Summary

The internationalization of ecommerce presents a tantalizing opportunity for businesses seeking to broaden and diversify their revenue streams. Traditionally, selling beyond a home jurisdiction and into global markets has been virtually restricted to large, multinational organizations with foreign subsidiaries and the resources required to support the navigation of complex legal and financial regulations across the globe. But the rise of powerful and convenient ecommerce platforms, like Shopify, have leveled the playing field by offering small-and-medium-sized businesses a quick and easy way to expand into the global marketplace.

Shopify, in particular, is a market leader in providing the mechanisms necessary to sell cross-border. When businesses expand internationally through Shopify’s infrastructure, they have two options available, each with their own benefits and costs. They can use the single-store path known as Shopify Markets or the multi-store approach known as Expansion Stores.

Shopify Markets

Shopify Markets offers a plug-and-play internationalization solution with tools for managing multiple currencies, displaying market-specific pricing, automatic SEO, and more. However, Markets fall short for complete store localization and merchandising, region-specific discounting and promotion, and country-specific pricing, tax, and shipping rules. Because of the lack of these features, Shopify Markets may appeal more to small businesses testing the waters of international expansion rather than established mid-market and enterprise-level merchants. To obtain the enhanced functionality suitable to ambitious organizations with global expansion plans, you must use Shopify’s multi-store solution.

“Markets is an attractive and cost-effective option for Shopify merchants, as it allows them to expand and test a new region with lower costs to market. This gives you time to prove your business case before investing further time, money and staff resources in that region. When used in conjunction with Expansion Stores, Markets can also help to broaden your reach and serve additional markets beyond those where you are already established.“

Nichola Birch, Lead Product Manager at Swanky

Expansion Stores

With Shopify’s multi-store solution, businesses implement what are known as expansion stores in their chosen global markets. Each expansion store functions independently from one another, which allows merchants to develop their stores with heightened flexibility and customization in individual jurisdictions.

This independence is critical for brands seeking a more robust approach to localizing their presence in individual markets. As each expansion store functions independently, you can implement optimizations in areas like region-specific content, promotional campaigns and discounts to enhance your ability to convert more in a chosen jurisdiction.

Expansion stores also enable functionality that’s not just consumer-facing. They allow for the payout of multiple currencies, so if you need to be paid in currency local to your store in a specific region, extension stores can make that happen. The multi-store approach also enables a more straightforward solution for complex pricing, shipping, tax, and warehousing rules. As you can manage each store individually, you can tailor your stores for each of these areas to meet the requirements of a specific geography.

The tactful nature of this customization and sophisticated approach to localizing buyer experience drives many mid-market and enterprise businesses to use expansion stores. However, while expansion stores can offer you a powerful solution for certain aspects of localization and international expansion, they don’t come without additional resource costs, financial burdens, and risks.

Increased Cost

In addition to increased resources costs, and discussed below, businesses incur increased costs associated with having to deploy duplicated apps and syncing ERP connection to each individual storefront, along with implementation costs required to migrate storefront themes, data, and content.

Increased Time Managing Stores

As each expansion store operates independently, each of your stores must be managed individually. This increase in internal resource requirements does not end post-implementation. Your staff will have to tailor each local store to its local market and customers, and manage each store’s product lineup, pricing, discounting, and more. As you can imagine, the greater the number of international jurisdictions into which you want to sell, the greater the burden on your staff and your resource costs.

Not Truly Local

Most importantly, Shopify’s expansion stores, while being an excellent tool for localization, don’t truly localize your payments. This means that while your store and checkout appear local, you are still processing cross-border and are being exposed to high processing and foreign exchange fees, as well as reduced conversions.

To mitigate your exposure to these financial risks, you have to unlock local processing. Traditionally, to do this, you had to have an established local entity, such as a legally registered subsidiary, in the country into which you are selling. However, setting up an entity to achieve local processing is often too cost-prohibitive for even mid-market and enterprise-level businesses. Incurring the fixed and variable costs of setting up an entity in each foreign market, in addition to the added local compliance risk, can very quickly devour any profit that you hope to realize.

Taking Shopify Expansion Stores To The Next Level

Establishing expansion stores will increase overall conversions and enhance your ability to scale globally. But, the added complexities and costs of operating them can often become too large of a barrier. To maximize your expansion stores’ potential return on investment and minimize your risk exposure, you need to reduce their cost and remedy the friction points. That’s where Swanky and our Merchant of Record model can help.

Swanky has helped international brands such as Wilkinson Sword, One Retail Group and HelloFresh to migrate their international online stores onto Shopify Plus. Swanky has created a unified codebase solution, which allows brands to manage all of their international stores from one single codebase. This mitigates the complexity of multi-store management and greatly reduces development and maintenance overheads.

“Our unified codebase allows you to retain the localized content and functionality of each regional store, while managing shared components from the central codebase.

Once the master code has been created, future expansion stores can be easily spun out for new regions, whilst any new updates or improvements can be automatically rolled out across all the stores simultaneously. “

Ian Jamieson, Head of Technology at Swanky

As an enterprise or mid-market brand, this efficiency saves you considerable time, money, and resources, which can be directed to other areas of your business.

Furthermore, you can unlock local processing in over 70 markets worldwide with a no-code integration using our Merchant of Record model. By localizing your payments through the Reach MoR network, you can increase your conversions by up to 20% and gain fee savings of up to 40% in your Shopify expansion stores.

Explore the analysis below of an Australian based retailer selling into the US which factors in both the benefits and additional cost of having an localized extension store vs. Shopify Markets.

What would You do with an Extra $20K per Month?

As you can see from the sample business case above, total savings with Reach and our Merchant of Record network are over $20K/month, at no additional cost. This is a case of pure profit recovery, which you can use to fuel your expansion plans, hire additional resources, or engage an expert agency like Swanky to boost your international growth through data-led optimization of your Shopify store. The bottom line is that our solution pays for itself and maximizes your ROI, giving you more freedom to make business choices that can accelerate your push towards achieving your goals.

Go Global with The Right Partners

When you turn on our Merchant of Record model, you gain considerable savings in processing fees and increased conversion rates that substantially uplift revenue, especially if you’re a mid-market or enterprise-level business selling large volumes. This revenue can then offset the costs of implementing Swanky’s robust solutions for managing your expansion stores’ operations. Combined, these solutions pay for themselves while you increase your efficiencies and ability to capture more global revenue.

Reach & Swanky can enhance your businesses’ ability to scale efficiently with Shopify expansion stores, save on fees, increase conversions, and get the best ROI while you grow internationally.

Learn more about our Merchant of Record model’s seamless no-code integration for your Shopify extension stores.

Learn more about Swanky’s unified codebase solution for managing multiple Shopify Plus expansion stores.

Further, explore Shopify Markets and expansion stores in Swanky’s in-depth blog.