Expansion into foreign markets
Expansion into foreign markets – why is it so important in the e-commerce industry?
Expanding into foreign markets is a key step in e-commerce development, enabling increased customer base, revenue diversification, and mitigation of risks related to the economic situation in a given country. With global reach, entrepreneurs can exploit less competitive niches and gain access to new technologies and sales channels. Online commerce eliminates many barriers to traditional business, but success in international markets requires adapting offerings, marketing strategies, and customer service to local conditions and applicable regulations. Expansion presents significant opportunities, but also challenges, requiring careful planning and analysis.
Foreign expansion – how to legally conquer foreign markets? Where to begin international expansion?
A thorough analysis of local regulations
Expanding internationally requires a thorough analysis of regulations and legal requirements. Whether you're already operating in Poland or just starting out in e-commerce, you need to stay up-to-date with local law.
The most important barriers:
- linguistic – regulations are often available only in the official language, and the specific nature of legal language means that incorrect interpretation can lead to serious consequences, while translations may not reflect the essence of the regulation;
- legal culture and approach of control authorities – even with good knowledge of the regulations, law enforcement may vary from country to country.
You should start by analyzing local regulations regarding:
- commercial, economic, civil, tax and criminal-fiscal law,
- registration, licensing and certification requirements.
This makes it possible to determine whether entering a given market is profitable and what formalities must be completed to legally conduct e-commerce activities abroad.
How to prepare documents for a foreign store?
When expanding internationally, it's essential to adapt your store's terms and conditions, privacy policy, and returns and complaints policy to the regulations in force in the target country. These regulations may differ significantly from Polish regulations, particularly in the area of consumer protection. Many countries have specific requirements regarding:
- the right to withdraw from the contract
- the method of providing information about the processing of personal data,
- warranty and complaint conditions,
- legal requirements regarding the store interface, including the local implementation of the Omnibus Directive, as well as the ordering process.
Failure to comply with local regulations may result in high financial penalties and loss of customer trust, which directly impacts sales results.
What is the Omnibus Directive and how does it affect e-commerce?
The Omnibus Directive is an EU regulation aimed at increasing transparency in online commerce and protecting consumers. It imposes several key obligations on sellers:
- Price history – if you offer a promotion, you must provide the lowest price of the product from the last 30 days before the discount (the "Omnibus price"). If you disclose the discount amount, you are required to calculate it based on the Omnibus price, not the regular price.
- verification of opinions – customer opinions must be true and can be linked to the sales contract, and the seller is obliged to inform whether and how they are verified,
- clear identification of the seller – the consumer must know whether he or she is buying from an entrepreneur or a natural person ("private") selling on the marketplace.
Failure to comply with the Omnibus Directive may result in high financial penalties, so it is worth adapting your promotional strategy and the way you present customer reviews.
Is it worth communicating in your customers' language? Or will an English-language interface and support be sufficient?
Customer service and documentation in the local language are crucial in international sales. If a seller is targeting consumers in a specific country, they should communicate all communications in their official language or another language explicitly designated by law. Furthermore, customers are more likely to make purchases if:
- they can read the regulations and returns policy in their own language, and these documents refer to legal acts and regulations that they are familiar with,
- have the opportunity to contact customer service in a way that is comfortable for them,
- Marketing messages and product descriptions are tailored to their culture and lifestyle.
Adapting the language and tone of communication to the specifics of a given country increases trust and has a positive impact on sales, while also helping to maintain regulatory compliance.
Is it worth using a marketplace for expansion?
Platforms like Amazon, eBay, Zalando, and Allegro allow you to quickly enter foreign markets without having to build your own e-commerce infrastructure. Benefits of using a marketplace include:
- ready-made customer base – no need to invest in marketing from scratch,
- Logistics and fulfillment – some marketplace platforms make it easier for sellers to store and ship goods,
- greater credibility – customers often prefer shopping on well-known platforms rather than in new, unknown stores.
Marketplace is a great starting solution, but in the long run, it's worth building your own online store to become independent from platform commissions and regulations and to ensure your brand recognition.
What tax obligations are associated with expansion?
Selling abroad carries with it tax obligations, particularly in the context of VAT. The optimal solution for companies expanding internationally is the VAT OSS (One Stop Shop) system, which allows for:
- settle VAT in one EU country, without having to register in each country separately,
- apply the VAT rate of the customer's country – when annual sales exceed EUR 10,000, the entrepreneur must apply the VAT rate applicable in the recipient's country.
Outside the EU, the tax situation varies depending on the regulations of the country in question and may require tax registration and compliance with local customs and fiscal requirements.
Why is it worth registering a trademark in the context of international expansion?
Brand protection is crucial when expanding abroad because it protects against
unfair competition and counterfeits. Possible registration options:
- national – protection in one country,
- EU (EUIPO) – protection throughout the European Union,
- international (WIPO) – allows protection in many countries at the same time.
Registering a trademark protects against the use of your name or logo by other companies and increases your brand value in the eyes of customers and investors.
Which legal structure should you choose?
Choosing a legal structure for foreign expansion
Choosing the right form of business is crucial for successful e-commerce expansion. It influences compliance with local regulations, credibility with customers, and tax optimization.
Market entry strategy
The form of business should align with the expansion strategy. Testing a new market can be done through an entity (business, partnership) in the home market, but also through a foreign branch or a sole proprietorship. If required by law or business relationships, establishing a local company may be necessary.
Impact on the perception of the company
In some countries, consumers and business partners prefer to work with companies, considering them more reliable and stable. Legal structure may also determine the possibility of using local sales platforms and payment systems.
Tax obligations
The form of business affects tax settlement and financial reporting. Partnerships are often subject to more complex accounting rules but offer greater opportunities for tax optimization and tax relief.
Requirements of foreign marketplaces
Some marketplaces prefer or even require sellers to have a business or company in a given country. It's worth checking the requirements in a given country to avoid any problems when starting a business.
Partnerships generate higher administrative and accounting costs but offer greater legal protection. Sole proprietorships are cheaper and easier to register, but may be insufficient for scaling a business.
Before making a decision, it's worth conducting market research and consulting with local legal and tax experts. Each country has different legal requirements, so choosing the right structure can be crucial to the success of your expansion.
Choosing a business form should take into account the scale of the business, development strategy, tax optimization, and local regulations. A well-chosen legal structure will not only meet formal requirements but also facilitate operations, increase customer confidence, and optimize taxes.
International expansion offers enormous growth opportunities, but requires in-depth analysis of the legal regulations, tax requirements, and cultural specifics of the target market. Success in international e-commerce depends on:
- adaptation of legal documentation and sales policy,
- understanding EU regulations, such as the Omnibus Directive or GPSR,
- adapting communication and customer service to local expectations,
- selection of appropriate sales channels (marketplace or own store),
- optimization of tax obligations,
- brand protection through trademark registration,
- selecting the appropriate legal structure for your business.
A carefully prepared expansion strategy allows you to avoid legal risks, increase sales and compete effectively in international markets.