Many of us expected 2023 to mark the comeback of the global economy following the pandemic. However, inflationary pressures from rising interest rates and geopolitical turbulence continue to weigh in. Amidst the ongoing uncertainty, business owners in Southeast Asia can find solace in the e-commerce sector, which continues to show promise.
Global e-commerce has grown at an average rate of 12% over the last several years and this is forecasted to continue into the future. Within e-commerce, the cross-border Business-to-Consumer (B2C) e-commerce is experiencing growth with a compound annual growth rate projected to exceed 28 percent between 2020 and 2027.
Particularly, the United States (U.S.) will rank second globally in total cross-border buyers (69.8 million), according to eMarketer’s forecast this year. Evidently, cross-border e-commerce is set to be a pivotal driver of sustainable growth for many businesses, especially SMEs in Singapore, according to a recent B2C e-commerce export opportunity study by Access Partnership with over 300 MSMEs in Singapore. The value of B2C e-commerce sales earned by Singapore MSMEs from overseas sales could more than double export revenues from S$1.7 billion in 2022 to S$3.9 billion by 2027 if they invest in cross-border e-commerce capabilities.
Despite the opportunities for growth through e-commerce, the idea of selling beyond home countries may initially appear daunting for some SMEs. The truth is that, with the right knowledge, tools, and support system, taking your brand from a relatively small domestic audience to a much larger customer base internationally is well within reach.
Cross-border e-commerce is booming
Despite the resurgence of brick-and-mortar stores, the demand for online shopping goes on. Consumers continues to shop online, further driving the growth of cross-border e-commerce as they seek diverse brands and competitive prices from international sellers. Consumers also chase after omnichannel experiences, as they seek to recreate the same retail experience while shopping online. In their purchase decisions, shoppers are no longer bound by physical distance and store opening hours.
The consumer shift towards online demand is complemented by advancements in technology and digital infrastructure which have also made it easier for businesses to reach global consumers. With the rise of e-commerce, businesses now have unprecedented access to a worldwide customer base. Compared to brick-and-mortar retailers, online stores benefit from competitive advantages such as relatively lower fixed costs (staff, rent, etc), allowing business owners to sell at lower prices. The proliferation of internet connectivity, mobile devices, and secure payment systems has eliminated geographical barriers, while streamlined logistics networks have made cross-border shipping and fulfilment more efficient and reliable.
Demystifying the seemingly daunting task
The same Access Partnership study found that the most common capability and knowledge hurdles faced by Singapore SMEs when exporting via e-commerce are managing digital platforms and knowing the appropriate business models for cross-border e-commerce. To plug these gaps, SMEs today can leverage the support through trusted allies who has extensive cross-border e-commerce experience and can offer valuable guidance on identifying potential opportunities, selecting the right business models, and tailoring their products to meet the preferences and demands of international customers.
Additionally, local government agencies and industry associations often offer support programs to help SMEs venture globally. For example, EnterpriseSG recently partnered with SBF and Amazon Global Selling to launch a new B2C Cross-border Brand Launchpad programme to help SMEs develop cross-border e-commerce capabilities and access consumer opportunities in the US. Taking advantage of these resources can significantly ease the entry barriers.
Brand-building is vital for global success
Shoppers today are driven by inspiration and product discovery. Digital tools can help brands boost engagement, enhance product experience with real-time demonstrations, and accelerate purchase decision-making.
These digital-savvy consumers also conduct their own research by reading product reviews shared by fellow shoppers. According to a GlobalData report, 57.3% of consumers surveyed in Singapore consult online reviews and comparison sites prior to making a purchase, which is same with consumers worldwide. Authentic customer reviews by online stores can help businesses establish credibility and build trust. These genuine testimonials serve as a testament to the quality, reliability and positive experiences associated with the products offered by the brand.
Finding a valuable partner for growth
Local SMEs often face resource constraints when it comes to hiring experts with in-depth knowledge across various aspects of business development. This is where partnering with a comprehensive cross-border e-commerce solution provider becomes invaluable. By leveraging their data insights and end-to-end expertise, SMEs can better their understanding of the preferences of their international customer base.
To keep up with the surge in consumer demand and global opportunities, SMEs need greater support in logistics and operations. Business owners often do not have the resources to invest in a large amount of time and capital to learn and operate an international supply chain. By working with partners who have readily available logistics infrastructure and established network, they can gain a competitive edge by getting support on a suite of logistics processes to deliver their products into their customers’ hands quickly. Such processes can include storing and packing products, handling returns, or even maintaining communication with consumers across borders.
Striving for gold
Business owners in Southeast Asia have every reason to grow with confidence. By engaging in global trade with the help of established and trusted cross-border e-commerce stores, SMEs stand at the threshold of unlocking a new era of growth opportunities. It’s time to seize the potential, take that first bold step, and strive for gold in the ever-expanding world of cross-border e-commerce. The stage is set, the possibilities are limitless, and success awaits those who dare to embrace the global cross-border e-commerce journey.