RSS

The Bulletin

Every online business is an international business, study confirms

Posting in Technology
Exporting has always been a difficult barrier for small businesses. Marketing was cumbersome, and financing was hard to get. Nowadays, however, those businesses that engage in e-commerce and online sales are 20 times more likely to be exporting across international markets than traditional small businesses.

That's the finding that came out of eBay's latest study on "Commerce 3.0," which draws a direct connection between e-commerce and international business. The study -- drawn from the eBay marketplace -- find that 97 percent of “commercial sellers” on eBay engage in exporting. By comparison, only five percent of mainly "offline" small businesses engage in exporting. In addition, eBay finds that e-commerce companies are doing business across an average of 19 different countries.

Going online also means a greater chance of surviving the crucial first year. The study finds 60-80 percent of new e-commerce businesses “survive” their first year. For traditional exporters, the survival rate is only around 30-50 percent.

The Internet, which now reaches five billion people across the globe, is truly an international phenomenon. The eBay study calculates that Internet access grew more than 300 percent for developing countries between the years 2004 and 2012.  Total sales on eBay grew 800 percent during this period.

The Internet has dramatically lowered the barriers to entry to reaching out to international markets. In times gone by, businesses seeking to export had to partner with exporting specialists or brokers to forge paths to overseas markets. Plus, domestic banks were often unwilling to finance companies who had overseas customers (even those with letters of credit), due to a perception that collecting payments was considered risky. With global supply chains linked to the Internet, it's easier to stay in contact with overseas buyers.

Traditionally, only five percent of firms, usually large corporations, account for 80-90 percent of global trade. However, startups coming on the scene via e-commerce are taking an increasingly greater share of this pie.

There are still government customs controls on goods being shipped. But connecting with international markets is now almost as easy as connecting with customers down the street. 

(Thumbnail photo: Joe McKendrick.)

— By on January 13, 2014, 7:28 PM PST

Joe McKendrick

Contributing Editor

Joe McKendrick is an independent analyst who tracks the impact of information technology on management and markets. He is a co-author of the SOA Manifesto and has written for Forbes, ZDNet and Database Trends & Applications. He holds a degree from Temple University. He is based in Pennsylvania. Follow him on Twitter. Disclosure