Is international for you?
Why international e-commerce?
What is involved and what are the key considerations?
E Commerce is the fastest growing channel for both domestic and international sales. Are you working in this area – or do you have intentions of doing so? Maybe you don’t think it’s for you, however, before you write it off you might want to check out the opportunities highlighted in this short lesson.
Regardless of whether you already have some experience, or you are an e-commerce ‘newbie’ what follows will help you to optimise your approach.
There’s a common misconception that if you have a website you have a shop-window to the world – especially if you have a coveted .com URL. Whilst that’s not technically untrue, the reality is you’re trading in a quiet backstreet and you’re unlikely to get much business unless you get into the main shopping area. If you’re going to make the most of this fantastic opportunity you will need to invest some time (and possibly some money) in your online activity. Here we’ll help you to understand why you might want to make that investment and what’s involved.
Is it for you?
The first major consideration is whether international e-commerce is relevant to your business.
B2B or B2C?
There’s a common perception that e-commerce is only a suitable route to market in a business to consumer (B2C) environment, however this is not the case:
The United Nations Conference on Trade and Development Information Economy Report in 2017 claims that although slower to start online Business-to-Business (B2B) e-commerce sales are expected to be 10 times larger than B2C. This is not a new phenomenon as the report highlights that in 2015 e-commerce sales reached over US$25 trillion of which 90% were B2B with just 10% B2C.
B2C is no slouch however, the publication E Marketer points out that
“By 2021, it is predicted that (online) retail sales will be about $4.5 trillion which will be around 15% of all retail sales. It is already higher than this in some countries. For example in China 19% of all retail sales are already via the internet and this figure is 14% in the UK”
This has clearly been accelerated by changes in customer behaviour during the Covid-19 crisis.
Physical, digital or service offering?
The on-line environment is suitable for selling physical products, digital products and services – you just might need to adapt your offer accordingly – we take a good look at this in our International E-Commerce Considerations course.
Start up or well-established business?
E-Commerce provides a very cost-effective way for any business to break into international markets. It’s often considered to be the best route to market for a new exporter.
What if I already have sales partners (distributors or retail) in a country? This is not a problem – you can use e-commerce to enhance this business, in fact e-commerce overseas is often more effective if delivered in conjunction with an overseas partner. We’ll look at these opportunities in in our International E Commerce Considerations course.
Large, small or micro business?
The beauty of e-commerce is that you can take a number of different approaches, a number of which require minimal resource and management and hence are very suitable for micro businesses. UNCTAD highlighted this in 2017 in their Information Economy Report where they stated “The digital economy is creating new opportunities for trade and development. It is helping smaller businesses and entrepreneurs to connect with global markets more easily and it is opening up new ways of generating income.”
I already have an e-commerce website – surely it is a shop window to the world?
Well technically it is, however, your shop is in a very quiet backstreet! You might get the occasional customer by luck or if someone is looking very specifically, but in reality you are really selling yourself short. International e-commerce is a very different activity to domestic e-commerce, and even if your site is successful in your domestic market it does not mean that it will enjoy that same success in overseas markets – more about this, and how you can rectify it our International E Commerce Considerations course.
UK or international market?
For some who are reading this, the decision may be around where to trade rather than how to trade. You might already be making e-commerce sales in the UK – why should you invest in doing this overseas?
This is a very important question to ask, as understanding the reasons for trading overseas, recognising the opportunities (and there are so many) will provide you with the motivation and confidence to invest time and or money into developing your international trade. As Sarah Carroll points out in her book Grow Fast, Grow Global ‘The potential is vast. You can reach customers online in markets that you may not ever have considered doing business with before’ The lesson Why Export? looks at this question in some detail, however there are some specific reasons that you might want to internationalise your e-commerce operations.
For those of you who are not trading on-line in the UK, you have a double opportunity for growth
A new sales channel (reaching a growing number of customers who buy in a different way).
New fast-growing marketplaces overseas.
With this in mind our International E Commerce Considerations course looks at international e-commerce opportunities in some more detail.
Why would you want to invest in international e-commerce?
If you are not sure if you should invest time and money in developing an international e-commerce channel you might want to consider some of the following points:
Why e commerce?
Simply put – it’s where your customers increasingly are. According to the ITU in their publication Measuring Digital Development
Over half the world is now online (over 2 billion people) and this is growing at an average rate of circa 10% per annum.
In 2005 about 17% of the world’s population was on line – by 2019 this had increased to 53%.
In developed economies circa 87% of individuals are active on line.
Your customers are changing the way that they buy things.
In developing markets increasing numbers of your customers have access to the internet through mobiles with mobile broadband subscriptions growing year on year by circa 18%.
