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Entering a new market is one of the most exciting moves a business can make. It usually comes with a sense of momentum, a fresh growth story for the team, and the promise of new customers who will love your product just as much as the customers at home.
But in practice, market entry has a habit of exposing every weak point in a company’s operations, finance function, and decision-making. It is not because founders are careless or teams are incompetent. It is because expansion adds complexity quickly, and complexity has a way of revealing what was previously hidden.
This guide breaks down the five biggest mistakes companies make when entering new markets, and how to avoid them. It is written for e-commerce and scale-up founders, but the lessons apply to most businesses scaling across borders in 2026.
What is the biggest mistake companies make when entering a new market?
The biggest mistake is treating market entry like a marketing project, rather than an operational and compliance project.
Many companies approach expansion by focusing on the visible parts first, such as running ads, translating the website, launching on a marketplace, or setting up a new fulfilment route. Those things matter, but they are often the easiest part of expansion.
The harder part is what happens behind the scenes when volume grows and the business starts operating across different tax rules, payment systems, delivery expectations, return behaviours, and reporting requirements. If a company does not build the foundations early, the new market becomes a source of constant friction rather than growth.
Mistake #1: Expanding because you can, not because you should. What does that mean?
It means entering a market because the barrier to entry looks low, not because the opportunity is proven.
In 2026, it is incredibly easy to “turn on” a new market. You can enable international shipping, launch paid campaigns in a new region, list products on a marketplace, or open up multi-currency checkout without making major changes to your business. This can create the impression that expansion is simply a distribution decision.
The reality is that the moment you start selling consistently into a new market, you are making a commitment to support that market properly. That includes customer experience, delivery speed, returns handling, local expectations, and often regulatory compliance. If the market is not genuinely attractive in terms of margin and repeat demand, the business ends up building complexity for growth that does not justify the cost.
A strong market entry decision is based on demand signals you can trust, a margin profile that still works after costs, and operational feasibility that does not require constant exceptions.
How do you know if demand in a new market is real, or just noise?
Demand is real when it is consistent, repeatable, and economically meaningful.
One of the most common traps is mistaking a spike in international orders for market validation. A few overseas purchases can happen for many reasons, including social media virality, seasonal gifting, or accidental exposure through a marketplace. These are not necessarily signals that a market is ready to be scaled into.
The best way to validate demand is to look for repeat purchases, improving conversion rates over time, healthy margins after shipping and returns, and a clear customer profile that behaves similarly to your best customers at home. When demand is real, you can forecast it with more confidence, and you can invest in the infrastructure required to serve it.
Mistake #2: Underestimating tax and compliance. Why is this so common?
Because compliance is rarely visible until it becomes painful.
Founders and operators often assume they can deal with tax and compliance “once the market is working.” The problem is that many tax obligations are triggered before the market becomes meaningful, and in some cases before the first sale even happens. That can include VAT registration requirements, sales tax nexus thresholds, inventory-related obligations, and marketplace reporting rules that vary by country and platform.
The reason this mistake is so damaging is that compliance issues tend to compound quietly. A business might operate for months without obvious problems, only to discover later that it has been required to register, file, or report in ways it did not anticipate. Fixing those issues retroactively is almost always slower, more expensive, and more stressful than setting things up properly from the beginning.
In 2026, enforcement is also becoming more automated, which means “we’re too small to matter” is a less reliable strategy than it used to be.
What does “compliance debt” look like in a growing business?
Compliance debt is what happens when a business grows faster than its reporting and regulatory setup.
It usually starts as small gaps that feel manageable, such as missing registrations, inconsistent tax calculation, unclear filing obligations, or messy transaction data. Over time, those gaps become harder to fix because volume increases and the business becomes more complex.
The most common symptoms include sudden backdated filings, surprise penalties, time-consuming reconciliations, and a finance team that spends more time reacting than planning. It also creates problems during fundraising and due diligence, because investors and buyers are increasingly sensitive to compliance risk, especially for companies selling internationally.
Compliance debt is not just a tax issue. It becomes a business issue, because it consumes time, introduces uncertainty, and can slow down growth at the worst possible moment.
Mistake #3: Getting fulfilment wrong. Why does logistics make or break market entry?
Because fulfilment is the part of the customer experience that becomes impossible to hide at scale.
