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Home / Business & Management / Entrepreneurship / SMEs and New Markets: Trade, the Chinese Powerhouse and Online Opportunities / E-commerce: more opportunity and more help
E-commerce: more opportunity and more help
These days you don’t need to be a huge multinational to trade across borders.
SONYA MICHELE: With e-commerce these days, things have become closer to people. So they are far more convenient, regardless of where the merchant might be or where the customer might be. So they can get that sought after item, whether it be in the street next door or whether it be across the other side of the world. So e-commerce has provided that.
BRUCE BILLSON: It’s been great that Sonya Michele could share with us what she’s learned and her journey of Dog & Boy. But she talked about how her business services an international clientele. How does she make that happen? What support does she rely upon, and what partnerships help her to not only secure the sale but then execute the delivery of her precious scarves to their excited customers? Let’s talk with Christine Holgate. Christine leads Australia’s postal organisation, called Australia Post. And they’ve set themselves up to be a great ally and great support for exporting SMEs like Dog & Boy.
Your own research revealed that only one in four SMEs has an overseas customer, and only about $1 in every $100 from trade and exports comes to an SME. So an enormous upside potential there, but you’ve identified that help is needed?
CHRISTINE HOLGATE: I think that’s right, Bruce. And although it is only one in four, it’s a better percentage than large businesses. It’s no secret that SME is at the forefront of innovation. So why aren’t we getting more small businesses growing overseas. And particularly in Asia, when we’ve got this incredible growth on our doorstep, and they happen to love Australian brands. Well, some people are actually afraid of the language differences. And they often say to me, but actually, I don’t speak Vietnamese, Christine. I don’t understand the culture of that country. It feels risky going putting money. So they generally invest money in safer markets.
It’s no secret that in Australia we invest more money in New Zealand, with a GDP growing at 2% and 4 and 1/2 million people– I love the New Zealanders– than we do in Indonesia. So why? And so what we really need to do is actually connect the people of Australia with our own diaspora, to start off with, and our own students here. Because we have a rich history here in Australia. 28% of us were born overseas. A million people with Asian parentage. What a great opportunity for SMEs. Let’s employ these people in our businesses. Let’s learn those languages. Let’s learn that culture, and doing business overseas. And that wouldn’t be too hard. Don’t have to risk too much up front.
Start with online platforms. Test your own products. Check the relevant for those different markets. Make sure you do your research.
BRUCE BILLSON: And your research found that two out of three businesses already online have an overseas customer, so that that segue from an online presence into the international market has been identified. But you’ve also pointed to the need for fulfilment. Once we’ve tantalised people with what it is we offer, how do we deliver it reliably? How do we deal with the currency issues? And that’s where you’re playing a role.
CHRISTINE HOLGATE: Well, I really hope to play a bigger role to help Australia.
Many Australian businesses are seeing people interested in buying their products and services. But let’s not have any illusion. These overseas customers have choices. Just as much as Australia is loved and wanted, so are the Swedes, so are the Germans–
BRUCE BILLSON: 150 economies busy in China, yeah.
CHRISTINE HOLGATE: That’s right. So we must be bold, be brave, make decisions. And there is an incredible opportunity out there for Australian small businesses. And there are many organisations to help them. Austrade is all about helping small businesses trade, and they’ve got access to some fantastic market research. You’ve got Efic who might just help you organise your finances to do it if you actually look at your local state governments, you’ll find out that quite often they have investment grants for small businesses who want to try to expand overseas. So you’ve got Asialink, another data of knowledge. So there are lots of people to help you on the way.
And there’s even ways that you can actually, perhaps, get funding to help you expand overseas. So just a terrific opportunity. But don’t waste it, because it won’t be sitting here forever. I think it’s also important to share the challenges and not just the successes. Why? Because then we don’t make the same mistakes twice. And I think that’s as critically important as just seeing the trail blazers.
BRUCE BILLSON: Yeah. And Australia Post is helping with fulfilment and a range of other resources. Share with us how that works to help with the execution of transactions that may have been enabled by technology, for instance.
CHRISTINE HOLGATE: Well, there’s lots of different ways Australia Post can help small businesses think about growing and expanding their business overseas. In many of the core markets where there’s growth, like China, we actually already have joint ventures with people like China Post, with Saichang. And that enables an Australian business, actually, to be able to very cost efficiently take products from Australia into China. We have warehouses in what they call the free trade centres, which are these areas where you get around the tariffs and all the regulation hurdles. So we can hold their products for them. But in other markets, like for example, in Singapore, we have Australia Shop on Lazada.