97% of the entire world population now lives within reach of a mobile cellular signal.
Consider how many customers you’re failing to reach by traditional channels.
You can be much more targeted in your customer communication in a digital environment (more about this later in the course) making your international marketing much more cost-effective.
You can learn more about your customers and their behaviour in a digital environment – once again making your international marketing more cost-effective.
In a recent survey of exporting small and medium sized businesses (SME’s) Gov.uk concluded that “the benefits of digital are not limited to the digital sectors: digital transformation can make every business in every sector more productive, wherever they are located. A recent survey of 1,000 UK-based businesses found digital capabilities helped boost revenues by 4.4% and reduce costs by 4.3%.1
For example, small and medium sized enterprises (SMEs) with a strong web presence on average grow more than twice as quickly as those with minimal or no presence, export twice as much, and create twice as many jobs”.
Why international e-commerce?
According to the IMF there are an increasing number of customers in overseas markets that can afford certain products and services for the first time. In Asia over half a billion people are already categorised as middle class which is more than the entire population of the EU – over the next 2 decades it is estimated that the middle class will expand by another 3 billion people and this will come almost exclusively from emerging economies.
According to Ernest and Young in their publication Hitting the Sweet Spot “Companies accustomed to serving the middle-income brackets of the old Western democracies will need to decide how they can effectively supply the new Bourgeois of Africa, Asia and beyond” .
The location of your customer base is changing – whilst your ideal customer might be in the UK today, over the coming years they might well be in an emerging economy.
The location of your competitors is changing – e-commerce is not only an opportunity for you, but also for your competitors who can use it to trade in your domestic marketplace – hence your home market is no longer a ‘safe haven’ and you might want to spread your risk by trading overseas.
There is a major shift in on line activity from West to East – the UK is no longer the primary marketplace for e-commerce
It can be easier to get noticed in a less developed / less competitive economy
What is involved? – Six Key Considerations.
The six key considerations that comprise the ExportSavvy six pack summarise what should also be considered when setting up an effective international e-commerce operation – these provide the foundations of the operation before you get into specific e-commerce activity – as a reminder these are:
Step 1 – consider Why you want to do this – what exactly do you want to achieve with your international e-commerce activity – this will not only help you to understand what to aim for, but will also motivate you, and give you the confidence to resource your e-commerce activity.
Step 2 – consider What you will sell – what products or services will be easy to sell on line? – Will you need to adapt them? – will you make a profit? Etc
Step 3 – consider Where you will sell – where are your best customers?, are they on line?, can you get your products / services to them etc? Focus on the best country(ies).
Step 4 – consider With What – resources – what will you need to deliver effective e-commerce to your chosen marketplaces? What skills, time, hardware, cash etc?
Step 5 – consider How you will sell on the internet – there are a number of ways that you can sell online – which is the most suitable route to market for you? How will you manage the customer experience? – more about this very important aspect later in the lesson.
Step 6 – consider Who you could work with – who can provide you with in territory support to enable you to optimise your e-commerce operation. How will you get value from these individuals?
By completing this course you will be able to answer all of these questions in relation to your international e-commerce.
Other key considerations
Your ultimate aim will be to make a good profit – whether that be to take out of the business or to reinvest in the business growth.
One of the most profitable retail e-commerce operations in the world is Amazon – why is it that they’ve grown so much faster than many of their competitors? Jeff Bezos the founder and CEO states “The No 1 thing that has made us successful by far is obsessive compulsive focus on the customer” .
A strong Customer experience will literally ‘turbocharge’ your on line sales. Forbes list 50 great reasons for a business focussing on delivering a great customer experience.
Companies that lead in customer experience outperform laggards by nearly 80%
73% of companies with above-average customer experience perform better financially than their competitors.
96% of customers say customer service is important in their choice of loyalty to a brand.
83% of companies that believe it’s important to make customers happy also experience growing revenue.
Brands with superior customer experience bring in 5.7 times more revenue than competitors that lag in customer experience.
73% of consumers say a good experience is key in influencing their brand loyalties.
77% of consumers say inefficient customer experiences detract from their quality of life.
Customer-centric companies are 60% more profitable than companies that don’t focus on customers.
It would therefore seem to be a sensible place to start with the questions –
What is a great customer experience in e-commerce?
How are you going to provide a competitive world class customer experience to a customer that is 5,000 miles away?
