Trav­el­ing on a bus in Syd­ney not long ago, I saw a fel­low pas­sen­ger come on board with a Marks & Spencer pack­age. Know­ing the British retailer didn’t have any retail stores in Aus­tralia, I asked him how he got his pack­age. He lit up with a smile and told me how great it was that Marks & Spencer now ships any­where in the world at no charge if a cus­tomer orders £35 worth of goods.

It struck me how many retail­ers are expand­ing their reach globally—Walmart, Best Buy, Costco, Tar­get, Macy’s, and too many oth­ers to list—and it’s no won­der. A grow­ing num­ber of glob­ally minded retail­ers are striv­ing to expand beyond their home mar­kets and into other estab­lished and emerg­ing mar­kets where con­sumer demand is strong.

From greater local­iza­tion capa­bil­i­ties to more enhanced mar­ket­ing part­ner­ships, ven­dors today offer options that not only estab­lish but also grow global busi­nesses. Many retail­ers are tak­ing advan­tage of third-party ful­fill­ment ser­vices, such asBongo, Bor­der­free, Bor­der­linx, Inter­na­tional Check­out, and i-parcel. (See For­rester, “Inter­na­tional Ship­ping Solu­tions For US Online Retail­ers,” Sept. 17, 2013.)

With strate­gies like free ship­ping and dis­counted prices, com­peti­tors are try­ing to entice con­sumers from any­where. Latin Amer­i­can retail­ers led the way in 2012 with 14.7 per­cent com­pos­ite retail rev­enue growth, fol­lowed by retail­ers in the Africa/Middle East region. At the same time, Deloitte reported that growth cooled from 6.3 to 4.3 per­cent for the US retail­ers in the Top 250 global retail pack.

As retail bound­aries break down across the globe, retail­ers face a double-edged sword. On the one hand, the oppor­tu­ni­ties are sub­stan­tial. On the other, glob­al­iza­tion results in increased competition—and not just from down the block.

To suc­ceed, savvy retail­ers must rec­og­nize that glob­al­iza­tion requires sub­stan­tial invest­ments in time, money, and resources—and a solid under­stand­ing of poten­tial cus­tomers in each mar­ket. Many retail­ers have failed due to sev­eral fac­tors, includ­ing lack of suf­fi­cient knowl­edge of eco­nomic, polit­i­cal, and cul­tural environments.

One recent exam­ple that comes to mind is the fum­ble of British gro­cer Tesco with Fresh & Easy in the United States. After five years and over $1.6 bil­lion invested, Tesco gave up in its bat­tle to break into the US gro­cery mar­ket. Accord­ing to the Wall Street Jour­nal, one major fac­tor was the sub­prime mort­gage cri­sis and sub­se­quent reces­sion that rav­aged many of the areas where Tesco located Fresh & Easy shops.

In devis­ing a glob­al­iza­tion strat­egy, retail­ers can ben­e­fit from a heavy dose of due dili­gence. Here are a few impor­tant boxes to check before mov­ing for­ward with any global expan­sion strategy:

  1. Con­sider the eco­nomic and fis­cal upsides, but also be bru­tally hon­est about the poten­tial down­sides. Rec­og­nize that return on invest­ment may not be imme­di­ate. Every retailer that has ever expanded into for­eign mar­kets or has even thought about it knows only too well—globalization adds lay­ers of com­plex­ity to every aspect of doing busi­ness. Mer­chan­dis­ing, mar­ket­ing, cur­rency and lan­guage local­iza­tion, store oper­a­tions, real estate, logis­tics, human resources, report­ing require­ments, and tax poli­cies all must be reeval­u­ated in light of a new environment.
  1. Learn about local cultures—don’t just scratch the sur­face; put cul­tural vari­ances under a strong micro­scope. Ask what unique value local con­sumers will derive from your prod­ucts and ser­vices to be sure your com­pany won’t be an also-ran. Con­sider vary­ing shop­ping behav­iors and con­sumer expe­ri­ences. For exam­ple, stud­ies show that Chi­nese con­sumers view web­sites dif­fer­ently than peo­ple in the United States and Europe and pre­fer to see more con­tent rather than less. If you don’t have a crys­tal clear view of the cus­tomer, then you won’t be able to com­pete locally or globally.
  1. Eval­u­ate all the options. It may not make sense to offer ser­vices in every tar­get coun­try. It may not even make sense to local­ize print cat­a­logs in every sin­gle lan­guage. For years, British fash­ion retailer ASOS pub­lished a 100-page, high-end fash­ion glossy mag­a­zine for women, but the com­pany could never afford to local­ize and mail the print mag­a­zine around the world. To expand reach inter­na­tion­ally while pro­vid­ing even more cachet and inter­ac­tiv­ity for the fashion-forward, ASOS turned to dig­i­tal pub­lish­ing to eas­ily local­ize con­tent for mul­ti­ple inter­na­tional mar­kets and expand its reach glob­ally, gen­er­at­ing incre­men­tal rev­enue and boost­ing brand excitement.
  1. Look at the country’s infra­struc­ture to make wise mar­ket­ing deci­sions. If a region has broadly adopted mobile devices because land­lines were never estab­lished, then devise a mobile-first mar­ket­ing strategy.
  1. Be real­is­tic. Deter­mine what is right for your brand. In some instances, it makes sense to go global. In other sit­u­a­tions, brands are bet­ter off stay­ing put and com­pet­ing in their own backyards.

While this may seem like com­mon sense advice, there are dozens or even hun­dreds of vari­ables involved in going global. Pro­ceed with care and cau­tious opti­mism, and estab­lish the right method­olo­gies and solu­tions to assist in know­ing the cus­tomer, whether here on home soil or halfway around the world.

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