- by admin
- Posted in Internationalization
- March 23, 2015
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Developing and sustaining a convincing online presence should be considered a priority, one through which organizations not only facilitate online transactions, but also maintain long-term customer loyalty (Eastwood, 2007; O’Reilly, 2007).
The Internet removes most of the communication barriers with customers by eliminating obstacles created by geography, time zones and location. Firms are no longer restricted by physical locations and boundaries in the creation of new business opportunities. Setting up offices and distribution channels and advertising in the physical world is not only costly, but requires complex logistics. Indeed, only very large corporations have such resources. However, with the Internet, smaller organizations now have the ability to reach out to new international markets that would have been otherwise closed to them.
Development of the Internet provides more comfort for the customers to make purchases online. According to the Office for National Statistics (ONS) survey, the percentage of people buying or ordering products, goods or services online was 61 per cent in October 2005, up from 36 per cent in October 2000 (Eastwood, 2007).
According to Eastwood (2007) there are several measures that companies need to take into consideration for using ecommerce application as a successful channel:
- Maximizing online sales execution channels. The low cost and immediate qualities that such channels offer can drive value for companies and enable them to offer superior service for the customer.
- Promoting real world brands online
- Meeting consumer expectations for personalized online customer service. As consumers become increasingly aware of the efficiencies and savings, they benefit from it by conducting their transactions online. They also hold increasingly high expectations for more responsive and personalized online customer service.
- Building customer relationships online. Consumers turn to the Internet not only for purchases, but also for having access to information and other resources to support the decisions they make in different situation of their lives. As the use of online applications becomes widespread, online channels need to support not only the sales and customer services, but also the cultivation of long-term customer relationships (Eastwood, 2007).
As consumers become more confident in buying online, their demand is raising, expecting better levels of service, reliable after-sales service and detailed information about their purchase (Eastwood, 2007). This is why the functionality of online stores is becoming increasingly important and, according to Eastwood (2007), those companies, which will provide their customers with the most comprehensive information in a clean and transparent way, are the ones that will be successful.
The quality of the shopping experience plays a key role in a number of sectors. While the cost for retailers of maintaining a network of stores and developing innovative and alluring shopping environments is considerable, there are many associated benefits. For some sectors such as furniture, potential customers are almost certain to evaluate their purchases by visiting stores during the initial stages (Eastwood, 2007).
SMEs can use ecommerce as an advantage to influence the chances to overcome the barrier of inability to contact potential customers in foreign markets faced by them in the internationalization process.
There is no better way to provide a company presence than having a Website (O’Reilly, 2007; Eastwood, 2007; Hamill and Gregory, 1997; Kobrin, 2001) that reaches millions of people in the world at very low costs. Being constantly connected in a virtual way, it will give our companies an advantage over their competitors. Being online, the companies have the opportunity to improve their customer services by providing easy access to information about products and services. Using ecommerce as a tool for customer communication with the customers/partners at any hour, anywhere in the world, it certainly offers an opportunity which enhances the chances for success. Ecommerce can have a tremendous impact on information dissemination, helping SMEs to contact prospect around the world and around the watch (Vivekanandan and Rajendran, 2006; Berry and Brock, 2004)
Kobrin (2001) considers that cyberspace and e-commerce are per se international. Hamill and Gregory (1997) argue that electronic commerce can overcome many of the operational barriers relating to paperwork, export documentation and also the barrier relating to contact customers/partners in foreign markets. For that purpose, Amazon and eBay are good examples.
Almost all products on the eBay platform are the results of the collective activity of all its users. As an answer to its user activities, eBay grows organically and the company’s role is that of an enabler of a context in which that user activity can happen. The competitive advantage of eBay comes in general entirely from the critical mass of buyers and sellers, which makes any new entrant offering similar services significantly less attractive (O’Reilly, 2007).
Compared to Barnesandnoble.com, Amazon sells the same products with the same product descriptions, cover images and editorial content from their vendors. Instead Amazon has developed a science of user engagement. They focused on user reviews, invitations to participate in different ways on every page. Amazon uses the user activity to produce better search results. Rather than lead to the company’s own products or sponsored results as the Barnesandnoble.com search module is programmed to do, Amazon always leads to “most popular”, a real-time computation based not only on sales, but also on other factors that Amazon insiders call the “flow” around products (O’Reilly, 2007). With such an impressive quantity of user participation, it is no surprise that Amazon’s sales also exceed competitors (O’Reilly, 2007). The information held by Amazon exceeds its suppliers.
Besides those characteristics and resources mentioned before, eBay and Amazon also provide others which are concerning more the internationalization of SMEs, such as international electronic payment solution, online store, the possibility to storage nonperishable goods by Amazon or eBay’s warehouses all over the world, etc.
For more exclusive companies with a top brand, there are other online platforms such as tictail.com, shopify.com and regiconia.com which provide them individual online stores. Because they are developed as Web 2.0 applications, they are also user friendly and easy to customize and administrate.
The advantages for SMEs of using the services and the resources of a third party and not build their proprietary online store are many and very important:
- Those companies invest perpetually invest a lot of time, human and financial resources to develop their platforms.
- The number of users on those platforms is tremendously high and cannot be reached by small online stores.
- The services are in general free or based on a small commission and also very easy to use by uninitiated internet users.
Of course, there are some limitations which could concern the SMEs in using ecommerce such as: inability to deliver in time due to lack of logistics, inability to meet all the orders due to lack of producing rate, premium costs for delivery, online fraud etc. However with all the limitations, electronic commerce has proven to be effective in more than meeting the needs of SMEs in international trade.
- Berry, M.M.J., Brock, J.K.-U. (2004). Marketspace and the internationalization process of the small firm. Journal of International Entrepreneurship, 2(3), 187–216.
- Eastwood, G. (2007). Future Online Strategies and Technologies. Creating value, improving communications and driving online business in the verticals. Scrip Business Insights.
- Hamill, J., Gregory, K. (1997). Internet marketing in the internationalization of UK SMEs. Journal of Marketing Management, 13(1-3), 9-28.
- Kobrin, S.J. (2001). Territoriality and the governance of Cyberspace. Journal of International Business Studies, 32(4), 687–704.
- O’Reilly, T. (2007). What is Web 2.0: Design Patterns and Business Models for the Next Generation of Software. Communications & Strategies, 1, 17-37.
- Vivekanandan, K., Rajendran, R. (2006). Export marketing and the world wide web: perceptions of export barriers among tirupur knitwear apparel exporters – an empirical analysis. Journal of Electronic Commerce Research, 7(1), 27-40.