Going global: How to expand into new markets

Hello, everyone. Thank you so much for joining us today to discuss going global.

With our panel today, we're gonna look at how to explore considerations and tactics when expanding to new markets.

My name is Steph Johnson. I work at Recurly in the strategic marketing side, and I'm joined today by two of our key partners. And I'm also gonna hand over to Daniella to introduce herself first.

Thanks, Daniella.

Hey, everyone. Thank you for having me. I'm Daniela Yer. I have a background in graphic design and product development.

I have launched many digital products for global entertainment companies during the last twenty years.

Currently, I work for the streaming distribution team at Paramount as senior director, partnerships, technology, and operations.

I am also an executive MBA candidate at London Business School, and my goal for today is to bring a mix of business and product perspectives.

Thank you. Over to Riley.

Hi, everyone. My name is Riley McDonald, and I am the director for strategic expansion for EMEA here at Worldpay. Really excited to be talking to you about, you know, going global. It's my bread and butter, so I'm looking to I'm excited to, you know, share the insights.

Thank you.

Hi. I'm I'm Jamie Fishman. I'm the chief strategy and product officer for Avalara. We are a cloud based compliance platform that help companies transact globally as well. So excited to be here also.

Thanks, Jamie. So you all know we have a chat that's open, and it's gonna be monitored by our team. So feel free to pop in any questions in there if you have any throughout the session. We'll also be sharing some relevant content as we go along.

But we're gonna dive straight in. First, I would love to direct this question to Daniela to talk about what the most common challenges you see companies facing when expanding to new international markets within the subscription space.

The first challenge is to understand whether expanding to international markets will achieve the desired effects.

Companies need to define their strategic goals. What is the purpose of expanding?

Has the product reached enough growth in your local market? Are you looking for economies with a stronger currency?

Companies need to study the target markets and define how they will measure success, ensuring their forecasts include all costs and risks.

Strategic aspects of an international expansion are industry, market, positioning, and product.

In terms of macro industry, for example, education, entertainment, news, what are the trends, the technological advances?

Are there new business models?

In the micro industry level, what is happening specifically in your particular activity? For example, what are people consuming? What is the content they like? Can you produce or buy the type of content and serve it the way they want?

In terms of markets, is it expanding or shrinking?

What are your competitors' incumbents in these new markets? Can you enter alone or you need a partner?

On the micro market level, what is or are your target segments?

How are you targeting them? What pain points will you solve?

What is your competitive advantage?

And related to that, what is your brand identity that will allow customers to differentiate your product from others? What is your positioning?

Finally, what is your marketing strategy and mix? What is the price you will offer, and will that be appealing to your segment and convey your value?

How you are going to distribute your product? Are you adapting to local conditions, or are you exploiting an a product as exist today globally?

Thank you. That's super interesting. I think what I took from there was a lot of setting yourself up sort of for success by defining your goals, finding the right sort of partners and local knowledge so that you can really do your research, and then setting up your strategy around those learnings. I know Riley and Jamie, you both have some examples, but Riley, I'd love to hear from you.

Yeah. Sure. I mean, I think the first thing when you think about challenges and when you think about entering into new markets is that you really have to challenge your assumptions. Worldpay's entered into, you know, thirteen new markets in the last four or five years. And every time that we haven't challenged our assumptions or we have ended up kind of being wrong, I think it's really important that you don't treat two cut, two countries the same even if you're, say, you're looking at Latin America and you're like, Argentina and Mexico.

They are vastly different countries. You cannot treat them the same. So I would just say, you know, continue to challenge your assumptions, and hopefully that way you avoid major issues down the line.

Yeah. That that's really great advice. We we experienced it firsthand. You know, we we had, got some success in in the US with our tax calculation and compliance platforms.

And then we thought, hey. Let's, you know, lift and shift it and bring it over to Europe sort of on an as is basis. And and, you know, the assumptions that we had that made it successful in United States didn't necessarily map over to outside the United States. So that was a a big lesson for us.

