Step-by-Step Guide to Exporting - Networking the World: E-Business for Exporters
"Since adopting our new e-business strategy, our company's success at home and abroad has significantly increased." Exporter
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E-business or e-commerce?
A distinction has also evolved between e-business and e-commerce. E-commerce generally refers only to online financial transactions. E-business includes online financial transactions along with many other types of information exchange, such as online servicing of customers or communication with business partners.
Understanding e-business
According to the definition of the Canadian Business Service Centres, "e-business means conducting business on the Internet, including buying and selling products and services, providing customer service and collaborating with business partners."
You can also think of e-business as falling into two broad categories: "business to business" (B2B) and "business to customer" (B2C). In B2B, as the name suggests, the electronic transactions flow mostly between companies. In B2C, the electronic transactions connect a business to its retail customers.
This chapter assumes that your business already has a Web presence that makes you a potential exporter of goods or services through the Internet. If you don't have a Web presence yet, there are many sources of information about establishing one. A good place to learn the basics is Industry Canada's ebiz.enable Web site at www.strategis.gc.ca/ebizenable.
Tip
Export regulations apply to e-business just as they do to traditional business. If you currently need an export permit to sell your product outside Canada, using the Internet won't change the requirement.
E-business applications and benefits
E-business has many applications, including sales, customer relations, finance, market research, market intelligence and procurement. Some of the benefits these applications can bring to exporters are:
- reduction of the time needed to deliver and update information about products or services;
- flexibility and adaptability of online marketing and advertising;
- customer access to your products or services 24 hours a day, every day of the year;
- faster responses to customers' needs;
- more efficient ordering and order processing;
- easier access to intelligence about export essentials such as demographics, market characteristics and competitors;
- electronic rather than physical delivery of certain products and services; and
- access to world markets, leading to more export opportunities.
Of course, using an e-business model to support an export venture doesn't do away with the traditional side of exporting. You'll still have to deal with matters like shipping, customs regulations and work permits, just as you would if you were doing business without the Internet. Seen from this angle, e-business hasn't changed exporting all that much. What it has done is make all kinds of export-related communication and connection much easier.
Assessing your e-business potential
If you're going to succeed in e-business, you have to start with a clear-sighted evaluation of your company's e-business potential. Start preparing by answering such questions as:
- Your company - What current structure, customer base, and partnership networks do you have? Do you have a Web presence? Who are your target customers? Do they use the Internet?
- Your strategic context - Your e-business strategy needs to be developed in the context of your overall corporate objectives. For example, do you want to increase profits, increase market share, expand your customer base or enhance customer service?
- Accessing online resources - Do you use online resources to track competitive trends, identify technologies you might use in your operations and identify potential new customers?
- Online procurement - Does your company contract for online support services such as credit card payments and customer service? Do you obtain materials, supplies and equipment through online sources?
- Your online presence - What information does your Web site provide? How do you use it? How can your customers use it? How do you maintain the site?
- Online interactivity - How do your customers primarily interact with your business? How do you acquire new customers? How well has the Internet penetrated your target markets? How do you collect customer feedback?
- Operational preparedness - Has your company mapped its core processes and documented its design and production functions? Are your operating policies and procedures documented in electronic format? Do you have an intranet?
- Integrated operations - Can your internal operations support integrated customer service? Do you have a documented quality assurance plan in place? Can your production processes be expanded quickly?
- Integrated service delivery - How effectively can you provide seamless, one-stop customer service that is personalized and customized?
- Extended boundaries - How easily can you include external partners to help you meet customers' needs? Do you work with customers in the U.S. and Canada, or in developed or developing countries? Do you use electronic tools and resources such as extranets or e-marketplaces to work with your partners?
Investigating the Return on Investment for eBusiness
Determining the Return on Investment (ROI) can be crucial in the decision to invest in a new information technology. However, it is not an easy process - many of the benefits are intangible and difficult to quantify. This new module of Industry Canada's ebiz.enable examines many of the issues that need to be addressed when contemplating an ROI analysis. It features a comprehensive ROI spreadsheet, best suited to medium-sized and large firms. See strategis.ic.gc.ca/epic/internet/inee-ef.nsf/en/h_ee00632e.html.
Web site suitability
Depending on your product or service, your needs and your objectives, your company's Web site might do any or all of the following:
- provide information that will attract potential customers to your product or service;
- provide an online catalogue and a secure electronic means for your customers to order and pay for your goods or services;
- provide your customers with access to their invoices and records of orders; and
- serve as a marketing tool for your products or services.
Doing this properly, if you're an exporter, means that you have to adapt your Web site to suit your target market. This is called localization.
Language is probably the most important issue in localization. If you want to sell to someone, you'll more likely succeed if you use his or her native tongue - even if that person is also fluent in English. This means that an exporter's Web site, or at least part of it, has to speak the same language as its target market.
Completely translating a Web site can be expensive, so you may prefer to begin by localizing only the most important pages. But be sure to use professional translators familiar with the target market and the target language.
Other suitability issues to consider are branding, currency denomination and payment methods. Branding that reflects the market's customs, laws and traditions, as well as language, will make a potential buyer feel more at home. Using local currency for pricing, shipping and tax calculations will do the same and will allow customers to compare prices more easily. Related to this is the ability to accept payment in local or U.S. funds, and to do so efficiently and simply.
