Home » How does cross-border e-commerce by SMEs unlock the global market?
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.
“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.
Connecting with customers and suppliers in different countries
Cross-border e-commerce has given SMEs in Asia a unique opportunity to expand their business and reach new markets. With technology and digital platforms, it has become easier for small to medium-sized businesses to participate in the global marketplace.
Currently, a significant proportion of enterprises by business size entails micro small, and medium businesses. With the rise of cross-border e-commerce in Asia, it has become easier for SMEs to participate in the global marketplace.
The ease of doing business has been facilitated by technology. For instance, digital platforms like Alibaba, Shopee, and Lazada enabled SMEs in Asia to connect with customers and suppliers in different countries.
“Digital selling provided an opportunity for these businesses to reach customers locally and globally without stretching operating budgets, but B2B sellers must stay ahead of digital export trends in 2023 to find continued success,”Andrew Zheng, the Vice President of the platform of Alibaba, noted in digital trends report.
In Southeast Asia alone, online orders increased by 102% in 2021 since people are either influenced by social media or looking for a one-stop shop for their needs. Many small to medium-sized businesses have a broader range of products, including food and beverage, skin care products, and household items.
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.
Logistics is one of the significant hurdles for an SME in Asia. Shipping rates can vary widely depending on the destination country, and SMEs may need more negotiating power from larger companies to secure favorable rates.
Another challenge for SMEs are the customs laws and regulations of different countries. It can be particularly daunting for a new SME in the market and may need more resources to navigate the complex regulatory environment.
SMEs must also consider the logistics of order fulfillment, including inventory management, packaging, and delivery tracking. These logistical challenges can be overwhelming for SMEs that need more infrastructure and resources than larger companies.
Despite the challenges, there are several solutions that may help SMEs. Among those is to partner with logistics providers that specialize in cross-border shipping.
Said providers can offer SMEs access to a network of carriers and shipping solutions. These can help them reduce costs and streamline the shipping process.
Another solution is to use e-commerce platforms that offer built-in logistics and fulfillment services. Alibaba’s Tmall Global platform can provide an SME company access to a logistics network that includes warehouses, delivery services, and customs clearance. The platform can be beneficial for SMEs new to cross-border e-commerce. They may need more resources to manage logistics independently.
SMEs in Asia
Cross-border e-commerce has been a game changer for an SME company in Asia-Pacific. By leveraging the power of the internet, SMEs can reach new markets and expand their customer base like never before. However, the landscape of cross-border e-commerce is constantly evolving, and SMEs need to be aware of the latest trends and technologies to stay ahead of the game.
As traditional markets become increasingly saturated, SMEs must explore new opportunities in emerging markets such as Southeast Asia and India. These markets offer a large and growing consumer base. Likewise, SMEs that can establish a presence early on will be well-positioned to succeed in the long term.
SMEs that can keep up with the newest trends and technologies and surmount the obstacles of cross-border e-commerce will be strategically situated to succeed in the global market. By leveraging mobile commerce and exploring new markets, small to medium-sized businesses can unlock new opportunities and drive growth in the years ahead.