With the emergence of China as the global e-commerce leader and rapid growth elsewhere in Asia and Latin America, online shopping has truly gone global, providing SMEs (small and medium-size enterprises) with significant growth opportunities.
As a result of online sales, an estimated two million Australian small businesses (about 95% of all business in Australia), are experiencing their strongest revenue performance in nearly five years.
To better understand the opportunities in cross-border e-commerce, global shipping company FedEx Express recently commissioned Forrester Consulting to conduct a detailed study.
The study explored what influenced the buying and selling behaviours of more than 9,000 global online shoppers and conducted in-depth interviews with 34 SMEs.
Mr Kim Garner, managing director of FedEx Express Australasia, says several of the study’s key findings can assist SMEs in taking their business to the next level globally.
Mr Garner suggests SMEs should consider the following eight tips:
1. Cross-border e-commerce is a major revenue opportunity for SMEs
Online consumers in every corner of the world are shopping across borders for physical goods. SMEs can win this business by highlighting their strengths and leveraging the availability of services, which close the competitive gap with larger companies.
2. Study your current international traffic and business
From the interviews conducted with SMEs, it became apparent that a large number started their cross-border business unintentionally. Of the Australian consumers who took part in the study, more than 70% said the “uniqueness” of an item was influential when making a purchase from outside the country. Record the geographical location of the consumers who are coming to your website to help you understand where the demand is coming from, which will help to prioritise your business needs.
3. SMEs must differentiate themselves by offering unique merchandise while providing world-class service
SMEs have a unique opportunity to provide hard-to-find products, with 81% of the Australian consumers surveyed confirming that being unable to purchase an item from within their country has influenced their spending habits. At the same time, you must offer great logistics and ease concerns relating to reputation that larger companies do through scale. FedEx can assist SMEs in navigating complex regulatory environments and managing logistics, which can be a major hurdle for many businesses.
4. Learn from your peers
SMEs could explore the sites of their competitors to understand what logistics services are offered and how the purchase processes works.
5. Decide whether to go broad or narrow
Are you going to try to serve many markets, or focus on a few? Does your merchandise have broad appeal or is it more attractive to certain countries? If you are focusing on a few markets, consider whether it’s worth investing more in services such as website translations, web advertising, and broader payment offerings. Easy to use and clever website design is essential for Australian online shoppers. Of those surveyed, 49% said poor website design was the number one reason why they would avoid purchasing online from an SME.
6. SMEs don’t need drastically different regional e-commerce strategies
Shoppers around the world generally discover the merchants they do business with through similar search methods and seek similar levels of service. This removes the need for multiple overarching strategies; however, certain consumers have somewhat varying needs based on factors including:
- Where they live
- What they are shopping for and
- How much they are willing to pay.
Agile SMEs can expand their cross-border business and delight their global customers by taking advantage of these market nuances.
7. Focus on limited geographies at first to test your approach and partners
Even if you opt for a broad global strategy,it’s best to make sure you’ve figured out a few geographies before expanding further. Each country will have its specific requirements and complexities. Using a logistics provider like FedEx, who is recognised for its collaborations with many customs administrations across Asia will simplify the customs processes associated with global trade.
8. Identify the right suppliers based on your strategy and needs
Your international strategy and type of business will dictate your needs from suppliers. Think about services and offerings, which will make a difference to the customers you want to reach and your business growth. For instance 76% of Australians surveyed cited that simple returns and exchange processes were very influential when thinking of buying online. If you want to be able to offer returns services to customers you will need a logistics provider that can handle international returns smoothly and efficiently. FedEx Global Returns is a shipping solution designed to simplify the worldwide returns process including editable returns labels, customs documentation and flexible return destinations.
Mr Garner says FedEx solutions support SMEs and online retailers so they can better compete in today’s multi-channel marketplace.
“FedEx makes customer returns as easy as it is to make a purchase, from automatically generating customised packing slips that contain complete return shipping instructions, to creating customised solutions for e-commerce,” he said.
Global e-commerce is growing across a variety of regions and countries with online buying behaviour representing more than one trillion US dollars in sales per year and forecasted to nearly double by 2018.
Through forces such as rapid growth in emerging markets and the proliferation of digital channels through which to search for and engage with business, consumers all around the globe are beginning to shop online, including 83% of those surveyed in the APAC region who confirmed that they have already shopped cross-border.
Many SMEs are already profiting from cross-border trade. What about your business?