Tip
To be truly international, a Web site should be accessible in English, French, German, Japanese and Spanish. A possible exception is sites that deal primarily in technical information, which is commonly written in English and is understood by buyers in most countries.
The technical issues of e-business
You may have already set up your Web site yourself, using your own hardware and staff to develop and maintain it. However, because of the demands that international e-business can place on a system, this may not be the best solution for your move into Internet-based exporting.
Security, for example, is very important in persuading other companies or retail customers to do business with you. This means that your e-business systems must have some or all of the following security mechanisms:
- Secure Sockets Layer (SSL) technology;
- software and hardware firewalls;
- physical site security;
- secure payment systems;
- data encryption;
- server certificates;
- digital certificates for authenticating the parties to an online transaction; and
- personal certificates to authenticate secure email.
If you are a small- or medium-sized enterprise, it may be much more effective to outsource your e-business needs to a hosting company. These Application Service Providers (ASPs) are professionally equipped to set up hardware, software and security systems that can provide many online tools, including those for:
- customer transactions;
- trade negotiations;
- foreign exchange services;
- credit protection; and
- financial operations such as accounts receivable.
Finding e-leads
Your potential e-customers may be out there, but how do you connect to them? There are several mechanisms for tracking down business leads and opportunities. The major ones are:
- Trade lead services - Through your Virtual Trade Commissioner, you will receive international business leads identified by trade commissioners abroad (see www.infoexport.gc.ca).
- International marketplaces - Receive sales opportunities tailored specifically for your business by e-mail with the SourceCAN.com Opportunity Matching Service. You control how broadly or finely the leads are filtered before they get sent to you – so you get only what you need. SourceCAN also offers features to help you find business partners and post opportunities you would like to contract out. See www.sourcecan.com.
- Search engines - be sure your Web site is listed with major international search engines such as Google and Yahoo. Your hosting service or Web developer will do this for you.
- B2B exchanges - most of these exchanges specialize in sectors like metals, apparel and forest products. They are a source of e-trade leads and may give you a more secure e-business environment than the online international marketplaces can provide.
Checking e-leads
The precautions you use in traditional exporting, in verifying the trustworthiness and stability of a potential export customer, for example, also apply to the world of e-business. Some guidelines are:
- Be sure you know who you're dealing with. Always verify addresses and avoid doing business in countries that are known for fraud. If you can't identify a potential customer or the country of origin of an order, don't proceed with the deal.
- Other characteristics of the potential customer's country are also important. How good is its communications infrastructure? How stable are its financial systems? What level of political risk does it represent? As in all export operations, due diligence is an essential precondition of success.
- Market research is a key component of evaluating e-leads. The principles of market research are the same for e-business exporting as they are for traditional exporting.
- Credit assessments are as important in e-business as anywhere else. Credit card fraud is on the rise, especially in certain parts of the world, so be doubly careful when dealing with credit card purchases from these regions.
Shipping and documentation
The Internet hasn't done away with the physical movement of goods or the documentation that goes along with them. It can, however, let you transmit documents electronically, which is much faster than moving the information around on paper and is just as secure. Internet tools and systems can also give you better control of your shipping logistics.
Rather than trying to deal with document transmission or logistics management yourself, you'd likely be better off to obtain the service of an ASP specializing in this area. These companies can help you with the online implementation of processes like freight forwarding, securing insurance and clearing customs.
Getting paid
An e-business exporter can, of course, receive payment by any of the traditional methods. Retail customers, though, tend to pay by credit card.
However, sometimes credit card payment is not possible or advisable. In this situation, you might consider using the services of a company that, for a transaction fee, obtains the customer's payment and then remits it to you. These specialized businesses often integrate their payment systems with services such as:
- creation of online storefronts including catalogues, stock control and order processing;
- fraud protection;
- multilingual and multicurrency support;
- letters of credit; and
- online, real-time transaction processing.
Providing customer support
Support for your customers is crucial to ensuring repeat business. You can do this, of course, through traditional methods such as telephones, faxes and the postal system. However, fast response to customer concerns is so important that you might be wise to invest in electronic customer relations management (eCRM). Several ASPs specialize in this area and may provide the services you need more economically and effectively than an in-house solution.
E-business solutions can give you a competitive edge in the export market through more efficient communications, cheaper ways of marketing your product or service, better customer relations, lower distribution costs and more effective ways of finding business opportunities. E-business has great potential, and you owe it to yourself and your company to look into it. It may be exactly the export strategy you've been looking for.
Protecting privacy and personal information
Canada's Personal Information Protection and Electronic Documents Act (PIPEDA) sets the rules that a business must abide by when it collects, uses or discloses personal information in the course of commercial activity. These rules have been in effect since January 1, 2004 and Canadian companies must comply with them. Organizations subject to a provincial law that has been deemed substantially similar to the PIPEDA are exempt from its requirements for all intra-provincial transactions. You can obtain more information about privacy issues from the Web site of the Privacy Commissioner of Canada at www.privcom.gc.ca.
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