The world is growing smaller and smaller, and this could not be any more true than in business.
As technologies have broken down barriers, approaching business from the mindset of creating a product or service that can translate into overseas markets has become natural for most startups—and why not?
There are numerous benefits to global expansion:
- Increasing potential customers
- Attracting global talent to the workforce
- Improving company reputation
- Exposure to foreign investment opportunities
- Moving ahead of competition
Thinking big may drive your company vision, and it makes for a cracking pub conversation, but knowing when to expand your business abroad can take restraint and careful consideration to avoid rash and regrettable decisions.
In this article, I’m going to share some insights based on my personal experiences working with Japanese startup, Nyle Inc. about:
- How careful marketing can trump having industry expertise
- Knowing the right time to expand business overseas
Learning from others
Time and time again, companies have jumped the gun into foreign markets, and time and time again we have witnessed them fall flat at the first hurdle. No longer does the “build it and they will come” theory hold the weight it once did; it is essential to know your market and understand where they are coming from.
eBay in China is one example—they led operations with a foreign management team that didn’t understand the local culture. They spent large sums on online marketing in a country where the population wasn’t actively using the web and cared little for the brand’s international identity.
Tesco—Europe’s largest supermarket chain and world’s ninth largest retailer—is another example. Due to poor economic timing and not understanding the U.S. supermarket consumer behavior, they were forced to give up on their American dream.
They tried to break into the American market in 2007, a time when consumer spending was in fast decline, and thus consumers were unwilling to try Tesco’s pricier ready-meals, one of their staple offerings. They also missed the mark in other ways: American shoppers prefer to buy in bulk which didn’t fit in-line with what Tesco was selling. Plus, consumers were put off by the unfamiliar concept of self-service checkouts.
Startups thinking about international expansions can learn a lot from these types of mistakes, many of which can be avoided by doing a thorough market analysis to really understand your target market, competition, and whether international consumers are willing to pay for your solution.
Sometimes things just don’t work abroad, like Dominos’ Lasagne Pizza—so popular here in Japan. I can’t speak for Americans, but this wouldn’t last too long on the British Dominos menu—a carb on carb combination just seems too bizarre!
Going global the Nyle way
The Japanese are renowned for approaching tasks with discipline and careful measure, and this is a fair reflection of my experiences working there with the country’s leading SEO consulting company, Nyle.
Nyle created “Appliv,”—a website that connects users to apps—with the goal of having a web-service to test out SEO techniques on. After a couple of years, the company started gaining some success, bringing in 6 million monthly visitors and found itself ready to expand internationally.
We made the decision to create a web-based app service, not on having any in-house industry expertise, but by measuring:
- Potential industry growth
- Whether we could create something unique or better than what already existed
- Whether it could integrate with the company’s SEO goals
Before development started on Appliv, Nyle assessed whether the app market was in a period of sustained growth, and whether that appeared to be the case both domestically and internationally.
Apple’s AppStore had already proven that consumer interest in apps was high, racking up over a billion downloads within its first year. Since then, the application industry was growing exponentially as apps became more accessible globally. In Japan, smartphone use was booming, and the hype around apps was evident everywhere, from taking over train poster advertisements to TV commercials. High app download figures solidified our assessment: We would indeed be entering a market experiencing a high level of growth.
Or in other words, was there room to create something new or better than what was currently around? We found that although the AppStore and GooglePlay already existed, by our assessment, the summaries were unreliable and biased, as they were written by developers themselves. Listings also appeared to lack order.
On top of that, category trees stopped too early, making it impossible for users to browse specific app types—for example, if you wanted to browse German language learning apps, you would either have to browse every app under the category “education” until you found the relevant one, or search with the app’s exact name.
By creating an honest system for reviewing apps, a unique ranking algorithm, and a detailed category tree, we knew we could create something better than the services which currently existed.
Because Nyle is an SEO consultancy firm, we needed an online space to try out SEO techniques to measure their effectiveness. Because Appliv was a web-based app platform, there was plenty for us to get our hands dirty with, from content creation, to link building, to web architecture. This would make it easy to naturally incorporate our techniques to analyze what works best.
“People trust people over companies”: Communicating to our market
This is no surprise, right? You have probably seen sales emails with subject lines like, “This is Ben from XYZ Inc …” or noticed companies signing Tweets off with an individual name. Putting a human name or face behind how companies interact with individuals gives companies a more personable image. Why? Because we trust our fellow human much more than the face of large corporations. When creating Appliv, we kept this firmly in mind.
We knew that people were far more impressionable to market influencers—people—than companies or brands, so we wanted to create a service that appealed to thought leaders and influencers so our service could spread organically through online mentions and social shares.
We found influencers using Klear, an online software that gives an indication of how likely someone is to interact with your content, and what kind of content appeals to them. We built up a database of key influencers who showed higher interaction rates for our app niches.
Lacking in-depth knowledge of apps and the inside-lingo needed to communicate to our target market, we took to Google and began gathering freely available information. Research!
We built an extensive list of niche categories using Wikipedia and used BuzzSumo to find what kind of articles were being shared the most, cataloging on topics, length, and platform.
To make sure we were fluent in app terminology, we followed trails of hashtags on Twitter and Instagram and made note of new terms used in trending articles. All the research was done for free, using freemium versions of the above tools above (although I highly recommend checking out the paid versions if you have the budget).
No matter what people’s interests were, we wanted to find something that appealed to them in app form, and so created over 3000 categories with just about any type of app you can think of; yes, even alpaca games. We also started offering reliable articles from a close-knit team of writers. Having so many niches also allowed us to increase internal linking on the site over a multitude of pages, which for SEO purposes worked great.
Once we had the content, we contacted the influencers who in-turn helped spread the word of Appliv, and the response was great. Gaining organic shares helped build user trust, we had little competition for the niche categories (which helped us build domain authority), and we were attracting the right kind of traffic to the site.
All our research was done for free—we didn’t use any paid tools—and targeting what influencers were interested in gave us a great starting point.
So, when to set sail abroad?
First, you have to question whether it is a good time for your company. Have you established a solid workflow? Are you on route to where you want to be domestically? It is essential to keep reinventing your service or product to keep up with the changing needs, and expanding abroad may mean losing focus of the changing market in front of you. To quote Uniqlo CEO, Tadashi Yanai, “In business, it is change or die.”
Second, which country are you targeting? Is that country seeing similar industry growth as you are domestically? And would your product or service be appropriate in that country given the cultural barriers? It can be a good idea to work with a market research company in the country you have eyes on, or even contact the embassy who can often provide relevant business information, statistics, and give advice.
At Nyle, the answer was “yes” for all of these points. We were making the top 10 search rankings for 98 percent of our keyword category titles and had a well-structured workflow in place. We also had an established company name with some eye-catching statistics to grab the attention of foreign developers. Most importantly, we began naturally crossing-paths with foreign developers who were interested in promoting their apps on our Japanese site; this felt like a sign we should start exploring what foreign markets had to offer.
The industry was also still soaring, with more and more apps being released on a daily basis. Scaling internationally and targeting the English speaking market felt like a natural transition.
A final note
Working with Nyle has taught me not be afraid to try what you don’t know. By measuring industry potential and piecing bits together online, you can have enough grounds to launch a successful startup.
The web has an abundance of easily accessible tools to conduct some solid market research, allowing you to narrow down your target user, and understand the industry you are moving into. At Nyle, we are now branching out into creating a domestic car rental platform. Do we have any car rental experts in the office? What do you think?