But out of that, I think, was born a a very helpful lens that that I think is useful in in these kinds of analyses, which was, what are the attributes?

What made us successful in the US? You know, what kind of complex problems were we solving that may be slightly different outside the US but no less present? And how can we, you know, attack those as our sort of foray into those foreign markets? So that's that's how we kind of, I think, grew from that experience.

That's pretty handy. And nice to see that everyone's having a similar problem, but we can all learn from them. So I guess, Riley, I was just wondering whether you have any advice on companies that are prioritizing expanding in new regions from, like, a payments and gateways point of view, that'd be really helpful.

Sure. I mean, I think one thing that's really stood out to us recently is, you know, we always put out our global payment support. It comes out every year. It covers, I think, thirty six different markets, and it's very clear that, you know, different consumers in different markets wanna pay in different ways.

And it's really important that when you're entering into new these new new geographies that you really understand how customers wanna pay. You know, recently, we did we've done some surveys around, you know, how important are payments to the customer journey when they're choosing to pay. You know, about four or five years ago, you know, about seven out of ten people said that the, you know, the whole payments piece was super important to their ultimate customer journey. Now we're seeing it rise to between eight or nine out of ten people say that it is paramount to their, you know, experience.

And I think what's most important and what people need to realize is that you need to enable the local payment methods because we found that, you know, around in this recent retail study we did, forty four percent of transactions are at risk if people can't pay how they want to. Meaning, you know, they're gonna go somewhere else that has that chosen payment method. So, you know, when we're looking at Europe, you can think of the rise of open banking and account to account. You can see all the different local payment methods.

And, also, the reality is, you know, just enabling, you know, the large international schemes is no longer good enough anymore. If you wanna be successful in a local market, you have to offer those localized payment methods.

Okay.

Daniella, a question for you. If a company were expanding into a region like Europe, where would local payment methods dominate in your opinion?

So, yeah, that's a very important point. Some countries doesn't have don't have a penetration of credit card.

The so you need to understand what are the alternative payment methods, But also what are the economics of that and the time for integration.

Can you afford that? Would you prioritize integration of the most popular payment method to reach more customers or you will be looking for a better profit to start with?

In my opinion, companies should prioritize in terms of other option. However, you know, these other apps aspects need to be considered.

For example, time for integration is important when you have a specific launch date. And, however, the thing thinking long term is the best approach while you have a, short term solution in place.

Great. Thank you. Just echoing off of that. Sorry, Steph. Just echoing off of that. I think it's really important too when you're talking about alternative payment methods, and I know we'll talk more about compliance and regulation in a little bit, but it's about, you know, following what the regulators are doing.

These markets, you know, are independent. They can change. It's about keeping your finger on the pulse of, you know, what's happening, say, for example, with Wiro in Europe. What what are the changes that are gonna come because of that in, say, like the Netherlands?

And it's really important that if, you know, those are your key markets, that you're keeping your finger on the pulse of what's changing.

Amazing. And that does segue perfectly into our next question about so I guess, Jamie, what are the most critical compliance issues that subscription companies should think about and consider?

Well, I I think just kind of, you know, building what Riley had said as you are moving into these new jurisdictions to familiarize yourselves with the legislation and the rules of transacting in said jurisdiction. And, you you know, right now, there's a global phenomena afoot with with the advent of e invoicing, you know, mandates pretty much around the world. And what's really interesting about it is, you know, I like to say that, you know, every business on the planet is here to do the same thing where everybody exists to buy and sell things because that's really procure to pay in order to cash or the at the at the lifeblood of of every business.

So when you think about that, you know, yesterday, you could do that sort of any way you want. And now with this new set of legislative mandates, you are required to transact over a certified network approved by a government. It has to unfold a certain way. So you cannot buy or sell things the way that you used to.

