Enter a foreign market with an e-business solution. What do you have to consider more than only being online?

Précis

Introduction

Why online?

Market Research

Recommendation

Management of returns

Web page development

Distribution

Globalisation – logistic requirements

Distribution Strategies

Operating process

Fulfilment

Project Plan

Introduction

Now a day, the internet as a new communication media, offers great opportunities and possibilities to companies. With the help of e-business solutions, the companies are able to reach a lot of potential new customers at once, because of worldwide upcoming popularity of this media. The point of sale becomes a virtual character and is no more fixed to local positions. Moreover, the internet provides the companies the possibility to offer and to sell its products at the same time without any media breaks. This leads to a reduced time to market situation, and an increased velocity to enter new foreign markets over a huge distance. The global expansion can take place without the need for high investment and reduces the operating-risk for companies. An internet shop solution makes it now possible for all actors, existing in a commercial chain, to offer and to sell products. The original equipment manufacture himself also has the chance to meet his customers direct. In the past, this was only feasible for the intermediators in the traditional supply chains.

It seems that the internet is an easy way for companies to generate fast profit without any efforts. That is why IT represents a new factor of production for all enterprises. The question is only “How the companies benefit from the IT advantages in combination with their existing operating infrastructure?” It is not only enough to have a domain name for the web shop. In the background you need a good infrastructure and a suitable concept so the question is allowed to ask - what do you have to consider more than only being online, when entering a foreign market with an e-business solution?

The aim of the document is to give a brief overview about important facts, which have to be considered when a company wants to launch an e-business solution. It contains a virtual example of a Brazil fashion company called COLEÇÃO BRAZIL. It represents the frame to explain the content. The entry strategy of COLEÇÃO BRAZIL consists of a conducted market research, general recommendations about selling products abroad, the web page development and a description of the physical distribution and fulfillment process. Finally a project plan shows the sequence of necessary activities to realize such an e-business project in a company.

Why online?

COLEÇÃO BRAZIL is operating in the fashion industry and wants to generate more profit in other markets.

The danger for a company, which plans to go abroad, is to get low profit margins, as well. This is the result caused by the intermediators in the supply chain. All vendors like wholesalers and retailers want a get a share of the profit margin. Another danger is that the original equipment manufacture has no influence of the range of products, which are offered at the point of sale. This leads to the fact that only the well know-brands are offered in the shops of the retailers. These entire problems are only a question of the market power of an original equipment manufacture. In Europe COLEÇÃO BRAZIL does not decree over a market power. The value of market power depends on the high profile and on the popularity of the products. This new Brand has noting about that. COLEÇÃO BRAZIL is in a bad negotiation position with all the wholesalers and retailers, when COLEÇÃO BRAZIL plans to enter the European market through the indirect channel.

On the other hand, there is a second possibility to enter the European market. The abilities of the information technology makes it possible, to offer products form all positions in a commercial chain. This was in traditional chains only feasible for the wholesalers or retailers. The direct sale though a web shop solution, looks very appealing. If COLEÇÃO BRAZIL is successful to enter the European market in that way, then COLEÇÃO BRAZIL gets a stronger market power and is in a better negotiation position.

Another advantage of a web shop solution is the bundling of orders. With that it is possible to automate a lot of processes, for instance the offering, the ordering, the order control, the invoicing and the invoice control. This leads to a transformation from manual operating sales channels to automated operating self-service-portals. A furthermore odd is, the fast update of the content of the web shop. It is possible to offer only these products, which are available in the stock. This results to an available-to-promise situation for the customer.

Market Research

The goal of the market research is to find the best pilot market to offering the commodity products of COLEÇÃO BRAZIL. Portugal is the winner of this analysis. Portugal has a unique selling proposition to offer the products from Brazil. The major reason is that Portugal has the best conditions, which results from a high affinity to Brazil. There is a conformity, concerning in weather, the climate, the language and historical connection. This odd has a lot of advantages. At first it leads to a strong involvement and preference of the customers. Moreover an easy communication between COLEÇÃO BRAZIL and all anther partners in Europe can take place. The communication is very important in a process of building an own market solution over this huge distance.

A substantial advantage is that the same product politics can be completely used by COLEÇÃO BRAZIL. This synergy effect is decisive for the choice of the Portuguese market. Because of this equality, there exists the same general market condition between Brazil and Portugal. The gross domestic product per head is in both countries quite the same. Thus all potential Portuguese customers have the same market requirements of products. This makes it possible to offer the same production range in Portugal. It is not necessary to adapt the products only for this market. Because it is the pilot project for COLEÇÃO BRAZIL it is important to reach a small risk and a high flexibility with the chosen solution.

Furthermore it does not require big changes, to provide the customer-service-centre also from Brazil, to answer the questions from the customer in Portugal. This usage of own recourses helps, to save money and contributes to a centralization of the processes.

Another reason is that Portugal is a member of the European union. This includes the possibility to enter other European market from Portugal, with the same business model. The European law make it feasible to sell all products across the member states without any restrictions.

On the other hand there exists one very important risk to offer products through a web shop in Portugal. The level of the e-commerce users, in the relation “business to consumer”, is in Portugal below the average figures in Europe. The number of internet users in Portugal looks very uninteresting with such a low value of approximate 7 percentage of the population, when you compare with other countries like Sweden with more than 50 percentage of the population being online. That is why the e-commerce is not so popular in Portugal as in other countries.

The e-commerce level in Portugal is a risk and an opportunity at the same time. For example the e-commerce market in Scandinavia will hardly even double, but in Portugal it is still possible. The less consumer acceptance could be an obstacle.

However with the help of a free support-call-centre the problem could be solved. The support-call-centre helps all users in the order process to do it first time right. With this service you can change the acceptance of the e-commerce in an emerging market, like Portugal.

Portugal has a population of approximately 10 million people. The urban population concentrates to 36 percentages in the areas Lisbon, Porto and Amadora. This high centralization of the population makes the logistic distribution process essayer. There exists a value of 360.000 e-commerce users in Portugal. The fashion share in e-commerce business is 31 percentages high.

The three main competitors for COLEÇÃO BRAZIL in the Portuguese fashion market are L & G Lagos Akdeniz Tekstil, La Stampa and Promemoria SRL. Competitors are still operating predominantly with retailers. So they offer their products only though the indirect distribution channel.

The „available per capita income“ of the Portuguese is 8.867 $, which raises the question about the necessary purchasing power. However the product range of COLEÇÃO BRAZIL reflects rather commodities, which are not so expensive. All the facts are from the source of the german “Statistisches Bundesamt”.

Another part of the market research is the marketing plan. In general, when a company wants to sell products, four important factors must be alwasy fulfilled:

- A market demand for this product must exist
- The products sales must always meet an appropriate market size.
- The higher price caused by the expenditure for sales activities abroad must be accepted by the customers
- The product must promise the customer a solution for a problem

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