So we can even help an Australian small business test the market by putting products onto the Australia Shop first. Australia Post is unique in Australia. We are the only organisation that touches every home and every business. But we also have an incredible network to the world, with every one of 160-plus post offices in the world. So if we can’t help, I’m not sure who can.
BRUCE BILLSON: And you found a correlation between those that are trading internationally and their own business resilience. It seemed to be more open to new market opportunities, more customers to try and delight. Is that part of the story, that really being open to these new markets, and that’s good for your business overall?
CHRISTINE HOLGATE: It’s also no secret that a small business who’s likely to have already expanded overseas is growing at least 17% faster than a business of similar size, similar market place, just domestically. So there are rewards. And of course, there’s people who are prepared to take risks. And there is an element of a risk, expanding into an overseas market. But if you want to grow, and you want to outperform your business, well, there’s an old saying. You have to speculate to accumulate. And it’s not so risky if you hold hands with the right organisation. You know, as I said earlier, there’s a power of people to support you.
BRUCE BILLSON: Three or four key points. If you and I are embarking on our SME, looking into new international markets, what would those three or four key points be that you’d look for to feel that we were on track?
CHRISTINE HOLGATE: First of all, make sure that you’ve done your research, and you’ve found that there is a need for your product. Don’t take coal to Newcastle. Number two, make sure you have an understanding of the local market. And that may require you hiring local people here in your own business, or having local people on the ground, but it’s really important that you understand the local consumer. Have a clear strategy. Have an element of patience and maybe a sense of humour. Make sure your bank is backing you, as well as your board. But you know what, if you can have that patience and resilience and really understand the consumer at the other end, there are incredible rewards for Australia.
I believe this is really important. And it’s not just important for individual small businesses to grow. It’s actually important for the future of Australia. Because if we don’t step up and take this opportunity, other countries will come and take it. And that would take away the jobs for our children. So they want us. We have the products and services they need. So we just got to go for it.
BRUCE BILLSON: Some delicious possibilities in international markets. Thank you, Christine Holgate, for sharing your insights and your experience with us today.
CHRISTINE HOLGATE: Thank you, Bruce.
These days you don’t need to be a huge multinational to trade across borders.
E-commerce is big business. According to International Trade Centre, it makes up 12% of global trade in goods, and that figure continues to increase, with reports it is expected to reach 17.5% in 2021.
In 2017 retail e-commerce sales worldwide accounted for one-tenth of total retail sales worldwide for the first time.
In 2016, almost half of those who purchased goods online completed a cross-border transaction, clear evidence that customers have embraced international shopping.
DHL forecast in 2017 that the rate of international e-commerce will grow at twice the rate of domestic e-commerce through 2020.
A survey conducted by Australia Post revealed that SMEs selling online are far more likely to have overseas customers than those not selling online. The SMEs selling to both international and domestic customers had on average a 17% higher turnover than businesses that had not ventured into overseas markets.
The implication for global retailers is clear, and by ‘global retailers’ we don’t just mean huge multinationals.
These multinationals, like Amazon and Alibaba, can pose a threat to SMEs in international trade, but can also pave the way in that they:
It is clear that while e-commerce affords SMEs opportunities to access new and global markets there are challenges that many SMEs find overwhelming. These challenges highlight the importance of SMEs seeking support to realise the advantages of e-commerce. As discussed in the video, in Australia the national postal service, Australia Post, provides a range of business solutions to help SMEs access new markets. Christine Holgate, CEO of Australia Post, describes some of the ways the postal service can support SMEs as they look to enter into international markets. If you’re outside Australia, you might like to search for an equivalent service available to SMEs in your particular area.Contribute to the development of online shopping culture in new frontier markets or provide consumer access via their marketplace solutions for third parties … [in addition, they also] set the standards with respect to the consumer experience in domestic and international online shopping (DHL 2017, p. 16).
Your task
Thinking about your business or an SME with which you’re familiar, what assistance or additional services would you need in order to supply a customer in a new market offshore to your operating base? How confident are you, as an SME owner, that you know the sorts of assistance you require, how to access that assistance, and the questions to ask that would enable you to begin operating in new markets? Share in the comments some steps you can take to increase your level of confidence.This article is from the online course:
SMEs and New Markets: Trade, the Chinese Powerhouse and Online Opportunities
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SMEs and New Markets: Trade, the Chinese Powerhouse and Online Opportunities
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