Cross-border e-commerce utilization by smes

Introduction

Hello. My name is Saito, and I am a consultant.
In the rapidly evolving global business environment, cross-border e-commerce(e-commerce) is a great opportunity for small and medium-sized enterprises to expand their business. However, there are undeniably some difficulties in taking advantage of it. In this issue, we will discuss in detail the paths and challenges in utilizing this technology.

Smes outnumber large firms e-commerce utilization

Generally speaking, large companies have more resources, making it easier for them to adopt new technologies and business models. However, a different trend can be observed when it comes to the use of e-commerce. While 31.3% of large companies use e-commerce, the figure is higher for smes (36.2%). Furthermore, 43.0% of smes want to expand their use of e-commercein the future, compared to 30.3% of large companies, clearly indicating that smes are more proactive in their use of e-commerce.

Source: Jetro overseas business survey 2022 questionnaire survey on overseas business expansion of japanese companies

One reason for this may be that there are fewer barriers to entry for small and medium-sized businesses to utilize e-commercethan to open offline stores or develop new sales channels. For example, some apparel brands have evolved their business model by initially selling exclusively on e-commerceand then opening offline stores.

Furthermore, the percentage of companies using e-commercethat utilize cross-border e-commerceis increasing each year. In particular, 48.2% of small and medium-sized enterprises (smes), or about half, are using cross-border e-commerce. This proves that cross-border e-commercehas become an important strategy for smes seeking to expand their sales channels overseas, and that they are expected to use it more than large companies.

Source: 2022 white paper on small and medium enterprises, summary

Shift of sales destinations in cross-border e-commerce

One thing to consider while using the cross-border e-commerceis the selection of sales destinations; according to jatro's survey, china (39.6%), east asia (korea, taiwan, hong kong, etc.) (37.0%), the united states (33.0%), and asean (32.1%) are the top countries and regions for current e-commercesales by companies using e-commerceoverseas. Asean (32.1%).

Source: Jetro overseas business survey 2022 questionnaire survey on overseas business expansion of japanese companies

However, a special perspective on china is required. China has indeed become a very large market, accounting for 52.1% of the global e-commercemarket. However, the data we just looked at shows that the percentage of companies that cite china as a e-commercesales destination is decreasing year by year. This can be said to indicate that while china is a large market, the hurdle for new entrants is getting higher as many companies have already entered the market.

Source: Ministry of economy, trade and industry, "Fy2021 market research report on electronic commerce".

Furthermore, East Asia (32.2%) and ASEAN (40.7%) were the destination countries/regions that respondents would like to expand their sales to in the future, compared to China (29.5%), with East Asia and AEAN now outnumbering China in percentage. This can be interpreted as a shift to other markets that are still expected to grow in the future.
Understanding these market conditions and choosing the right sales destination is an important step for SMEs to succeed in cross-border e-commerce.

Source: Jetro overseas business survey 2022 questionnaire survey on overseas business expansion of japanese companies

Challenges faced by smes in using e-commerce

Small and medium-sized enterprises (smes) can engage in cross-border e-commerceactivities to enter foreign markets and create new business opportunities. However, there are several challenges that need to be overcome in order to take advantage of them. The most significant challenges are the lack of information about the countries and regions where they sell their products and the need to increase their brand awareness. Various efforts are needed to understand consumer preferences, laws, and regulations in different countries and regions, as well as to make your products and services known abroad.

Source: Jetro overseas business survey 2022 questionnaire survey on overseas business expansion of japanese companies

Summary

These are some of the reasons why smes should engage in cross-border e-commerce, its benefits, and its challenges. As the global business environment continues to evolve, it is important for smes to utilize cross-border e-commerceto remain competitive and create new business opportunities, but it is also essential to have a strategy to gather information and increase brand awareness.

eLife offers a cross-border e-commerce all-in-one package that provides one-stop support for everything from cross-border e-commerce construction to global marketing initiatives.
If you are considering cross-border e-commerce, please contact us for more information.