E-commerce: Tips for boosting your exports by doing business online

Exporting to foreign markets with e-commerce. Keys to success.

E-commerce is booming. Around the world, annual percentage growth rates are in the double digits. And the COVID-19 pandemic is only driving those numbers higher. With cross-border e-commerce, Swiss SMEs can also profit from the expanding world of doing business on the internet.

Online shops and e-commerce are outpacing brick-and-mortar stores worldwide. Annual percentage growth rates in the double digits are quite common. What's more, since the COVID-19 pandemic began, online sales have garnered an even bigger share of the overall retail market than ever before. That is a good sign. Consumers who have made purchases online for the first time during this phase are likely to continue doing so. That opens up enormous opportunities in cross-border e-commerce for Swiss SMEs, both in consumer goods and in the B2B area.

Yes, every market has totally unique characteristics and challenges that companies need to know and overcome in order to export successfully. How can those problems be solved? At the 2020 GoGlobal Days hosted by Switzerland Global Enterprise (S-GE), experts from all over the world gave Swiss SMEs tips on how they can increase their business growth in global markets using e-commerce.

Export to anywhere in the world with e-commerce

Recipes for success in the field of exports are as varied as the countries themselves. Here are the most important tips and procedures for Swiss SMEs.

EU zone

Because of its geographical proximity and large internal market, the European Union zone seems to be a logical step for many Swiss companies looking to expand via e‑commerce. The opportunities are huge; online sales totaled roughly EUR 600 billion in 2018.

Nevertheless, internet sales in the EU zone are not automatic for companies in Switzerland. That is because the EU is not a single market but consists of 27 different sales markets. First of all, they each have their own value-added tax regulations. Second, the needs of customers and their expectations regarding payment systems, customer service, and delivery times differ from one member state to the next.

A gradual expansion into individual markets in collaboration with local logistics partners will help you achieve your goal. For a company, the first step would be to open an online shop for the entire EU, thereby addressing as many customers as possible. In large and important markets, the company can then open a separate store in the respective national language with dedicated customer service and a local address for returns. That approach will enable you to tap into one market at a time.

Cross-border e-commerce in the EU: Opportunities and risks

Opportunities

Challenges

Geographical proximity

High costs for international deliveries

Huge internal market within the EU

Offering needs to be localized for each country as an individual market

Tremendous purchasing power

Laws and regulations differ between each member state

United States and Canada

Roughly 80% of consumers in the US and Canada shop online. In 2019, Canadians made around CAD 43 billion in purchases online. In the US, the total was roughly USD 510 billion. Shoes, clothing, and electronics in particular are often bought on the internet.

Swiss companies wanting to enter the North American markets need to answer the following questions beforehand:

- Will it be worthwhile to set up shop there? Or are issues such as fierce competition, cut-throat pricing, and scarce demand reasons not to?

- Should I attempt to enter the market through an existing retailer, an online marketplace, my own online store, or a combination of these?

- What logistical challenges exist, and how do I overcome them?
- How can I ensure further growth in those markets?

Logistics are extremely demanding in the US and Canada because of the vast distances. Working with external transportation partners with multiple distribution centers is advisable. Especially in the US, tax issues need to be considered carefully because each of the 50 states has a different sales tax rate for online retailers. Canada has the big advantage of a free trade agreement with the European Free Trade Association (EFTA), thanks to which imports from Switzerland are largely free of customs duties.

E-commerce in the US and Canada: Opportunities and risks

Opportunities

Challenges

Tremendous purchasing power

Complicated logistics for covering large distances

Well-developed infrastructure and attractive prices for shipping goods

Strong competition in online retail, with consumers placing high expectations on customer service

US is the second-largest market for e‑commerce

Strict laws and regulations in many areas

Importing to Canada is easy thanks to free trade agreement

Complicated taxes in the US. Every state requires payment of a sales tax on amounts above a certain threshold

Brazil and Mexico

In Latin America's two largest markets, Mexico and Brazil, e-commerce is still in an early stage of development. The spread of the internet and, above all, smartphones has not progressed as far as in North America, Europe, or Asia. Nevertheless, annual online retail sales in this region are also growing by double digits.

However, when exporting to these countries, Swiss companies need to pay attention to import restrictions and customs duties. Besides that, people often have little confidence in digital payment systems. Credit cards are not very widespread, which is why alternative payment methods, such as the boleto bancário in Brazil, should be taken into consideration. Local partners and experts can help you navigate the jungle of these markets and devise the right strategy.

E-commerce to Mexico and Brazil: Opportunities and risks

Opportunities

Challenges

Enormous markets with a huge potential

Cumbersome bureaucracy, complex tax regimes, plus high customs duties and import restrictions, particularly in Brazil

Strong growth in online business

Little trust in online transactions and low distribution of credit cards requires alternative methods of payment for consumers

South Korea

Over 90% of the population in South Korea has access to the internet and a smartphone. Online shopping enjoys commensurate popularity. On average, sales grew by 24.3% annually, hitting USD 113.3 billion in 2019. Business with imported goods via e-commerce shows similar growth rates. Where foreign products are concerned, there is demand mainly for high-quality items in the areas of fashion, electronics, cosmetics, as well as food and beverages. Besides internet marketplaces, important sales channels include online retailers and home shopping via smart TV.

Swiss companies looking to sell their products in Korea need to pay attention to the following:

  • Virtual marketplaces, such as Coupang, enable foreign companies to open a sales channel quickly.
  • Customers don't want to waste time shopping; they want their shopping experience to be as trouble-free as possible.
  • Localization and end-to-end customer service are highly important.
  • Taking quick and aggressive action pays off in South Korea's dynamic online market.
  • Customers often discover products using search engines. Keyword marketing therefore offers good opportunities to boost sales.
  • Do not sell through one channel only. An omnichannel approach gives you more opportunities to address customers.
     

International e-commerce to South Korea: Opportunities and risks

Opportunities

Challenges

Over 90% of people have access to the internet and own a smartphone

Fierce competition among online retailers

More than half of online purchases are made via mobile devices

Customers expect rapid delivery, around-the-clock customer service, and quick response times

Strong growth in e-commerce

Certain products may be subject to customs duties

Online payment systems are widespread and accepted

Customers must be provided with detailed product information and an uncomplicated shopping experience

China and India

Digitalization in the densely populated markets of India and China is spreading rapidly. Today, China is already the biggest market in the world in terms of revenue for e commerce. Thanks to the expansion of internet access and the spread of smartphones, millions of potential new customers are being added annually. Swiss products also enjoy an excellent reputation in these regions. In these markets, Swiss SMEs need to keep the following points in mind:

  • Take one step at a time, and constantly evaluate the success of your actions.
  • Existing and reliable platforms as sales partners provide support in the areas of logistics and customer service.
  • Mobile payment systems are widely accepted in Asia.
  • Digital and social media marketing play an important role in addressing young people. In addition to the usual platforms, examples of popular advertising media with huge audiences in China include live streams.
  • Local importers and sales partners are indispensable in India, and they offer market expertise and support with the marketing of products and choosing a strategy.
  • Address every customer segment using an omnichannel approach and a combination of online and brick-and-mortar stores.

International e-commerce to China and India: Opportunities and risks

Opportunities

Challenges

Huge markets with enormous potential

Success is difficult without local partners

Most online purchases are made using mobile devices

Bureaucratic hurdles and customs duties

Strong growth in online business

Strong and aggressive competition in online business

Would you like to learn more about the opportunities of e-commerce?

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