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International expansion masterclass: Top strategies for growth
International expansion can be a double-edged sword for retail and e-commerce brands. The growth potential is immense—but the road is also paved with complexities.
We tapped retail experts, Lafaurie Chief Operating Officer Pablo Lafaurie, Style Arcade CEO & Co-Founder Michaela Wessels and Style Arcade Merchandising Consultant and ex-menswear buyer Morgan Polinelli about the strategies required to succeed in going global in a live webinar.
Here, we breakdown their international expansion tips, including localizing the shopping experience, increasing AOV with strategic product assortment, tailoring marketing and inventory strategies and building a growth-focused tech stack.
Creating an aspirational brand poised to expand internationally
Launched in 1991 in Paris, Lafaurie is a renowned French heritage brand. Pablo Lafaurie took over the brand as COO alongside his brother six years ago, and their brand evolution has led them to discover that while it’s important to focus on the local market, all brands have the potential to expand internationally.
It is a huge growth opportunity, and fortunately, it’s not as hard as you might think to test and learn to see exactly where your biggest growth locations are.
International mindset
You have to communicate your mission and vision to the team to align everyone with the business goals. This starts with embodying your international ambition, to help create an international mindset internally in your brand.
For example, getting to know, visiting and examining the customer behavior in the countries you want to expand in, will give you ground-level experience of what your brand’s customer journey looks like in that location.
Brand confidence
You must be able to see the potential of your brand in the particular country or region you want to expand to. To raise brand confidence start by testing the waters with wholesale.
Use this channel to see if there is appetite for your brand, and allow your wholesale partners to range your core items as the best way for new customers to get to know the brand.
Strategic channel focus
You will always have customer interest, so success will rely on having a dedicated strategy. Today, Lafaurie boasts an omnichannel presence, including wholesale, department stores, 12 retail stores in France (6 in Paris) and a thriving international e-commerce store. Thanks to a strategic focus on the international market, the US now accounts for 50% of Lafaurie’s e-commerce sales.
It’s important to factor into your assortment planning that your DTC customer and the wholesale customer are two completely different people. While this is difficult to merchandise, it can serve excellently for brand identity and exposure; your merchandising in specific channels can push boundaries of how your brand can be perceived.
For example, a luxury brand could present a wholesale range to international customers that presents only their high-end fashion product to boost brand awareness. Meanwhile, the same brand may utilize its DTC channels to clear through available stock and keep that international brand positioning intact.
International consumer behavior insights
We know consumers shop differently on different channels and by their geographical regions — so how do you approach the difference between consumer behavior and perception between markets?
Main differences between US and European markets
- 1. US product-led acquisition
Lafaurie’s paid acquisition strategy was focused on their best-selling Painter’s Jacket. Their French customers loved the cotton canvas shirt in the brand’s signature garment dye process and premium quality, making it the perfect item to build their international acquisition strategy around.
Laufaurie discovered:
- When the US customer lands on the website from a paid ad, the number of visits that were needed to convert on the jacket was significantly lower than in France
- The French customer takes the time to discover and follow the brand, and perhaps visits the retail stores first
- In the US they see a more direct path to conversion because the US customer buys the product first — whereas the French customer buys the brand identity, making it a bigger growth opportunity for higher LTV
- The US is the bigger e-commerce market with 40% of menswear sales whereas France is 20%-25%.
Having the ability to rely on best-sellers helps LaFaurie to grow confidently and they know that the product has a low return rate, which lowers the risk of the acquisition spend.
- 2. Higher AOV in the US
Lafaurie found the US to be a great market to scale their international e-commerce business because the customers buy more sophisticated products and higher price points.
It seems logical because if you’re buying from an international brand, you want to buy the products with more added value — you’re buying the brand for what it does best. Not for its basics, for example, that you can purchase locally.
When you can sell more expensive products with a higher AOV, you can invest more in paid acquisition, marketing and growth opportunities.
Rules for data-driven international sizing
Keep monitoring the size curve
While top-of-body products have a similar size curve per region across the US and Europe, it’s the bottom-of-body products that remain harder to sell across countries, as it’s so dependent on the block of the product, as well as the fabric.
The US has shifted upwards in the bottom of body categories, compared to Europe. So, when expanding internationally, frequently monitor and adjust your size curves to remain reactive and service new customers.
Translate the size for different markets
If a jacket is a top seller, and therefore more consistent in its sizing preferences across countries, consider your strategy to be less about purchasing per size, and more about translating the size for international customers.
