Despite the widespread of use of the Internet among local small-to-medium sized businesses (SMB) there is a notable lack of enthusiasm within the sector for using the technology to reach foreign customers, according to a recent study.
“Many companies do no know how they adapt their business models to use Web-based technologies to reach out to foreign digital markets,” says Beck Reuber, professor of strategic management the Rotman School of Management at the University of Toronto.
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Reuber is one of the authors of a study titled, Building International Sales in a Digitized economy: Best Practices for SMEs. The report was commissioned by the Conference Board of Canada (CBC) in order to identify strategies that would help smaller businesses build their reputation and market goods and services abroad through the Internet. The study is based on a survey of more than 500 papers published during the last 10 years and supplemented by interviews with a select group of Canadian entrepreneurs who are successfully selling online abroad.
Since Canada has a relatively small domestic market, according to Reuber, the most promising growth opportunities for SMBs lie outside the country’s borders. She also points out that studies and real-world examples show that participation in digital markets or e-commerce increase access to international customers and can improve the quality, speed and cost effectiveness of communication and transactions.
The need to go global is a must for many SMBs seeking growth, according to the head of Markham, Ont.-based start-up incubator. “Don’t get me wrong, opportunities abound in Canada. But for a large number of companies realizing their full potential requires expanding beyond our borders,” according to Jeremy Laurin, president and CEO of VentureLAB, a Markham, Ont.-based business incubator.
Yet, while more than 60 per cent of Canadian Internet users participate in social networking sites and there is extensive exposure to online technology in the country, the report notes that only 36 per cent of business owners believe that doing business over the Internet will help them reach new customers. The report also found roughly the same number of respondents were reluctant to change their business models to accommodate online sales.
Lack of knowledge not technology
There are three main factors that contribute to success in International digital markets, according to the CBC report:
- A favourable online reputation
- Strong online technology capabilities
- An engaged online brand community
However, in the case of many Canadian SMBs, Reuber said, lack of how to effectively use e-commerce tools, rather than lack of technology are the main hurdle to adoption. “It’s not that they don’t have the technology, but rather they are not so sure how to employ it effectively,” the professor said.
To achieve the three requirements above, the CBC report has the following advice: There are numerous international sellers in the online market. Buyers typically flock to and recommend sellers with good online reputation. But in order build a reputation, your business must be visible to online customers first.
SEO: Businesses can achieve this by employing search engine optimization (SEO) tools and services that will help the firm’s Web site gain high rankings in online searches. For instance, the online analytical tool of Toronto-based mobile app maker Polar Mobile revealed that its first Indian and Indonesian customers found Polar Mobile through the company’s Web site.
For SEO best practices, check out these articles:
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Another way to gain online visibility is to join an online channel. Examples of online channels are: Download.com (for software products); Ersy.com (for handmade products); and AbeBooks.com (for second hand books).
An online channel can also be a third-party buy and sell site such as eBay.com, Amazon.com or iTunes.
Firms can also develop visibility by developing their reputation as a subject matter expert or online influencer by contributing to online discussion groups relevant to your market or creating a blog targeting your audience.
Hamilton, Ont-based label maker Mabel’s Labels Inc., which sells labels for children’s clothing has a very successful blog that targets mothers.
Online trust: With almost daily media coverage of online fraud, identity theft and data breaches, developing online trustworthiness is a must for any business involved in e-commerce.
First, a business must disclose to its clients information about the firm such as physical location, profiles of its managers and ways it can be contacted for transactions or complaints. There should be phone numbers for customer service and technical support.
For example, even if clients of the Toronto-based online hiring firm ClearFit.com use the company’s online hiring tool, there is still a toll-free number that customers can use if they have any questions.
E-businesses must also have a reputable and reliable online payment system that its customers can easily and securely use.
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Then, the company’s site must highlight the fact that they sell internationally. For example, the company’s Web site must clearly show where their goods and services are available.
For example, the Toronto-based online billing company FreshBooks Inc.’s Web site has the banner “Love Everywhere” and lists the percentages of its customers from different countries.
Send out quality signals: Highlight the quality and distinctiveness of your products and services. Get reputable third-party certifications and show them on your Web site.
Take advantage of joining online ratings and reviews.
Develop technology competency: Effective back-office processing systems such as linked database and Web applications are vital in streamlining processes and enhancing productivity and efficiency.
For example online retailer Beyond the Rack deals with 2,000 vendors and 3,000 orders each day and has buyers and vendors located in Canada and the United States. It is uses inventory and purchasing tools to make sure that the right products get to the right buyers at the right time.
Web-analytics tools are also important for helping businesses gain a better understanding of its customer base.
Think online community – According to the CBC report, market research has shown that people want to be involved with companies online and “co-create the value of the company itself or its products and services.”
Online brand communities can be valuable to SMBs seeking to internationalize through digital markets because online communities typically span national borders, said Reuber. Online communities can also be a valuable source of information about trends in your market or feedback from your customers.
Mabel’s Labels has a full-time social media coordinator who is active on Twitter and develops relationships with influential mommy bloggers. To bolster the image of its brand, Mabel’s Labels offers its employees a two-hour lunchtime mini-course that emphasizes the importance of preserving the company’s core values when employees are using social media sites.
Nestor Arellano is a Senior Writer at ITBusiness.ca. Follow him on Twitter, read his blogs on ITBusiness.ca Blogs and join the ITBusiness.ca Facebook Page.
