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E-commerce opens challenging worlds

Author: Charles Brewer

The advent of e-commerce has significantly boosted opportunities in the small and medium enterprise (SME) sector, which currently accounts for 40 percent of South Africa’s gross domestic product and 60 percent of the workforce in formal employment.

However, despite e-commerce enabling SMEs to reach a larger customer base, it has also made operations more complicated, hampering SME growth, which is critical for development, employment and entrepreneurial goals.

In the wake of uncertain domestic demand, small business owners are increasingly exploring new ways of selling their products and services overseas. There is strong evidence that going global generates lucrative growth opportunities, and that SMEs engaged in international trading via channels such as e-commerce are reaping the benefits.

The latest research by Cisco Systems estimates that global e-commerce will increase 13.5 percent annually over the next three years and reach an estimated $1.4 trillion (R12.4 trillion) in 2015. The research also estimates that while the US, UK and Japan will command more than 53 percent of e-commerce sales by 2015, emerging countries such as Spain, Brazil and Russia will grow at rates of 26 percent or more annually through 2015.

By recognising a niche in the market and quickly adapting to meet that need, SMEs can potentially capitalise on growing customer demand and in turn create a major source of employment and wealth creation.

Doing business outside of South Africa can, however, present challenges and as a result, limit SME growth. There are various considerations that SMEs need to consider when venturing outside of South Africa. One of the biggest barriers is a lack of market intelligence, especially when a company is trying to expand into different markets.

Everything from culture and local customs to language barriers and complex legal producers can hamper an inexperienced business’ ability to trade internationally.

While expanding overseas can seem daunting because of these uncertainties, SMEs can avoid some of the potential pitfalls with an efficient and reliable third-party partner.

Shipping is just one component of getting your goods to markets in other countries and that SMEs are increasingly turning to their suppliers for expert advice on markets.

We are seeing a continued trend for a complete range of end-to-end solutions, beyond the traditional capabilities of warehousing and transportation. Securing a partner with a broad geographical footprint is being seen strategically by some SMEs as a way to gain a deeper understanding of foreign markets, explore expansion opportunities and maximise free trade zones.

Every country has its own unique customs quirks which can make international trade a minefield for SMEs lacking in-house logistics expertise.

For these reasons, it is important for SMEs, especially those with an e-commerce arm, to thoroughly research customs rules, duties, processing times and potential risks that they might face when shipping to a particular market, or to engage customs brokers.

Automating customs processes by using online tools to process shipment documentation and developing databases with commodity information is a good way of not only reducing the administrative burden, but also reducing the error rate and the speed at which goods are processed.

With research and a well-defined strategy, SMEs can expand into new markets, compete with larger companies, and use their size and nimbleness to their advantage.


Charles Brewer is the managing director of DHL Express for sub-Saharan Africa.

Article first published on on November 22 2012 at 08:00am

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