The hidden costs of expanding into a new market

A new market might look compelling on paper. There’s a large audience, strong growth, limited competition and a product that already works elsewhere.

Then reality hits. Customers may be more price-sensitive, local competitors may have distribution sewn up, marketplaces may dominate, returns may erode margins or changing customs rules may undermine the business case.

AI can make expansion faster and cheaper, from translating content to creating local creative and analysing competitors. But it can do the same for your competitors too.

Instead of asking “Is there demand for our product?”, a better question is “Does our whole commercial proposition work here, and are we equipped for how this market is changing?” Before committing serious money, these are the areas we think you need to stress-test.

1. Don’t confuse a big country with a big opportunity

A large population doesn’t necessarily mean a large market for your product. Look beyond headline size: how big and fast-growing is the relevant category? Who buys it, at what price, and from whom? How concentrated is competition, and how much demand goes to domestic versus international brands? Are there significant regional or demographic differences?

Don’t assume your category already exists in the market. Tumble dryers, for example, aren’t a major category in Italy, where a long-established culture of air-drying clothes is supported by the warm climate and high energy costs. Does your proposition actually resonate with local customers? If you have to create a market rather than enter an established one, the marketing challenge is very different.

Remember too that market conditions can change while an expansion programme is being planned. The UK-India Free Trade Agreement, for example, changed tariff treatment and trading conditions from July 2026. Political, economic and regulatory changes can affect consumer spending, media costs and the viability of particular channels.

A good business case should survive a few uncomfortable questions: what if prices need to fall 10%? What if acquisition costs are higher? What if a tariff appears? What if a major marketplace changes its fees?

What to watch: A large population doesn’t guarantee enough demand for your product at a profitable price.

2. Understand why local competitors are winning

Knowing who your competitors are is only half the job. You also need to understand why they win.

A local brand may have stronger recognition and lower acquisition costs. A retailer may have better distribution. A marketplace seller may have lower costs. Look beyond the product at pricing, availability, reviews, delivery, marketplaces, brand awareness and after-sales support. A competitor doesn’t need a better product to beat you. They may simply be easier to find, cheaper or more trusted.

AI adds another layer. If everyone can use it to produce more content, creative and competitor analysis, more marketing output won’t be much of an advantage. The real advantage will come from having better local information and using it to make better decisions.

What to watch: A strong product still needs to overcome local advantages in distribution, pricing, trust and customer acquisition.

3. Find out where demand is really happening

A common international expansion mistake is assuming that the channel mix that works at home will work abroad. Search may matter, but so might marketplaces, comparison sites, social commerce, affiliates, retailers or local platforms. In some markets, customers may discover, compare and buy products entirely through a marketplace without visiting the brand’s website.

The important question is how customers move from discovery to purchase in that market. If marketplaces, social platforms or other local channels play a bigger role than they do at home, your marketing strategy and budget may need to change accordingly.

AI adds another intermediary. The question is no longer just “Where do customers search?” but also “Where do they ask?” If people increasingly use AI to recommend products, compare brands or make buying decisions, you need to understand how your brand and category appear there. Marketplaces and AI platforms can open up new customers, but they also mean relying on someone else’s rules. Understand this before setting your media budget.

What to watch: Your most effective route to customers may be very different from the one that works in your home market.

4. Prepare for an AI-shaped search landscape

Traditionally, international SEO meant understanding local search demand, competitors and search results. It still does, but increasingly AI is deciding what customers see.

Google’s AI Mode and agentic shopping are examples. Merchant Center is becoming more important too, as Google uses product data to power AI-driven discovery and shopping. Its Universal Commerce Protocol can give shopping agents access to information such as pricing, inventory and product details.

That makes accurate, structured and locally relevant product information increasingly important. Pricing, availability, delivery and other commercial details need to be reliable. As AI influences discovery, comparison and purchase, market-entry research needs to consider not only local search behaviour, but how AI-mediated discovery is developing in that market and category.

What to watch: AI is changing how customers discover and compare brands, so market-entry plans need to account for these newer routes to purchase.

5. Don’t mistake AI-generated localisation for local understanding

AI can translate your website, rewrite ads and create local creative, but sounding local isn’t the same as being local.