What is a world class customer experience? In simple terms, it is satisfying the customer at every touch point that you have with them.content/uploads/2020/09/CustomerService.png” width=”380″ height=”343″ alt=”” class=”wp-image-2755 alignnone size-full” />
American Express regularly produce their highly acclaimed Global Customer Service Barometer and in their 2017 report they constantly cite the value of customer service
“2 out of 3 Singaporeans have not completed a purchase because of poor customer service in the past year”
Delivering a great customer experience not only significantly increases your chances of securing an initial sale from your customer, but also a repeat purchase – this increases the yield from each customer – from the same report we see
“When it comes to making a purchase 64% of people rate customer experience rather than price’”
“7 out of 10 US Consumers say they have spent more money to do business with a company that delivers great service”
Bain and Company stress that “increasing customer retention rates by 5% increases profits anywhere from 5% to 95%”
And the Harvard Business Review reminds us that “It is anywhere from 5 to 25 times more expensive to acquire a new customer than it is to keep a current one”
So the value of customer service / experience is clear. A note of caution, American Express also point out your competitors are getting better at it……..”81% of Americans feel that businesses are meeting or exceeding their expectations for service, compared to 67% in 2014”
With this in mind one of your primary aims should be to give the customer value and optimal experience at each point. Within our International E Commerce Considerations course have a tool that can help you to plan this.
Once we are clear about this we can consider what should be delivered at each touch point we can build our international e-commerce operation with this in mind.
Our International E Commerce Considerations course will take you through a series of development stages, considering customer experience but before we start let’s consider one more very important factor.
Your mindset – the biggest barrier could be you…
Sarah Carroll of Grow Global has worked on a one to one basis with hundreds of companies to help them to develop their international e-commerce business and has delivered workshops on the subject to thousands. With her considerable experience she cites one single factor as the biggest barrier to success in this field – mindset of the management. In her book Grow Fast Grow Global in chapter 4 she refers to the typical “International Digital Journey”.
She explains that some companies have enjoyed considerable success within a year, whilst others have taken 10 years to reach the same point. To explain why this is often the case Sarah outlines 8 stages of the journey, and explains that the key is how quickly the Management move through the stages – the speed is invariably linked to lack of focus, inaction, doing things on the cheap (taking shortcuts) and missing growth opportunities. She also claims that a good starting point for you to develop your international e-commerce business is to understand where you are on the journey at this point in time. Once you understand your mindset you’re much more likely to progress from that point.
Let’s get started!
This opening lesson has helped you to think about the first of the six key considerations Why many businesses want to develop their international e-commerce capability. If you want to work through the the others, the International E Commerce Considerations course will take you through a series of lessons highlighting the key things to consider as you set up a robust and effective international e-commerce operation.
Create your online offer – making your on line offer offer simple, practical and profitable. (key consideration 2 – what?)
Choose the best marketplaces for e-commerce – Identifying the best target markets where you will find your ideal customers and be able to trade with them most easily and most profitably. (key consideration 3 – where?)
Recognise the challenges – consider what’s involved in delivering a world class customer experience, evaluate your resources and current capabilities to deliver that customer experience, (key consideration 4 – with what?)
How? (part 1)– deciding on the best route to market and creating your on international line presence. There are a number of business models that will give you on line sales – you can do it yourself, or with others – how might you choose which is best for you?
How? (part 2) delivering sales through a world class customer experience. So once you have created your site you will want to deliver that all-important customer experience – this section of the course is broken down into a number of individual lessons that looks at what will be involved in that by considering the aforementioned customer journey.
o Attract customers – considering your resources how can you attract traffic to view your offer?
o Convert traffic – how will you convert that traffic and make more online sales?
o Fulfil your order – how will you effectively deliver your sale to the customer
o Provide world class customer service – consider all post sale requirements of the customer and how you will deliver these effectively in your target marketplace(s)
People who can help – concerned about cash, skills, market presence? – don’t worry there is plenty of help (and resource) out there and this lesson will help you to identify and access this. (key consideration 6 – who?)
In addition to these 6 key decisions it is essential that you make a profit and trade safely and legally. With this in mind there are two more lessons that you can complete.
Financial considerations – making sure that you make money – and don’t fall foul to those hidden costs that can erode your profits
Legal considerations – minimising your risks and protecting your business.
Each lesson will provide you with a series of important considerations about the subject, Once you have completed the lesson we will send you a correspondence giving you some options:
The Action Zone will help you to decide what you are going to do to put your learning into practice.
The toolkit will help you to achieve this – we will direct you to appropriate tools.
We will also give you the option to connect to relevant further learning sources and people who can help you to resource and implement your ideas.
If you would like a coach to take you through this course and challenge your thinking, this can be arranged – just sign up to our 1 to 1 coaching programme and tick the e-commerce option.
We wish you good luck with your online endeavours!
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