Global delivery company DHL announced at the beginning of February that it would be terminating its e-commerce business in Chile in April 2019. This announcement comes less than two years since the company first launched an e-commerce service delivering shipments from online stores to consumers in Chile. Unfortunately, their efforts in Chile did not yield the profitable results the company has experienced in other countries, despite setting up shop in one of the stable economies in Latin America.
So, what obstacle did DHL encounter to render their efforts so unprofitable? According the Chilean newspaper, DiarioFinanciero, DHL has endured some tough competition from domestic package delivery companies already busy serving Chile’s top retailers. More than anything this announcement sheds light on the difficulties and risk of failure when expanding into a global market without first understanding how to effectively compete there.
“A lack of regional knowledge and not offering a region’s preferred payment option are key disadvantages that hinder U.S. online merchants attempting to scale globally. Merchants cannot offer the same traditional payment options they do domestically to other international markets, expecting the same results,” says Steve Villegas, PPRO Group’s vice president of partner management in a recent report on the topic.
“U.S. merchants need to adapt with the global market, be strategic and region-specific to capitalize on increased sales from consumers outside of the U.S., where 85 percent of the world’s purchasing power lies. Taking the time to learn and adapt to regions that vary not only culturally, but also in how they handle their money, will give any merchant that extra step in an already competitive global market.”
Challenges for Companies Going Global
In addition to competition, there are many other challenges companies face going global: unfamiliar cultures, organization communication, the physical distance, mastering marketing and tariffs and export fees. As seen in the case of DHL, choosing the right countries to expand to is also critical. Another important detail is payment processing; it’s crucial that your business have safe payment processing that serves customers on a global scale.
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Author Bio:Payment industry expert Taylor Cole is a passionate merchant account expert who understands the complicated world of accepting credit and debit cards at your business. His understanding of the industry and Payzone hidden charges has helped thousands of business owners save money and time.