New year, new markets: Business strategies for international expansion
2024 promises to be a year of opportunity for India-based businesses eyeing international expansion. Whether you’re an exporter, eCommerce provider, or SaaS leader, the global economic headwinds that are battering other countries are blowing in India’s favor.
Supported by government policies like Make in India and Production Linked Incentive (PLI) and driven by global demand for Indian goods as countries look to diversify their supply chains away from China, the manufacturing and export sectors are growing rapidly, propelling India’s economic growth forward. Meanwhile, India-based e-commerce is projected to grow at an annual rate of 18 percent through 2025.
For more in-depth analysis and predictions for 2024, download our ebook, “Market Report: 2024 Exporter Trends In India”.
The following sections will explore how India-based exporters, e-commerce, and SaaS companies can take advantage of the favorable global conditions while mitigating these potential risks.
Exporters: Diversifying to Grow
As an India-based exporter, there are numerous ways to take advantage of current trends to expand your business in 2024. As tensions between the U.S., E.U., and China grow, foreign importers are shifting their focus to a China+1 strategy in the face of tariffs placed on Chinese goods — and Indian exports are the forerunners to replace them.
As the global middle class grows, there is growing demand for Indian goods beyond traditional markets in emerging economies in Southeast Asia, Africa, and Latin America. Indian products can fulfill growing demands and enjoy a competitive edge in these new markets, so exporters who focus on them will reap the rewards.
“Countries globally like Australia and New Zealand are also relying on India for their requirements. So it’s not only the U.S., but the other geographies across the globe as well,” highlights Annie Yadav, Director of Sales at Stenn.
One way to source these goods is by forming partnerships with manufacturers. The growing domestic manufacturing industry is opening doors for exporters to connect with more domestic producers and access more homegrown products. By tapping into this rich manufacturing ecosystem, you can offer a diverse range of products that meet both local and international standards.
For example, there’s a lot of active interaction in sectors like EV and pharma. Products from these sectors have broad international appeal, particularly for importers from developed markets like the U.S. and EU. However, it will be essential to focus on sourcing high-quality goods to stand out in a crowded market and prevent brand dilution.
Another way to diversify and grow your export business in 2024 will be to harness the momentum of the e-commerce boom. Globally, the e-commerce sector is expected to grow at a rate of 9.4 percent in 2024, and the digital marketplace transcends geographical boundaries, allowing exporters to tap into wider audiences and more resilient revenue streams by diversifying across e-commerce platforms.
Finally, forming strategic partnerships with local government officials can strengthen your export business by connecting you to decision-makers and their conversations around global trade. Government officials can provide insights into policies and trends and ensure your voice is represented in the conversations that affect your business.
E-Commerce: Harnessing the Digital Landscape
India is now the second-largest internet market in the world behind China, with 692 million active users in 2023, yet this represents only 49 percent of the country’s population. As part of the Make In India initiative, the government has rolled out the National Broadband Mission, providing broadband access to all Indian villages.
This is opening up previously underserved regional markets, where a growing online customer base awaits, eager to embrace the convenience and variety that online shopping offers.
Expanding into these new markets will require research to adapt your offerings to regional tastes, preferred payment methods, and delivery expectations. Thorough market research will enable you to create a shopping experience that resonates with the cultural and practical nuances of different Indian regions and demographics, helping to attract new customers and foster customer loyalty.
Successfully entering new regional markets will also require partnerships with local logistics providers, payment gateways, and e-commerce enablers who can provide valuable insights and resources. These partnerships facilitate smoother operations, from streamlined logistics and payment processing to nuanced marketing strategies.
But opportunities for India-based e-commerce platforms don’t stop at the domestic market — there are many opportunities to take a slice of the growing global e-commerce pie. For instance, India-based manufacturers are cutting out the middleman and selling directly to customers in markets like the U.S. — where 57 percent of online shoppers say they buy from international businesses.
