According to research from the World Economic Forum, SMEs account for 99% of the enterprises and two thirds of employment in OCED countries, making up a significant portion of each country’s economy. In the US, nearly all net job creation between 1997 and 2005 came from firms less than 5 years old. For continued expansion and development many of these SMEs look to go abroad.
To expand business and seize the opportunities offered by the digital economy, companies of all sizes take take their business across borders. Large corporations often have an existing network to trade globally, with a sophisticated supply chain and ability to handle the fixed costs that come with global distribution. Small and medium enterprises however face many barriers that may prevent the competition of a cross border sale, including finding the customers, overcoming a language barrier, completing payment in different currencies and dealing with import/export regulations, tariffs and taxes.
eBay developed a pilot program for select small business users and made their business listings available to an international customer base, where previously they had focused purely domestically. eBay then worked with the pilot customers to eliminate the barriers for international buyers and sellers by providing full transparency on costs and delivery dates and covering the shipping., not to mention having an easy and safe way to complete a payments transaction. From the preliminary results, estimates suggested that the ability for an SME to expand this way can increase sales by small business sellers by 60% to 80% equivalent to a US$ 4.8 to US$ 6.4 billion gain in trade. If this held for the entire global e-commerce market, international trade from the Internet might unlock ~US$ 95 billion
Through online marketplaces for B2B e-commerce, SMEs have the opportunity to reach similar sized buyers in international markets. Online marketplaces help sellers navigate complex transactions and handle multi-language, multi-currency and regional payment requirements. In addition they often help to “level the playing field” and make it easier for all sized companies to compete for eyeballs and clicks. One of the great issues that online marketplaces solve, is enabling the payment in different currencies and covering the risk involved in the transaction.
The issue for small and medium enterprises is no longer how to go global, as there are numerous marketplaces to chose from, but is now which marketplace is best. Some e-marketplaces like Alibaba are cover all verticals, bringing together customers from over 240 countries while others are more specific like supplyON.com (automotive), elemica.com(chemical), agentrics.com (retail), and hubwoo.com (MRO-Parts).
In the future, the marketplaces will continue to develop to address export and import laws, changes in industry regulation and shipping regulations but as they say, a whole new world, has been opened for small and medium enterprises.