There’s no doubt e-commerce technology has the power to turn even small businesses into companies with worldwide reach. The net effect is a more level playing field for many Canadian companies, and the opportunities to expand into new markets have never been better.
I discussed this topic as a panelist on a webinar last week, that looked at how Canadian businesses can grow their e-commerce sales internationally. If you missed it, be sure to catch it on-demand. Panelists Josh Fine (Manitobah Mukluks), Andrew Lederman (Alibaba-OpenSky), Neil Swain (Trade Commissioner Service), and myself offer some practical tips for selling online in general and to China in particular.
Last year, global online retail sales were estimated at over US$2 trillion. While studies show that consumers still prefer to shop in brick-and-mortar stores, e-commerce sales are outpacing retail store sales in the US and Canada. Retail Insider recently reported that Canada’s e-commerce sales were up 30.6% in comparison to 2016, while location-based retail sales only grew by 6.7%.
By far, China has the largest e-commerce market in the world, accounting for 40 per cent of all e-commerce spending. To illustrate what this actually means, let’s do a quick comparison of America’s Black Friday to the Chinese equivalent, Singles Day. In 2017, Black Friday and Cyber Monday weekend sales across all retailers totaled just under US$15 billion. In China, on Alibaba alone – in just 24 hours, mind you – they sold over US$25 billion. Five billion of that poured in during the first five minutes.
e-Commerce refers to a range of online activities to sell your product or service online, from engaging your customer, to processing their purchase, to delivering your product. And there are different ways to execute your transactions
For example, you can be a vendor within an online Marketplace – think Amazon or Alibaba. This type of platform is a great way to test the waters, because you get to leverage the massive web traffic these marketplaces generate, not to mention their customers’ trust.
You can also sell from a Storefront, which refers to processing orders from your own website. Typically, companies use a combination of both, relying on a marketplace to generate traffic and their own storefront to build their brand.
And don’t forget about social media, which helps to ratchet up emotion and really drive brand loyalty. In fact, a number of social media platforms are ramping up their own e-commerce capabilities. For example, Instagram now allows followers to purchase product directly from posts, without the need for visiting the company website.
There’s an interesting fact that eBay Canada shared with EDC; on average, they say small- and medium-sized Canadian exporters reach about 2.5 different countries annually, but eBay exporters reach more than 20 countries every year. Now that’s what I call diversification! If one market has a tough year, you can offset it with other markets that are doing well. Here are some other benefits:
- Expanded customer base – access to major markets, which would otherwise be challenging, especially China
- Improved customer experience – because on-demand means whenever and where ever
- Less restrictions – for example, selling cross-border via e-commerce in China has far less restrictions than traditional sales in a brick-and-mortar store.
- Lower marketing costs – many of the most effective online marketing tools are relatively inexpensive or even free
- Technology enhancements – advances in artificial intelligence and other technologies means that customers can receive highly tailored shopping advice and promotions, without any human intervention.
- Ease of entry – no physical location required.
When most people start having a look at China, they think of Alibaba. Andrew Lederman, one of the webinar panelists, is the Director of Business Operations & Strategic Partnerships at OpenSky, an Alibaba subsidiary focused on bringing North American brands online in China. His advice for a China strategy? Among other things: know your audience. Don’t assume buyers in China are the same as in Canada. Find out what products they’re interested in. Andrew also shared some information about their Tmall Rising Star program, or as he refers to it, their “China in a Box” program – if you’re interested in Chinese e-commerce, you’ll definitely want to read more.
I enjoyed hearing the e-commerce story of Manitobah Mukluks. According to Josh Fine, Chief Brand Officer from the exclusive, Winnipeg-based indigenous foo brand, going online five years ago was a game-changer. Today, e-commerce sales account for half of their total global business. In addition to being sold in high-end retail venues in North America, their top-tier moccasins and mukluks are sold through their own online storefront as well as on select marketplaces. Ironically, investing in their online presence was one of the biggest contributors to the growth of their traditional bricks and mortar retail sales.
Along with the many benefits of selling online, there are some obstacles to be aware of. Neil Swain, deputy director of e-Commerce at Global Affairs’ Trade Commissioner Service, talked about one of the key challenges faced by Canadian businesses selling online: customs. The remedy? Research the regulations of each market you plan on shipping to. Import restrictions are usually fairly transparent, but if you have any questions, contact a TCS officer here in Canada to get help understanding the various regulations overseas. He also shared some resources you might find helpful, including the Canada Business Network as well as the CanExport initiative.
Your questions answered
As usual, the interactive webinar provided an opportunity for audience members to ask questions of our panelists.
One business owner wanted to know if there were any workshops to help prepare Canadian companies to use e-commerce to sell to China and other markets. Check out these resources:
- FITT (Forum for International Trade Training) has added an e-commerce course.
- TCS guide to eCommerce in China
- Soon to be released: TCS guide to e-Commerce in the U.S.
Another audience participant asked how to find reliable partners in countries like China.
- Alibaba has a certified partners list available to vendors who open a store in Tmall
- TCS can provide a short-list of reliable in-market partners in over 160 countries
Ready to jump in?
Do your homework, have a plan, start building a network and tap into resources like EDC and the TCS. Then, as Josh Fine puts it, pick a platform, choose one market first, and get on with it. The investment to start in e-commerce is relatively minor, so try something.
If you haven’t already done so, read more about EDC’s Connections Program and complete your company profile so you can be considered for promotion to international retail customers and partners.
There are a lot of great brands out there that started in a basement. If you can fill a niche demand in the retail sector, there are ways to help you identify contract manufacturers, get funding, and even lessen the risks of doing business globally. Go ahead and get in the game; the e-commerce playing field is both level and green.