A recent survey from Rackspace confirmed a number of other Chinese eCommerce companies are also following this trend, revealing that despite success at home many are looking overseas for further growth. The survey results, of 147 respondents working in the Chinese e-commerce sector, showed 34% plan to expand overseas in the next 12 month, 46% already have and only 20% have no immediate plans to
expand at all. Even those in the latter group still foresee doing so in the future – with 74% expecting to do so in next four years.
With so many Chinese e-commerce companies planning to profit from overseas expansion what should be top of mind they enter these new markets? Adam McCarthy, Director & General Manager for Asia at Rackspace, shares his top tips on what companies should consider when expanding overseas.
1. Keep your IT flexible and scalable – When expanding overseas the last thing you want to do is invest heavily in IT frastructure that may become less useful as needs suddenly change, or completely redundant should the move prove to be unsuccessful. Ensure you put in place a flexible and scalable IT
system which lets you build capacity as and when you need it. This means picking an IT platform where you can fail quickly and pivot fast if required.
According to our survey, among the Chinese e-commerce companies planning to expand overseas the majority want to use managed cloud services – with 40% saying they plan to outsource their overseas hosting to local, global or domestic suppliers. Cloud computing allows you to test ideas quickly and achieve results fast, which makes it the smart choice when testing out new markets.
2. Use a global supplier with local knowledge – Take the time to find an IT provider who not only understands your company’s objectives, profile and culture, but also knows the market well and has helped others expand. Our survey revealed there were many focuses for IT when it comes to overseas expansion. ‘Reliability’ was the top priority, followed by ‘user experience’ and ‘working with a supplier from my home market that I know
well’. Investing time to identify what your priorities are and then finding a supplier that can meet these needs will be time well spent later down the line.
3. Make sure you have support – With so many e-commerce businesses keen to become global, it only makes sense that the infrastructure and support you use is global too. According to our survey amongst the e-commerce companies whch had expanded overseas, the biggest IT challenge was support. Technical support was ranked as ‘very important’ by 61% of
respondents when setting up infrastructure and by 53% of respondents when expanding overseas.
Many Chinese companies are seeing the value of utilizing local support teams and investing in a provider that truly understands the global marketplace. Make sure your suppliers offer global support teams that are well versed on how to help your company succeed in the relevant markets.
4. Learn from others – There will likely be other companies that have gone through similar expansions. Take some time to look at what worked for them, and what didn’t.
Rackspace customer Made-in-China, which has grown its infrastructure from just two servers in 2006 to a total of 23 servers hosted in the U.S., as well as seven cloud servers hosted in Hong Kong, offers some advice, “As an eCommerce company that connects worldwide buyers with Chinese suppliers, it is critical that we provide a user-friendly and quality experience to our customers around the world,” said Tao Yan, IT Manager, Made-in-China.
“With our previous provider, there were many instances of downtime as well as a lack of real-time support. However, with Rackspace our experience has been completely different.”
“Rackspace’s global footprint, especially in Europe and the U.S. where most of our traffic originates, puts us closer to our customers. As a result, page-loading times are extremely fast. Instead of waiting for a webpage to appear, our users around the world can enjoy satisfying, real-time web browsing experiences.”
With an ever-increasing number of China-based e-commerce companies expanding West, researching how they handle global traffic or are able to offer stable hosting solutions will help give you the edge as you expand.
While there is no fool-proof approach to Western expansion, the key to making sure your IT investments are safeguarded is to plan well, find the right partners, understand the local market and be keep systems as flexible and reliable as possible. With the right knowledge and technology on your side, any eCommerce company stands to profit.