Closer to home, the growing Russian and Chinese e-commerce markets are opening up to India-based sellers. For example, the Russian e-commerce market is projected to exceed $100 billion, and Ozon, the “Amazon of Russia,” is welcoming Indian goods on the platform.
The picture is similar in China, where widespread digitalization and a growing middle class are driving demand for Indian goods. By diversifying across both traditional and emerging markets, India-based e-commerce businesses can profit from the booming e-commerce sector in 2024.
SaaS: Conquering the U.S. Market
For SaaS brands looking to expand in 2024, the United States remains the most important market. India has spent over a decade positioning itself as an IT hub for software companies and earned the well-deserved reputation as one of the most important IT sourcing destinations in the world. As a result, the India-based IT service market is projected to grow to $19.93 billion by 2025.
The key to success in a competitive landscape like the U.S. lies in testing and adapting your products to meet the specific demands and preferences of U.S. customers. A leading example of an India-based SaaS startup that “broke America” is Zoho, which has grown to a value of $1 billion. One of the keys to this success has been reinvesting over half its profits into research and development — more than double the industry average.
But product alignment alone won’t be enough — you’ll also need to tailor your pricing and marketing strategies to U.S. market expectations and consumer behavior.
This involves research to understand local pricing models, payment preferences, and marketing channels. By meeting American audiences where they are and speaking their language, you can establish a strong product-market fit. For instance, with economic uncertainty challenging U.S. businesses in 2024, India-based SaaS providers can compete on price point and payment options.
Additionally, collaboration with established U.S. partners such as distributors, system integrators, or value-added resellers (VARs) can help you tap into a wealth of local knowledge and networks. Examples of VARs include:
Such partners provide insights into the U.S. market and the localized support needed for navigating its complexities. They can also help you extend your reach, leveraging their networks and expertise to accelerate sales growth and market penetration.
Threats to International Expansion: the Role of Cash Flow and Financing Solutions
One of the biggest challenges facing small and medium-sized businesses undergoing expansion is cash flow. For example, manufacturers and exporters often deal with long payment cycles, which can strain their cash flow, while SaaS companies, e-commerce businesses, and other digital economy enterprises typically have recurring revenue streams but need funds for growth activities like sales and marketing.
To overcome the problem of liquidity, you might want to consider financing solutions such as invoice factoring or revenue-based financing.
Invoice factoring is a good option for manufacturers and exporters who often have to wait for payment after shipping goods. Invoice factoring allows them to get an advance on these invoices, providing immediate working capital to continue operations, buy materials, and fulfill more orders.
Additionally, B2B companies that provide services on credit terms to other businesses can use invoice factoring to manage cash flow while waiting for payments.
Revenue-based financing (RBF) is better suited to SaaS companies and e-commerce businesses. For SaaS businesses with recurring revenue that need capital to expand, RBF allows them to receive funding based on their recurring revenues, repaying it as a percentage of future revenues.
Meanwhile, e-commerce businesses may need capital for inventory, marketing campaigns, or to scale operations. By leveraging RBF, they can access funding that aligns with their sales volume.
In fact, any digital business with regular income can harness RBF for growth without diluting equity or taking on fixed repayment schedules.
2024: The Year India-Based Enterprises Take the Global Stage
Amidst a sputtering global economy, India is surging ahead, driven by a vibrant manufacturing sector, booming exports, and a thriving digital ecosystem.
For business owners, opportunities abound for capitalizing on the nation’s manufacturing strengths, harnessing the growing export market, embracing the e-commerce revolution, and innovating in the SaaS domain.
However, 2024 will not be without its challenges for India-based businesses. Cash flow management, especially for small and medium-sized businesses, will be crucial, and companies that embrace solutions like invoice factoring and revenue-based financing will have the best chance of succeeding at international expansion.
By navigating global opportunities and mitigating risks, India-based enterprises will expand their domestic footprint and solidify their presence on the global stage in 2024.