And it puts a lot of friction on businesses if you're not prepared to kinda tackle some of those complexities. So understanding those things, being prepared, finding the right vendors who can help you, talking to colleagues and other businesses, even competitors who've done it before, I think are all very helpful to to to build your appreciation of of what's required.

Couldn't agree more with that, Jamie. I mean, we've seen it. And I think it's important to obviously, we're we're talking about Europe today, but, you know, we've seen it in Brazil, in our in Argentina, in Mexico. You know, Thailand's brought in these regulations, UAE as well, Saudi.

So it really truly is, you know, a rising trend, and it's important that everyone understands kind of the implications of that and what extra lift and shift will be required of you.

Yeah. And and, you know, that that that's just on effecting the actual documentation around the purchase for the sale in a compliant way. But, you know, I I think of you know, if you were to also think about companies who are sending physical goods, well, now you need to familiarize yourselves with those rules. There's restrictions, you know, that you can't you can't just send lithium batteries to sort of anywhere you want, or bubble gum in some countries is, you know, is on the naughty list and down the line.

And then, you know, making sure those things clear through the customs and you're and you're compliant with all the in country regulatory requirements to get that parcel to its intended, you know, destination. Those are, I think, even beyond the pale of just the document exchange. Now you now you're dealing with, can I actually do this transaction? Right?

I think it sounds like there's a lot of, again, legal requirement, sort of knowledge and and pairing with local partners would really help with that. I think something else that comes up with some of our customers is sort of the increased exposure to fraud in different regions and, you know, how a company is looking to prevent that fraud or manage that risk in it when they go into a new region.

I'm sure, Riley, you've got some examples on this with from the payment side. I think that's where we will first jump to when we think about risk.

I mean, a hundred percent. What, you know, merchants, as we like to refer to them, need to understand is that, you know, when you go into new geographies, you are introduced to new types of risks, and you have to just realize that's going to be your reality of, you know, moving into a new geography, and you need to adjust accordingly.

And, ultimately, working with the right payment service provider or fraud vendors to really who have experience in that geography who can help you navigate, you know, machine learning. It does take some time to adapt to, you know, new geographies and new data. So if you wanna be thinking, you know, practically about until your models are really mature, you can be using rule based strategies. You know, once that rule or the model has then matured, you can, you know, change those rule based. They can be dialed back so you could help, you know, increase operational efficiencies. And and, ultimately, you know, it also does take a lot of data to make sure that Kuhn fraud checks are being done. And, you know, you wanna remove friction, but sometimes finding that right balance of, you know, healthy level of friction can also sometimes be necessary, and it just depends on the geography.

K. Thank you.

So I think something else that we a lot of our customers are considering is also the kind of cultural and operational challenges that you have to think about when you're expanding to new regions.

So how do you tailor the I mean, and, Daniella, you touched on this at the beginning, but how do you tailor the content and the brand identity? And I'm wondering if we could jump into that a little bit more with any sort of ideas you have or tactics on on the brand identity and and operational side.

Yeah. Sure. So, I think there's a continuum between two extremes, you know, adaptation and aggregation.

While adapting to local conditions, you can boost your revenues and market share maximizing local relevance.

For example, for an entertainment subscription service, how much how much local content or locally tailored content can you offer on a regular basis?

If this is the most prominent approach, you might need a country centered organization.

On the other extreme, the aggregation is exploiting an existing standardized product as is delivering economies of scale, grouping, development, and production.

If this is the approach, then it will suffice with running, global business units or even managing from headquarters.

Then independently from your approach, your product will be competing with a different set of products in each country, and it will be positioned in relation to them. So companies, need to figure out the best actions and partnerships they should pursue to convey the right message and brand associations.

For example, are you the most flexible product or the one that offers the lowest price or the one with the biggest library?

But it's more, in each country, you may require a different set of features that customers are willing to pay for more or features that don't matter to them depending on, of course, their income and and access to technology.

