International E-commerce Expansion Flashcards

What is the main risk of using a 'gray market' distribution strategy when expanding internationally?

Answer: Brand equity damage, price erosion, and loss of control over customer experience

Gray market goods (authentic products sold through unauthorized channels) can undercut official pricing, damage brand perception, create warranty and support issues, and erode the trust of authorized distributors.

An e-commerce company is evaluating international markets using a 'TAM-SAM-SOM' framework. What does SAM represent in this context?

Answer: Serviceable Addressable Market — the portion of TAM the company can realistically target given its product and capabilities

SAM (Serviceable Addressable Market) is the segment of the Total Addressable Market that a company can realistically serve based on its product fit, geographic reach, and competitive positioning.

When setting international pricing, which approach involves charging different prices in different countries based on local purchasing power and competitive dynamics?

Answer: Market-based (differential) pricing

Market-based or differential pricing sets prices according to each country's local conditions — purchasing power, competition, and willingness to pay — rather than applying a single global price.

A merchant selling electronics to Australia must be aware of which mandatory compliance marking required for electrical products sold in Australia?

Answer: RCM (Regulatory Compliance Mark)

The RCM (Regulatory Compliance Mark) is mandatory in Australia and New Zealand for electrical and electronic products, replacing the separate C-Tick and A-Tick marks, and must be affixed before sale.

What is 'currency hedging' and why is it important for international e-commerce merchants?

Answer: Using financial instruments to lock in exchange rates and reduce revenue risk from currency fluctuations

Currency hedging uses financial tools like forward contracts or options to lock in favorable exchange rates, protecting a merchant's profit margins from adverse currency movements between sale and settlement.

An e-commerce seller on a global marketplace discovers a competing seller in another country is listing counterfeit versions of their products. The first step should be:

Answer: Submit a brand registry or intellectual property complaint through the marketplace's official IP protection program

Major marketplaces like Amazon, Alibaba, and eBay have official IP protection programs (e.g., Amazon Brand Registry) that allow verified brand owners to report and remove counterfeit listings quickly.

Which international trade agreement most directly impacts US e-commerce merchants selling to Canada and Mexico by reducing or eliminating tariffs?

Answer: USMCA (United States-Mexico-Canada Agreement)

USMCA (which replaced NAFTA) governs trade between the US, Canada, and Mexico, establishing preferential tariff rates and rules of origin that directly affect cross-border e-commerce duty obligations in North America.