Why These 7 Successful Businesses Failed Abroad

Success in the U.S. market does not always translate to success abroad. Numerous high-profile companies have expanded internationally, only to face unexpected challenges and failures. Here, we delve into seven successful businesses that struggled to replicate their success in other countries.

Walmart^®: A Global Giant's Misstep

Walmart, a retail behemoth in the United States, faced significant challenges in Germany. Despite dominating the U.S. market, Walmart couldn't navigate the cultural nuances and fierce competition from local retailers. After being in Germany's market for less than a decade, the company ultimately pulled out in 2006, closing 85 stores and suffering a staggering $1 billion loss.

Walmart's venture into Japan in 2003 met a similar fate. After nearly two decades of trying to win over Japanese consumers, Walmart exited in 2020, racking up another $1.6 billion loss. Both Germany and Japan resisted Walmart's big-box, low-price model, favoring local shops and bargains. Walmart also struggled in South Korea, Brazil, and the U.K., proving that global success is far from guaranteed.

Starbucks^®: Not Everyone's Cup of Coffee

Starbucks, the global coffee powerhouse, hit a wall in Australia. Its rapid expansion strategy backfired, creating an oversaturated market where locals remained loyal to their beloved independent cafes. In 2008, Starbucks was forced to shut down 61 stores, leaving behind only a handful.

Starbucks' journey in Israel was even shorter. Launching its first store in 2001, the company exited by 2003, after opening just six stores. Israeli coffee drinkers, with a taste for stronger, higher-quality brews, simply weren't sold on the Starbucks experience.

Best Buy^®: Tech Troubles Abroad

Best Buy, a leader in electronics retail in the United States, failed to gain a foothold in the U.K. The company misjudged the competitive landscape and consumer preferences, leading to the closure of its 11 UK stores in 2011, just two years after launching. Best Buy's ambitious plan to open 200 stores fell flat. The company delivered too few stores, often in inconvenient locations, making it difficult to attract customers.

The Home Depot^®: DIY Disasters

The Home Depot, the largest home improvement retailer in the U.S., struggled in China. The company's DIY model did not resonate with Chinese consumers, who preferred to hire professionals for home improvements. The Home Depot closed its last seven stores in China in 2012, costing them $1.6 million.

Airbnb^®: Early Checkout of China

Airbnb entered the Chinese market in 2016, hoping to replicate its global success. However, by 2022, the company shut down its operations there after six years of struggling to gain traction. Airbnb decided to cease representing short-term rentals in China, opting instead to focus on helping Chinese travelers find accommodations abroad. Despite removing around 150,000 listings, this only represented about 1% of Airbnb's overall business.

Mattel^®: Barbie's Struggles

Mattel's iconic Barbie dolls faced cultural resistance in China. Mattel's iconic Barbie dolls hit a cultural roadblock in China. Despite introducing a Chinese Barbie named Ling, the brand's Western-centric image failed to win over Chinese parents. Mattel closed its 36,000-square-foot six-story flagship Barbie store in Shanghai in 2011, just two years after it opened, costing the company $30 million.

eBay^®: Auction Site Woes

The world's largest online marketplace, eBay, faced tough competition in China from local giant TaoBao. eBay's system fell short as Chinese customers preferred seeing a seller's online status and communicating directly with them. They also favored building trust through direct interactions rather than relying on eBay's seller rating system based on past buyer feedback.

In 2000, eBay launched in Japan but struggled to meet consumer preferences there as well. Japanese consumers were reluctant to input their credit card information for purchases, preferring cash-on-delivery options. Learning from these mistakes, eBay later adjusted its strategies in both countries and successfully returned to profitability after its initial failed attempts.

The stories of these seven companies highlight that international expansion is fraught with challenges. Cultural differences, market misjudgments, and local competition can all play significant roles in the success or failure of a business abroad. Understanding these factors is crucial for any company looking to expand internationally.

References: 10 Successful American Businesses That Have Failed Overseas | 8 International Expansion Failures Examples