From a customer perspective, it's not convenient to keep your native sizing (e.g. Italian 38 vs US 28); if they have to translate it themselves, there’s the potential to lose that customer. If possible, test displaying the native sizes on your localized websites to increase understanding and conversion.
Aspirations to operations
It's important to have the most simple, seamless and transparent shopping experience to eliminate any cross-border fears for the customer. You must replicate their usual shopping experience from a local, operational and UX perspective.
Premium logistics experience
Seamless shipping experience - Lafaurie opts for standard 72-hour shipping from France to the US. Always aim to deliver quickly but within reason of what your brand can achieve, and always choose the local carriers for customer confidence.
Free and easy returns - Add solutions so you can operate with a local 3PL return center to reduce return friction from customers.
Local payment - Build your checkout and payment methods to be localized for your customers, and ensure duties are paid at checkout. The customer should never pay hidden fees after they receive the package.
Dedicated policy page - Your return and shipping policies should be visible everywhere on your website to give your customer reassurance and confidence. Preempting questions before a customer has to revert to customer service is key.
Cross-border merchandising
For international assortments it’s important to make your customers feel like you have a localized product — however you only have one OTB, and you’re most likely purchasing Winter and Resort at the same time for different regions.
- Start with a mindset shift on how you split your range, and segment your assortment by weather rather than country. For example, Resort in the US can align with Queensland, Australia’s weather, no matter the time of year. Consider how your e-commerce and marketing can group these together by their purchase behavior.
- Understand what product works in Resort, and what product works in Winter that will make the customer feel like they’re being included.
- Consider how you can “winter-fy” Resort and how can you “summer-ify” your Winter range in order to make the products live longer. Whether it’s through fabrics or colours, it's able to live longer rather than go straight to markdown, ruining that brand identity you’ve spent so long building up.
Optimizing your tech stack for international growth
When it comes to building your tech stack, every brand will have intuition about the platforms they prefer, so always confirm your intuition by testing and learning based on the data you receive.
Ensure the tools you implement can:
a) be used by global teams to increase team productivity and happiness, and
b) serve the customer in a holistic way.
For example:
- An assortment planning tool needs to give a clear view of product performance and be able to plan a replenishment strategy accordingly (Lafaurie use Style Arcade)
- An e-commerce platform need to offer localized experiences, streamline order fulfillment and display analytics to see return rates, best-sellers, product types, and ROS by country (Lafaurie use Shopify and Shopify Markets)
- For a seamless post purchase experience, brands must use a CRM system that understands retention starts from order confirmation (Lafaurie use Aftership and Klaviyo)
- Seamless returns management (Lafaurie use Loop Returns)
- AI-enabled customer support (Lafaurie use Gorgias)
- Replicate a retail experience for your e-commerce store. Test a Try Before You Buy program to enable the customer confidence to try the products without paying in full. (Lafaurie use Try Now where the customer only checkout with credit card details, and is charged only for what they decide to keep)
Turning insights into action
Monitoring key metrics
Tracking CAC (customer acquisition costs) against CLTV (customer lifetime value) will ensure teams are able to understand whether their marketing efforts are paying off in a new region.
Marketers must compare their CAC to LTV to understand whether their marketing is profitable. A profitable business’s CAC should be less than the revenue generated from a customer’s LTV
An industry benchmark for this ratio is around 4:1, however Lafaurie aims for a 5:1 ratio for international brand expansion to balance the costs.
Assessing demand
When seeing if there is true demand in a new region, ensure you take those standard temperature checks. What competitors are already there? How will you show up on a Google search? Is your brand filling a gap? Start by offering international shipping and run some paid ads. Once you have enough data, you can see if there's a sales mix, if your customers prefer markdowns or full price, and you can make more informed decisions.
Lafaurie knew from tourists shopping in their retail stores how they could potentially expand. If you can imagine where your brand sits in the market, then test your best paid content. If you have high traffic and a strong CTR, then it's a good first sign - but you have to keep testing.
International expansion is a big investment, so you need to be sure about your real profitability.
When Lafaurie launched in the US, they waited a few months to identify the best sellers and also identify our real profitability per order. The best-selling products also usually have the highest margin and therefore act as your best acquisition and retention vehicles.
Brands will limit themselves if they don’t invest in the right tools for a seamless cross-border experience. A poor experience will affect acquisition, and not offering one at all will hinder your growth.
Watch the full webinar here.
Image Credit: Lafaurie