Yeah. I think that's that's really interesting, especially the sort of intricacies of of sort of likes and dislikes of each region when you're looking at the sort of content and having that person or that knowledge locally, which we've touched on quite a lot. I think the next thing is also looking at how do you, like, scale the operations? What is, you know, the considerations that you can think about going across borders and and also your team? You know, how how important is it to localize operations with a team? Do they need to be on-site, or or has that adapted?

Love to know from anyone in the room what your your thoughts are on that.

I mean, I definitely think that you need to have, you know, localized operation.

We in our approach is always boots on the ground. Always boots on the ground. You always have to have people there.

I think, importantly, things that are often missed in large English speaking countries is the need for that local language support as well when you're going into new geographies. You know, ultimately, your customers not only wanna pay in the way they wanna pay, but if they've got a problem, they wanna speak to you in the language that they are accustomed to. And that's definitely been a really important thing for us. Right? Like, that globalization is key for scaling. When we entered into Latin America, we now have a large operational base in Latin America because they are then on the same time zone, they speak the same language, and they understand more of the local nuances than, say, I would sitting out of my office in London.

Yeah. I think also a lot of the time, the local nuance can build, like, brand loyalty and trust if you've got someone speaking to you in the same language.

Exactly.

Take Yeah.

And well, well, and to be, like, the sort of regulatory compliance person of the call, I'll say that, you know, we we've also had our hand forced in some in some instances because there's a lot of legislative requirements on a country by country basis that might require you to have a physical presence in that country to participate in the business that that you desire to participate in. And so for us, you know, in certain countries, the requirement is you must put your data center here. You must store your data within the borders of our country. And, you know, as a cloud based provider, it it's not the worst thing for us because we can spin up, you know, additional clouds and and and all sorts of things. But it is definitely something that's costly and time consuming. And if you're not prepared for it and you get caught, you know you know, not really thinking about it, it could it could really slow your business down.

It seems like you've definitely oh, sorry. Sorry. Go ahead, Riley. Go ahead.

I was just gonna say we've definitely experienced that when we looked at, you know, the likes of India and UAE with changing data localization rules. I think, ultimately, that is gonna be a really big driver for where people choose to set themselves up locally because as Jamie alluded to, that lift and shift of setting yourself up physically having to, you know, build or rent out data centers in those chosen geographies, it it can it can be really costly, and you need to make sure that that's factored into your business plan as well when you're looking to, you know, expand.

Additionally well, you know, with globalization, perhaps you even don't need a team in place, but you need to have some tools in place. For example, one of the operational challenges I've seen is, you know, testing, user acceptance testing in the local market, payment methods to to try the device, people being familiar with local devices and local partners.

You need local knowledge. However, maybe you can manage remotely. I'm sorry about the ambulance. Now talent is is more readily available across the world. Virtual employment means that you might have local people from that country in your headquarters, and you don't need to locally have a physical team in place.

I I mean, piggybacking off of that, Daniela, I I do think though we've encountered a lot of, you know, maybe Saudi is not the best example, but Saudi is, you know, the country that we're looking at right now, and there are Saudization laws in place. You have to be hiring local Saudi nationals in the country, so it does really impact, like, how you are going to set yourself up. You can always rely on your kind of, like, centralized functions like we do here in London.

But ultimately, like, you are going to need people in those geographies, and it's gonna be out of your hands. I know Jamie's mentioned it before. Right? Like, your hands get tied by regulation, and that's something to be aware of.

Yeah. And it it sounds like everyone has a different sort of take on it, and it depends on the region, and it depends on what you're offering or or what you're looking to achieve because maybe, you know, marketing, you might be able to you don't have those regulatory compliance challenges. So you could have a team that's talking to them, but they could be virtual and have that virtual knowledge.

But, again, it all comes down to researching and and learning what you need when you expand into that country. I don't think there's one rule fits all. So the guide is to just get some local knowledge, find the right partners to help you with that.

