In the current economic and political climate it may seem hasty and unpredictable to expand your business across borders. But from my experience in global business development, I can confidently say that there has never been a better time to take that risk.
If your business has access to the right technology and an ample knowledge of today’s global ecosystem, you are in the perfect position to take advantage of the borderless digital economy and rather than succumb to new tariffs, quotas and changes- use them to your advantage to grow and expand your business.
Here are five trends to keep in mind when taking your SMB (small/medium size business) global in 2017:
The number of SMBs Seeking to Join International Marketplaces is on the Rise
If you want to be able to stack up against your competition, you may have no choice but to look at cross border opportunities. A study has found that currently, 58% of small businesses already have international customers, with 72% planning to grow their international customer base in the next year. Marketplaces create a more efficient way to reach new customers, providing international sellers with some or most of the infrastructure required to sell goods and services across borders. In addition, the study found that 96% of the small businesses surveyed were confident about conducting their business abroad – signifying that expanding internationally might not just be an option, but rather a necessity for keeping up with the competition.
If There’s one Particular Region You want Your SMB to Expand to- it’s Asia
Consumers in China are continuing to gain more buying power, and thus, attracting more interest from foreign sellers. To benefit and sell successfully in an Asian market, you must make sure that you will be able to translate your products and services, as well as have the capability to easily receive payments in their currencies. Although the growth across Asia has slowed and become more predictable as of late, demographics and consumption trends all point to a strong overall trajectory and by 2020, China’s consumer economy is expected to reach about $6.5 trillion, a growth rate of roughly 50%, despite slowed GDP growth.
There will be more emphasis on compliance with the ongoing threat of money laundering and terrorism
The growing threat of terrorism has led to more and more emphasis on blocking illegal financing sources. Combine this with the increase in international money flows, and you will see a greater focus on compliance and transparency than you have seen in the past. To ensure uninterrupted customer service and seamless transactions, you will need to remain aware of the entities you are utilizing to process your transactions and ensure that they are adhering to all local compliance and AML procedures.
Ecommerce in developing countries is on track to outpace mature markets
With the growth of non-traditional financial intuitions, countries where banking infrastructure is less accessible will now have the ability to participate in global transactions and eventually, surpass their more mature market counterparts. Between 2011 and 2014, 700 million people became account holders for the first time, and the number of “unbanked” individuals dropped by 20%. This is a huge number, and one that is certainly going to shake up the global eCommerce ecosystem. In fact, it is predicted that the financial industry will continue to grow and evolve to include the unbanked and under banked, eventually reaching 7 billion people on the planet. This new consumer base is too large to ignore, and SMBs must look for ways to overcome language and currency barriers in reaching them.
New technology is making way for the emergence of the global buyer
With the latest technological advancements making international payments so secure, consumers are becoming more comfortable with purchasing internationally and as such, the volume and frequency of global eCommerce is on the rise. Given this, SMBs will need to prioritize providing their potential customers with more secure and seamless ways to conduct international transactions if they want to stay ahead of the competition. B2B transactions will also mirror this trend, with more and more businesses seeking to pay partners, resellers and contractors around the world via marketplaces or directly. It cannot be denied that, as more economies continue to globalize, consumers and businesses will expect simpler, more transparent cross border commerce solutions or they will simply look to purchase locally.
Richard Gilbert is the Director of SME Partnerships and Business Development for Payoneer