Going global is a landmark achievement for many Australian businesses: and if the numbers are anything to go by, entrepreneurs are optimistic about their chances of success overseas.
The most recent survey of smaller exporters by the Export Finance Insurance Corporation (EFIC) has found that two-thirds of small businesses who export believe their financial positions will improve over the next 12 months. That’s close to a 10% increase compared with a year ago.
Sixty percent of companies who export also expect their profits to be higher over the next 12 months as they take advantage of new selling opportunities.
Getting your brand recognised on the world stage is a big deal, but you can’t always control when it will happen. Two entrepreneurs tell SmartCompany about how they first got noticed abroad. Their experiences selling into new markets follow a less linear path than you might think.
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The power of Instagram
Ethical underwear brand Mighty Good Undies has just inked a deal with US department store brand Nordstrom to start selling its products through its online store, with its co-founder saying it could consider in-store sales in future too.
Elena Antoniou tells SmartCompany that while the business, which launched via a $32,000 crowdfunding campaign in 2016, had big goals, its first foray into global markets wasn’t secured off the back of a pitch.
“We were approached by them simply with an email – and we were like, ‘is this for real?” she explains.
A buyer for the department store set up a Skype session with the business after one of the Nordstrom brothers, who operate the chain, noticed the Mighty Good brand on Instagram and suggested they might be a good fit.
“We were like, ‘this is an incredible thing to happen to us’. They said, ‘what we loved was the modern aesthetic, millennial focus and ethical credentials,’,” Antoniou says.
The fashion startup’s first partnership selling with a well-known US brand didn’t happen the way the team expected it would, but Antoniou says even though the team hadn’t been actively pitching for this opportunity, it was critical that they were match fit once the global chances came along.
“The scale of it [organising the deal] is huge. You can’t just go, ‘great, someone’s placed an order, let’s just send it over there.’”
As a business, you need to be ready to both do your own due diligence on the prospective overseas partner, and be able to provide the required details to that partner, she says.
It’s also critical that smaller operators work out exactly what details they’re going to need in order to successfully get the stock to the buyer, says founder of the Virtual Association of CFOs, Michael Stapleton.
“The thing you have to understand when you export is that it’s not as simple as chucking stuff in a container and sending it,” he says.
He advises small businesses to plan out their strategy and the specific way the stock will get released on the other side of the world: including whether the buyer pays you an initial deposit or in full on arrival.
Requirements like customs certificates also need to be sorted, but these basics can often catch small businesses off guard the first time they go global, he says.
“I think the certifications people need can catch people by surprise,” he says.
Global opportunities knock from the start
Smaller operators have to be ready for action the minute global interest in their business hits, says founder of Allerton Swimwear, Pirra Griffiths.
She says the first time an overseas retailer showed interest in her company was when it was showing its first ever season line to local buyers. US retailer Forever 21 put its hand up, offering to include Allerton in a “Designer Collective” featured line.
The challenge, however, was that being such an early stage business, Allerton hadn’t even finished making the product that the international distributor was calling for.
“The scary thing for me was that they didn’t want the collection in September [when it was scheduled to launch], but in early June, which meant I had to rush my first round of production through, using all new contractors (cutting, fabric suppliers, factories),” Griffiths says.
Taking the opportunity to dip a toe into global waters early proved a positive, even though the company has decided to focus most of its efforts on Australia for now.
When UK department store House of Fraser came knocking in 2016, Griffiths says the early experience dealing with a foreign buyer meant her processes were in place to discuss another international opportunity.
“Having the experience of F21, I was aware, somewhat of the process and expectations,” she says.
Online shopping gives more opportunities for expanding
Online retail means more and more smaller operators are reaching global markets even if they’re not taking the traditional path of setting up shop overseas.
Recent research of close to 200 smaller operators by money transfer business World First found that 84% of those selling online are building customer bases in the US.
They may not be setting up shop fronts or forming traditional partnerships with distributors overseas, but 42% of these businesses say they plan to expand to multiple overseas markets, simply through the process of selling online.
More than 60 percent of these sellers were open to or were using retail juggernaut Amazon in order to expand globally without physically travelling overseas.
Allerton is one brand that has jumped on Amazon marketplace. in Australia However, in terms of global strategy, Griffiths says her early experiences dealing with global markets has indicated how it was more important for the company to build up its following in Australia, too.
“I was able to see that I needed to concentrate on the local market first, keep building Allerton’s profile, perfecting the product and the processes before I make a bigger splash in the market,” she says.