I think also we touched on a bit on the technology and infrastructure, not to go too heavy into that, but there are certainly some technologies that will help, you know, guide you and make this a a lighter lift for the team as you look to expand.

Jamie, I wonder if you could touch a little bit on on the sort of technology and infrastructure side with us.

Yeah. You know, from from our standpoint, you know, our mission is to help, you know, companies transact compliantly anywhere in the world. And so that layer of abstraction, you know, if you can find global partners that have a global capability and you can kind of plug in, that's probably your best bet. Because then south of that, you you know, you've got kind of a multi vendor region by region approach, which is doable. But then you're managing however many vendors with different SLAs and different support, you know, kind of programs and all that. So I think looking for the accessibility to those global platforms, do they have APIs or connectors or things that I can platforms, do they have APIs or connectors or things that I can leverage to get up and running relatively easy? Because you want the least amount of friction to get started.

And then making sure that the capabilities that they have will get you into the regions that you covet, but also give you room to expand in the future as you grow your business. And trying to, you know, sidestep, you know, going at it, you know, piece by piece, country by country is is probably preferable from a from a tech perspective.

And and, Riley, do you have any suggestions on, the sort of tech stack side or or the infrastructure?

I mean, I definitely think adopting some kind of agile methodology from a from a tech perspective is is really important. You need to be able to respond to those changing payment methods and changing regulations quickly. Right? Oftentimes, you and I'm sure everyone has experienced this where you have a regulator, they come in with a new piece of regulation, and they tell you, well, it's gotta be done in a year.

And you go, there's no way we can do that in a year. And, you know, how do we then meet those timelines? So I think being agile, staying ahead of the curve, looking at your, you know, payment trends. And, also, you know, if you're entering into a new market, we've touched on this before.

Like, do you go in on your own or do you partner? You know, we went in with a partner in South Korea because there was thirteen different debit cards, and we just knew that we would never be able to connect or even maybe not have the opportunity to connect into all of those local debit cards. So we said, okay. We're gonna partner, and that's worked out really well for us in that region.

Whereas, say, in UAE, we had a much better understanding of the market, and so we went in without a partner from a payments perspective. You know, we still partner from an invoicing perspective and, you know, tax and all that fun stuff.

But we went in on our own and, you know, just being agile and and being able to adapt. Adaptability is key.

Great.

I think I'd love to go around and do a little key takeaway with each of you. So I think we've explored, like, a lot of really interesting things here around regulations and doing your research and a lot of your learnings, and thank you for sharing all of those. It's good to, I think, learn from each other and have this opportunity to share what's worked, what hasn't, and give everyone a bit of extra leg up for when they're looking to expand.

If I could start with you, Daniela, if you have, like, a key bit of advice you would give to anyone who came up to you saying, you know, I'm looking to scale my subscriptions globally.

Sure.

I would say understand your customers at a local and at and at an aggregated level.

Start from doing research, segmenting the market, and beginning at the beginning of your plan.

Then you can transport those segments into the tools that you use to to run your business, understand the dynamics, the behaviors, and create cohorts to better serve this this audience.

Great. So I think segments there and and sort of understanding your audience as much as possible before you make that leap.

And, Riley, do you have any top tips or and, Fahia, I think I go back to, like, question your assumptions.

Right? I think everything that Daniella has touched on is is is great, and those are all the things that you need to consider, but you also need to consider, you know, the regulatory landscape and the compliance frameworks that you'll need in place and having a really, really strong business case. You know, these projects are long. You're not gonna be able to enter into a new country really, really quickly. It is gonna take a lot of capital, not only from, you know, investment into that region, but also, you know, people.

So making sure that you are confident in your business plan and that you set yourself realistic goals and time frames, that would be my big key, you know, suggestion and always question your assumptions. And if it's not working, take a pause, reset your assumptions, and then go again.

