How does cross-border e-commerce by SMEs unlock the global market?
30 Oct 20235 min read
Summary
- Small and medium-sized enterprises (SMEs) in Asia account for the vast majority of businesses and are key contributors to employment and trade. The rise of digital marketplaces such as Alibaba, Shopee and Lazada has enabled these SMEs to expand their customer base internationally.
- Cross-border e-commerce gives SMEs in Asia a pathway to global markets at relatively low cost by connecting them to customers and suppliers beyond their home market and using online platforms to scale rapidly. The COVID-19 pandemic accelerated this shift by encouraging online adoption and turning local sellers into regional exporters.
- Nevertheless, significant obstacles remain such as the complexities of logistics, variable shipping rates, customs clearance and the need for warehousing and fulfilment infrastructure. Partnering with specialist logistics providers or using platform-led fulfilment services are presented as practical solutions allowing SMEs to navigate these barriers and seize the global opportunity.
Small to medium sized enterprises (SMEs) are essential contributors to exports and international trade or cross-border e-commerce. In many Asian countries, SMEs account for a significant portion of total employment and are often the primary source of new job opportunities.
SMEs in Asia are critical in driving economic growth as they comprise 96% of all businesses in Asia. Cross-border e-commerce enables SMEs to expand their customer base and business size beyond their borders.
The tech shift in small to medium-sized businesses
The growth of cross-border e-commerce, especially in Southeast Asia, is due to various factors. For instance, digital platforms like Alibaba, Shopee, and Lazada enabled SMEs in Asia to connect with customers and suppliers in different countries.
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"The COVID-19 pandemic has accelerated the shift towards a more digital world. The changes we make now will have lasting effects as the world economy begins to recover," The United Nations Conference on Trade and Development (UNCTAD) Secretary-General Mukhisa Kituyi shared in a report.
With lockdowns and social distancing measures in place, many people turned to e-commerce shopping in SMEs to safely and conveniently purchase essential goods and services.
An October 2020 Survey also showed that 51% of Chinese consumer respondents preferred shopping online than visiting a physical store. It also showed that Chinese and South Korean SME merchants have digital capabilities for selling online.
Shipping and logistics management obstacles
While digital platforms have made it easier for SMEs to connect with customers and suppliers in different countries, handling shipping and logistics remains a significant challenge.
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