Real localisation can affect pricing, payment methods, promotions, product names, imagery, reviews, delivery, returns, customer service and legal information. You don’t necessarily need to localise everything, but you do need to identify where local knowledge can affect performance. Some pages may need little change; others may need a complete rethink.

Local differences can also affect how people communicate, research products and establish trust, not just the words they use.

As AI makes generic localisation cheaper, genuine local expertise becomes more valuable. Oban’s Local In-Market Experts can challenge assumptions about search behaviour, competitors, content and customer expectations that a central team may miss.

What to watch: AI can make localisation faster, but local expertise is still needed to understand what will work best with customers.

6. Make sure the business can deliver what the marketing promises

Marketing can create demand faster than operations can service it, creating customer dissatisfaction. Before launch, pressure-test fulfilment, stock, returns, refunds, warranties, repairs, support and customer service, including opening hours and language capability.

Cross-border shoppers are wary of uncertainty around delivery times and charges, so make these clear upfront. If customers expect support in their own time zone or language, make sure the business can provide it. Operations aren’t separate from the marketing proposition: they are part of what you’re promising, whether the customer comes through a human, algorithm or AI agent.

What to watch: Generating demand is only useful if the business can deliver the product and customer experience it has promised.

7. Your brand reputation doesn’t automatically cross the border

A famous brand in one market can be completely unknown in another. That creates a trust challenge, and paid media isn’t always enough to overcome it.

Trust is becoming more local. As consumers face an abundance of AI-generated content, scepticism is increasing, making relevant proof and local nuance more important than ever. Work with Local In-Market Experts to understand what customers in each market look for when deciding whether a business is credible. This might include local reviews, certifications, media coverage, familiar payment options, domestic customer service, a physical presence, local partnerships, trusted creators, guarantees or clear returns policies.

Regulation is also part of the marketing brief, and rules can vary significantly between markets. Make sure you understand and comply with local requirements around data, privacy and synthetic content, as well as the rules that apply to each channel.

And with AI systems increasingly influencing discovery and recommendations, what people and machines can find out about your brand matters far beyond your own website. Consistent, trustworthy and locally relevant information is becoming part of the brand proposition.

Don’t assume every category works in the same way, either. A financial services customer, a B2B procurement team and someone buying skincare will have very different ideas about what makes an unfamiliar brand trustworthy.

What to watch: A brand that is trusted at home may have to build credibility from scratch in a new market.

8. Calculate what the product really costs to sell

A product can be highly profitable at home and barely worth selling abroad. What matters is the landed economics: customs duties, taxes, fulfilment, payment and marketplace fees, returns, compliance, localisation and customer acquisition.

The EU’s recent €3 customs duty on low-value consignments from outside the bloc illustrates how quickly costs can add up. For a high-volume e-commerce business, even a small charge per order can become a significant cost. Currency movements can matter too, particularly where media spend, product costs and revenue are in different currencies.

AI may reduce some research, content and operational costs, but it can also create new technology and platform dependencies. Model the economics at order level, based on how customers will actually buy.

What to watch: Duties, fulfilment, returns, fees and customer acquisition can change the economics of an otherwise attractive market.

9. Budget for getting things wrong

The final hidden cost is that you will learn things along the way. Research will meet real search behaviour, positioning will be tested with real customers, and competitor analysis will meet actual prices. AI can speed up that learning, but it can also make bad assumptions travel faster. A polished answer based on poor local information is still a poor answer.

Expansion also requires ongoing resource. Managing local platforms, agencies, creative, customer service and reporting takes capacity as well as budget.

So leave room in your budget to test, learn and adapt. The first phase doesn’t have to maximise revenue; its job is to establish what works so you can build sustainable growth with greater confidence. And don’t treat market research as a one-off exercise. Search behaviour, competitors, regulations, platforms and customer expectations can change quickly, so keep monitoring the market and updating your assumptions.

What to watch: The first phase of expansion is about testing assumptions, so budget for learning, adaptation and the resource needed to keep pace with a changing market.

The value of understanding your target markets

If you’re assessing a new market, Oban combines international digital expertise with Local In-Market Experts to help you understand customer behaviour, opportunities and what it takes to compete.

Our Country Profiles offer a practical overview of digital marketing, consumer behaviour, media and ecommerce across different markets – a useful starting point for deciding where and how to expand. Get in touch to continue the conversation.