One image that comes to mind when people think of e-commerce is a pyjama-clad eBay seller who has just sold a rare stamp from Liechtenstein. Fortunately for businesses, selling online is more sophisticated and can be a rewarding way to start an export income or to complement existing sales.
E-commerce is a system that enables buyers to research, order and pay for goods, and sometimes services, online. The platform now sees suppliers from many different industries offer their wares—from fashion to food, furniture to fridge magnets—almost anything can be sold online.
For beginners, the internet provides cost effective options for selling overseas. Mohammad Khan, international business development manager (NSW/ACT) at Australia Post says it leapfrogs a lot of the traditional legwork. “With e-commerce you can test one market and take it to other markets with very little expense. You don’t have to spend time and money getting on a plane.”
Michael Durie, marketing consultant at Australia Post, believes the internet benefits new exporters because it reduces obstacles for businesses. “What e-commerce does is close the distance and creates a 24/7 market environment. This gives access to countries they never had access to before,” he says.
E-commerce allows the business to control every part of the supply chain, from inventory management and payment to fulfilment. This means if part of the chain isn’t working, the business has the flexibility to change things before it dampens sales. “The beauty of e-commerce is you can change things quickly: you can take a product out and put in a new product, or put in a message that the product is not available,” says Khan. “Inventory is essential in overseas markets; if you do not deliver, you lose trust.”
However, control means that the business is responsible for the infrastructure—the inventory, payment and delivery mechanisms—to manage sales. “It’s one thing to say ‘let’s build a website’, but that’s only a small part of the equation. You need to have all the infrastructure in place so everything works smoothly,” says Durie.
His advice: start small but scale. “Successful companies build incrementally and make sure they can scale things quickly. Then they can expand into numerous markets rather than one market at a time.”
Another way to build a market is to use a familiar channel, like a shopfront on eBay, then expand from there. “When you go into a new market, it’s wise to use those [channels] and then once you’ve built a reputation, you can have your own website,” says Khan.
Selling through a website can be a good way to complement existing trade for existing exporters. “Some businesses have e-commerce, plus the distribution network and retail network,” notes Khan. He says seasonal businesses use e-commerce to complement domestic sales. “Look at ugg boots: during winter in Australia sellers can concentrate on domestic sales, but as the US goes into winter, they can concentrate on that market.”
Dilip Rao, managing director of online payment gateway Paymate, says an online presence may even expand your existing distribution network. In countries like China where there are several markets rather than one homogenous market, an exporter might distribute to one region to test the market. “If you start with one and also sell online, then suddenly realise you have business in two or three other regions, that’s where you can extend you distribution.
“It can also get you into countries where you didn’t think you had demand. Japan, for example, has a lot of sophisticated buyers online, but it’s a tough country to set up shop. You might get online orders and then you can justify the investment to set up shop.”
Having an online channel may also help with marketing. By collecting data from various regions you can see what’s popular and tailor your promotions accordingly, whether through your website or your existing distributors.
Online we trust
According to Rao, there are three main ways you can earn trust from online buyers. The first is to gain endorsement from an established player. With Chinese payment gateway Alipay, Paymate created Haiwaibao.com, an online shopping mall for Australian businesses to sell to China. With Alipay’s referral, more than 80 million existing customers already trust this online store.
Language is also a factor. “We made it a dual language website so people can see products in English and Mandarin. While a lot of people speak English, they’re not comfortable enough to make an online purchase,” notes Rao.
Other types of communication also provide peace of mind. “If you have an email address where people can contact you that’s good, but you have to respond. If you don’t respond for three days, you won’t get a sale,” says Rao. “On Haiwaibao you can chat to somebody online and that’s a good way to have engagement on your website, especially internationally. When you can answer a question you’re more likely to get a sale because you feel there’s a real person behind the website.”
Trust: Have a professional website with information about your business, including contact details and credentials.
Availability: Make sure you have items in stock. Sell in a widely accepted currency, like US dollars.
Options: Give several payment and delivery options. Be clear about how each method works and how much they cost.
Safety: Secure payment systems and provide security details to customers. Ensure shipments can be tracked and/or offer insurance.
All wrapped up
According to logistics franchise Pack & Send, good things come in all-sized packages. Operating on the premise that no package is too big, awkward, delicate or valuable to send, Pack & Send is known for taking on business that others reject. And e-commerce has certainly been kind to the company, reports CEO and founder Michael Paul. “It has certainly fuelled our growth. Today, even small home-based businesses can sell products on a global scale, which has been good for us in the logistics game.”
The biggest shift has been the growth of the business-to-consumer (B2C) market. Traditional logistics has been business-to-business, but Pack & Send’s ability to adapt to the B2C model has served them well, says Paul. “The parcel is delivered to the nearest Pack & Send store and the recipient can pick up the parcel at a time convenient to them.”
He also notes reverse logistics—a return for repair, for example—is another feature of the new e-market because consumers no longer have a physical outlet to visit.
Named 2007 Franchisor of the Year in the PricewaterhouseCoopers Excellence in Franchising Awards, Pack & Send now has over 90 stores in Australia and new master franchises signed in New Zealand and the United Kingdom. “One competitive advantage is our Store Connect system where multiple Pack & Send stores work together to deliver solutions,” he says. “It made sense to get a network in the UK and New Zealand, where we were already sending a fair bit of our freight, to take advantage of that.”
While it has taken over two years to get the overseas franchises up and running due to extensive research, intellectual property registration, investment in IT infrastructure and development of financial models, Paul says he’s glad they took a proactive approach because it means they’re in good shape to create a global network. “We’ve registered our trademark in over 50 countries throughout the world; we expect to be in all of those in due course. Having those global stores means we build more value into each franchisee’s businesses.”