When a business enters a new market, customers compare your delivery times and returns experience to what they already expect locally. If your shipping is slow, expensive, or unpredictable, it becomes harder to convert new customers and even harder to retain them.
Many companies try to solve this by moving inventory closer to customers, using local warehouses or third-party logistics providers. That can be a great decision, but it also introduces new complexity, including inventory management challenges, new costs, and often tax implications depending on where stock is stored.
Fulfilment becomes a strategic decision rather than a tactical one, because it affects conversion, retention, customer satisfaction, and operational overhead all at once. The best market entries treat fulfilment as a core part of the expansion plan, not something to patch after problems appear.
How should companies decide between cross-border shipping and local warehousing?
They should decide based on customer expectations, economics, and operational readiness.
Cross-border shipping is often a good early-stage approach because it is simpler and requires less setup. However, it becomes less viable when customers expect fast delivery, when shipping costs erode margin, or when returns become too expensive and slow to manage.
Local warehousing can improve delivery speed and customer experience, but it requires strong forecasting, disciplined inventory planning, and the ability to manage fulfilment partners effectively. It can also trigger additional compliance obligations depending on the market.
A practical approach is to start with cross-border shipping while testing demand, then move to local warehousing when the market has proven repeatability and margin, and when the operational team has the capacity to manage the complexity.
Mistake #4: Not adapting to local customer expectations. What gets overlooked most often?
Many companies assume that customers in a new market will behave like customers at home.
In reality, customer expectations can vary dramatically by region, especially in e-commerce. That includes expectations around delivery speed, preferred payment methods, trust signals, return policies, and even how product information is presented. A market that looks similar on paper can still behave differently in practice.
For example, a return policy that works well in one market may feel too strict in another. A payment method that is standard in one region may be unfamiliar elsewhere. A pricing strategy that looks competitive at home may not account for local shipping norms or duties.
The businesses that scale well are the ones that treat localisation as a growth lever rather than a translation exercise. They adapt the experience to match the market, rather than forcing the market to adapt to them.
How do returns impact market entry more than founders expect?
Returns are one of the fastest ways international expansion can destroy margin.
Returns tend to increase in new markets because customers are less familiar with the brand, sizing expectations may differ, and shipping and delivery uncertainty can influence purchasing behaviour. International returns also introduce higher costs, slower processing, and more complex workflows, which can put pressure on customer experience and finance operations at the same time.
If a business does not plan for returns properly, it can end up with an expansion that looks successful in revenue terms but is quietly unprofitable once return costs are factored in. The best market entries treat returns as part of the go-to-market strategy, not a customer service issue to deal with later.
Mistake #5: Scaling without operational visibility. What does this look like day-to-day?
It looks like running a bigger business without having better information.
When a company expands into multiple markets, the number of moving parts increases quickly. There are more channels, more currencies, more payment systems, more logistics routes, more customer service needs, and more compliance obligations. If the company does not have clear reporting and operational visibility, decision-making becomes slower and more reactive.
This is when finance teams spend weeks reconciling rather than analysing. It is when founders lose confidence in the numbers. It is when teams argue over whose spreadsheet is correct. It is when market performance is difficult to compare because data is inconsistent.
Operational visibility is not about having fancy dashboards. It is about having clean, structured, reliable data that supports decision-making and compliance, so the business can grow without constant uncertainty.
How can automation help companies avoid these mistakes?
Automation reduces risk by making processes consistent and repeatable.
As companies scale, manual processes break because humans cannot maintain perfect consistency across growing complexity. Automation helps by reducing errors, improving speed, and creating clean audit trails. It also allows finance and operations teams to spend more time on strategy and less time on repetitive reporting tasks.
However, automation works best when it supports a clear operating model. It is not a shortcut for planning. It is an enabler for sustainable growth, especially when paired with expert guidance in areas like tax compliance and multi-market reporting.
Final Thoughts: Market Entry Is a Test of Your Foundations
Entering a new market is one of the best ways to grow a business, but it is also one of the fastest ways to expose weaknesses.
The companies that succeed in new markets are not the ones who move the fastest. They are the ones who move with clarity, strong fundamentals, and systems that scale.
If you take one lesson from this, make it this:
Before you ask “Can we sell there?” ask “Can we operate there?”
Because selling is the easy part. Operating is what makes growth sustainable.