When Nude Bee Honey Co. sells into new markets, it makes it a point to turn the unfamiliar into familiar territory. Recently, the country in question was Taiwan. Ryan Tyler Thomas, head of brand marketing at the Toronto-based business that sells hive-to-table honey, found that there was consistent and strong online demand, but he wasn’t sure why. While visiting the country, Ryan came to see that in Taiwan, honey is more than just a condiment, it’s considered an essential herbal remedy. Now, just a few months and several meetings with local distributors later, Nude Bee Honey Co. (and a little bit of Canada) can be found on shelves in health and wellness stores across Taiwan.
At one time, selling internationally was something only well-established organizations could hope to do. Small businesses never dreamt of entering foreign markets. They only opened their doors to their local community or within the country.
E-commerce has changed the game. Entrepreneurs are no longer limited to selling within their home country and are finding success selling across borders. Technology has significantly reduced the hurdles that once prevented small businesses from exploring international expansion. In just a few clicks, entrepreneurs can generate new revenue streams.
“Made in Canada” brands and goods enjoy recognition and demand on the global stage. Synonymous with quality, Canadian goods are particularly popular with shoppers in the U.S., U.K, Australia, Germany and France. In the U.S. alone, it is estimated that 22 million Americans shopped online from Canadian businesses, spending $8.7 billion in 2016. Beyond the highly popular Canada-U.S. trade corridor, research firm Forrester estimates that global e-commerce cross-border spending will hit US$627 billion by 2022. Yet despite the immense opportunity, less than 20 per cent of Canadian small businesses sell online, and even fewer engage in cross-border commerce.
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For Canadian small businesses, there has never been a greater opportunity to reach new customers and unlock global consumer spending. Retail e-commerce sales climbed nearly 30 per cent in 2017 and are estimated to reach $56.96 billion this year. By 2021, 12.7 per cent of all retail sales in Canada will be transacted through e-commerce channels. Having an online presence makes it significantly easier for businesses to sell internationally and seize these growth opportunities.
There are strategies to help entrepreneurs make the most of cross-border opportunities:
Start with familiar territory. Test international sales in a few key markets before expanding further. The U.S., U.K. and Australia are good places to start. These countries are among Canada’s top export markets and shoppers in these regions are likely familiar with buying from Canadian businesses. These markets also share English as a common language, making it easier to communicate with customers, ultimately offering an opportunity to test and perfect international sales processes before tackling additional markets. Or, in the case of businesses like Nude Bee Honey Co., follow customer demand, but be sure to immerse yourself in the nuances of the market beforehand.
Be transparent about shipping costs and delivery timelines. Shipping costs and other fees are the main factors deterring consumers from shopping cross-border. Businesses should not underestimate the important role that affordable shipping plays in the transaction. Thirty-five per cent of shoppers say that delivery and shipping costs prevent them from shopping cross border and 46 per cent indicate that free shipping is a top driver to purchase when choosing to shop from international websites.
Free shipping however, doesn’t need to be forced into your business model. Shelley Jones, owner and founder of dignify, a Calgary-based online business that sells beautiful blankets handmade in Bangladesh, found that striking a balance between what’s practical for the business and right for the customer works best. “Most small businesses can’t hope to compete with the high-volume/low-margin giants of free shipping, and the truth is, we don’t have to,” Jones says. “I’ve found success selling across the U.S. by testing different shipping and pricing options to find what works best.”
Reduce barriers to checkout. Offering safe, secure and familiar payment options that customers recognize is essential. When it comes time to complete a purchase, having a secure way to pay is a top consideration for 44 per cent of cross-border shoppers. When shopping cross-border, most online shoppers would prefer to have a choice of whether to pay in local currency or in their own currency.
Jérôme Gagnon-Voyer, co-founder of Cambio Market, an online business that sells sustainably sourced goods from artisans in the Philippines, has found that clarity at the point of checkout makes all the difference in converting shoppers to purchasers. “Regardless of the payment currency, payment should be simple,” Gagnon-Voyer says. “Simplicity can be the difference between a shopping cart full of unpurchased goods and a completed purchase.”
Get help. There are many resources and organizations that can help entrepreneurs on their cross-border journey. Innovation hubs such as MaRS offer toolkits and support for small businesses looking at international expansion. The Business Development Bank of Canada also offers tools, advice and articles for businesses looking to export internationally. For entrepreneurs looking for a low-threshold way to test the waters, consider leveraging a global e-commerce marketplace platform like Etsy.
I rarely meet business owners who don’t feel nervous about expanding into new markets. That’s normal. I also rarely meet business owners who regret their decision to do so. Selling internationally is worth it. For those that are ready to take the torch, there are massive growth opportunities beyond Canada’s borders. I hope entrepreneurs take the plunge and seize the opportunity.