Great. I love that. And, Jamie?

Wow. I I feel like most of the most of the points have been pretty well covered. I I think I just would echo the idea about, you know, testing the thesis for why it is that you're expanding into a geo and and having the sort of flexibility of abstraction. Right?

Like, what is it about the thesis that has legs? The the what is it that it's at the core of this thing for us? It's complexity. Right?

And complexity of tax compliance was our thing. When we went overseas, we didn't necessarily see that same level of complexity, but then along comes this other thing, you know, e invoicing that mimics a lot of those complex attributes and is a really hard problem for businesses to solve. And so it's a little bit of a it's not really a pivot, but it's a little bit of an acknowledgment that there's some attributes of of what makes our business work that can be extrapolated, but there are differences that have to be accounted for as part of that extrapolation. So I just say be you know, as you're doing the analysis, be flexible and look for those abstractions that can help you, you know, find the right fit.

Yeah. I really like that. I think also something you touched on, Jamie, that was really interesting, and I made a little note on it was about sort of how things the in the marketplace are are evolving and becoming slightly more complicated, and that, you know, I think you used to be able to buy and sell easier. Do you think that's a trend that will continue and that we need to continue anything about that?

It it it's a funny question to me because you hear things like, you know, that in the digital age or digital, you know, compliance or or or my favorites, tax simplification. Yeah. All of these things are are are make it ostensibly easier for businesses because there's some standard or format being introduced.

But with every new thing comes new requirements to be able to plug into it, however easier or whatever promise it it may be hinged on. Right? So I think that is friction intended or not. And it's just, you know, in in some respects, I think it gets to be a better means by which we transact with one another as businesses. But on the other hand, there's that initial entry point to adopt whatever new requirements there are that create the challenge to to enter those jurisdictions or to get your business compliant with whatever new laws or regulations these countries are promulgated.

Nice. And, Riley, any top tips on trends that you see in the future that maybe you think are here to stay or change or adapt?

I mean, from a payments I mean, regulation for sure. I think looking at local regulation, countries protecting their markets a hundred percent, like, we're definitely seeing that, especially with requirements like e e invoicing where suddenly the government's even more involved than they were before.

From a payments perspective, you know, account to account based payments are, you know, are not going away.

Subscriptions are not going away. Being able to make sure that you have the right products to make, you know, sure that if an account updater so your subscription keeps rolling through, those types of things I think are really important. Open banking.

And, ultimately, it's about how you look at these new payment methods, particularly from a subscription perspective, and make sure, you know, they have those reoccurring capabilities.

That is, you know, that's not going away either. Those would kinda be my my top ones. And then, you know, new and funky ways that keep peep people keep trying to pay. So keeping your eye on on what's coming and and the trends is always great.

Kate.

I think that something that obviously everyone's knows has been recently changed in the US was the new opt out regulation that has to be more visible on subscriptions. And I I wonder, Daniella, if you've encountered any changes that you have to consider for that, and I guess everyone's considering it. But it's gonna be a quick change that everyone has to make and more from, like, a content customer point of view.

Yeah. So I I agree with everything that has been said. You need to be aware of the changes that each markets are requiring for companies.

Sometimes many companies are ahead of the game. So, you know, usually, you know when these laws are being discussed and you implement them beforehand. So that is a good practice. When you also are a global product, you implement a solution that the first markets required and then that is useful for the rest when that goes internationally.

Great. I think that's a great way to sort of end off today, you know, trying to stay ahead. And if you hear things, you know, plan for it on the regulation side. Big thank you to you for joining today and and for everyone watching.

We will get back to anyone in the chat who we've not managed to respond to, and, we'll be sharing some more content along with this recording to everybody. And, yeah, just wishing everyone in the please join us today good luck in the expansion journey. And, thank you so much to our panelists for joining us.

Thanks. Thank you, sir.

You.

Thank you so much. Have a good day. You too.