interest-based communities).
For example, our startup is a gift marketplace that relies primarily on online payment methods. Through market research, we have found that online payments are a customer favorite, but method preferences can vary significantly. When entering a recent market, we must integrate local payment systems, which is a process that requires legal, technical work and thorough research. If preparations are not accomplished, the market will simply not have the ability to accept recent orders.
5. Check the loading speed of your website and apps
In the age of high-speed Internet, user experience is crucial to the success of e-commerce. Slow loading pages frustrate users, leading to high bounce rates, fewer conversions, and a negative impact on brand perception.
According to Amazon, a 100-millisecond delay in page loading can lead to: 1% loss in salesalthough one other study suggests this 53% of website visitors will leave the page if it takes greater than three seconds to load. However, satisfied customers can spend as much as 140% more and will recommend firms to others if they feel appreciated.
6. Find product-market fit
Start by developing a minimum viable product (MVP) that directly addresses the core problems of your audience. Launch this MVP and collect detailed feedback from users by analyzing their behavior and preferences. The key is to refine the product based on these insights and enhance its features to higher meet market demands. Regularly track performance metrics similar to user satisfaction and engagement to confirm whether your product solves a market problem. Constantly iterate and improve until you achieve a regular stream of sales from your local audience, which can signal that you just have achieved PMF.
A widely known example is Airbnb, which began at a conference in San Francisco when its founders rented out their very own property to address a housing shortage. By collecting user feedback, they have improved their offer, emphasizing the value of unique stays and the ease of booking. This iterative process, combined with a focus on user needs, has helped Airbnb grow into today’s global leader in short-term rentals.
7. Hire a country manager
Once you’ve got achieved product-market fit—that is, getting a regular stream of sales from your local audience—consider hiring a national manager. They provide deep insight into the local market, adapt the company’s strategy to the cultural and regulatory specifics of the country, and establish essential business connections, facilitating business development in a recent market.
Choosing the right market for international expansion is a key decision that may determine the success or failure of a startup’s global journey. Following these seven steps can significantly increase your probabilities of making strategic decisions. Careful market selection and adapting it to local needs and conditions will lay a solid foundation for sustainable international development.