E-commerce and international business.
What does e-commerce have to do with international business?
This is a sample from our book “Export & Import – Winning in the Global Marketplace” ISBN 978-0-9681148-1-0
E-Commerce or E-Business is a process of buying and selling on-line, i.e. over electronic systems like Internet or other computer networks.
Most of us have heard about Amazon.com, know how to purchase CDs, videos, and even cars on the Internet. This is what we usually refer to as e-commerce. However, this only accounts for 5-10% of actual e-commerce business. The remainder, almost 95%, consists of business to business transactions.
Growing access to the Internet and the proliferation of web sites has allowed even small companies to advertise their products and services all over the world. It has also created opportunities for them to service and sell to global customers.
There were 1.73 billion Internet users in 2010 or about 25% of the world’s population. The major users are: 738 million in Asia (China has 253 million), 418 million in Europe and 253 million in North America and 179 million in Caribbean and Latin American countries.
Almost 247 billion e-mails were sent every day in 2009. Unfortunately for legitimate users, 70% of those messages are spam or virus carriers, so the volume of “real” e-mail is about 47 billion a day. Half of internet users make purchases on-line and another 400 million will join by 2012, resulting in over 1 billion Internet users contributing $1.2 trillion to all global business (B2C or Business to Consumer). Online sales now account for 6% of all retail sales in the United States and are expected to grow to 8% by 2013. Four percent of sales in Great Britain are made online. Many online sales also produce increases in store sales as customers learn more about the products companies offer.
The emerging global interconnectedness will spread ideas and innovations around the world faster than ever before. Online spending rose to $3.2 billion for the week ending on Sunday November 29 2009.
Communication is not only about email and websites. The use of social media in the context of e-commerce has exploded: 350 million subscribers use Facebook every day, 1 billion access You Tube and 27.3 million “Tweet” every day on Twitter. There are hundreds of thousands of blogs. All of these media provide entrepreneurs with free and instant access to customers around the world. Business of the future will have to be part of those social networks if they want to promote themselves, attract new customers and create new ventures using ‘online communities’.
E-commerce is an enormous, fast-growing market. Most of us think of e-commerce as a consumer buying books, clothing, tickets or electronics online, but 90% is transactions between businesses, B2B. We are talking of more than 12 trillion dollars a year or 30% of all the business between companies.
Develop a great web site that is easy to find
Before going into too much detail about the different solutions you should know that you can benefit substantially on the global market by using the internet and one or more well-designed web sites. By setting up one or more easy to locate sites, you open the door to advertising and selling your products and delivering customer service.
With a web site, you create a presence in the global marketplace. You can showcase your products and services in several languages. By using different domain names, you can make them appear local like:..eu, com, ca, sp, etc., creating the image your company is established on many markets.
B2C or Business to Consumer
Amazon.com started by selling books over the internet. Today, the product range includes DVDs, music, games, downloadable books and grocery products. Media comprise only 60% and electronics 35% of sales. Amazon.com keeps track of customer buying patterns and can make personalized recommendations on products of interest. In 2009, the company sold more than $25 billion worth of goods.
Many consumers are making their travel arrangements online. The travel industry is very competitive. Depending on demand and availability, prices can fluctuate considerably. As well, most major airlines have switched to electronic ticketing, online check-in and downloadable boarding passes.
C2B – Customer to Business
At Priceline.com you can buy at a fixed price or submit bids on airline flights, vacation packages, cars, hotels and cruises. You can determine how much you are willing to pay, but according to Priceline terms and conditions, when the seller accepts your bid, you must complete the transaction.
C2C – Customer to Customer
E-Bay is an online auction company. You put in a bid for a product that someone wants to sell or you can list a product that you want to sell. E-Bay takes a small commission ranging from as low as 1.5% for over $1000 to 8.75% on low value goods. Traditional auction firms normally charge around 15 – 25%.
B2B – Business to Business
This is the largest market, involving many types of companies and products and services. Some companies will only do business this way. Purchasing, order acknowledgement, invoicing as well as payments can be completed online. Here are two examples.
Cisco Systems is one of the largest telecommunications, network and security services and data management systems providers. The company has about $100 million worth of sales a day. Cisco offers certification training, financing options, links to retailers and resellers and tools for customers to manage services ordering, contracts and obtains quotes online. Customers can search for Cisco products on the company web site and make purchases. Since between 80-90% of online orders are initiated by customers, there is a reduced demand for salespeople. This saves Cisco hundreds of millions of dollars every year. Most of the company’s subcontracting, after sales service, technical support and trouble shooting is managed online.
What are some of the reasons?
Cost for a call by a salesman: $200 per call.
Cost to take an order by phone: $25.
Costs for an order using e-commerce: $0.80
Interactive information over the net: 2 cents per call.
Many companies also do a large part of their customer service over the Internet, including “self-help” information.
To obtain the latest technical information about products just log into the web-site and search for the information you want to have.
So what does this have to do with you and international business?
You, as a small company, have the same opportunities as a large corporation to get exposure on the web. It makes it much easier for you to reach a worldwide customer base. Even if your clients do not buy online, you can attract new clients; supply them with information about your products as well as receiving information about them. Remove perceived boundaries and open the doors for new export sales.
You do not need to be a computer Guru to set up your own e-commerce site. There are free sites that provide help. There are also sites that, for a fee, will clear credit card transactions.
Start preparing your web site for:
- Information for clients worldwide. Make sure to put in the right Metatags, i.e. keywords, allowing for keywords in the native language as well as your own. Make sure to register your web-site with as many search engines as possible.
- Make the site easy to search and find information. (See our search button on our web site: www.exportpro.com)
- If you want to sell online, use an already establish company and program.
- Make sure your web-site is easy to find has a search feature and has easily accessible information.
- If possible, have your web site in different languages.
Welcome to the world of global business.
For more information read our book: “Export & Import – Winning in the Global Marketplace” ISBN 978-0-9681148-1-0
Leif Holmvall
President
Export Pro Inc. Canada. www.exportpro.com
