1 © Jan Jonckheere

Exporting 100% online - is it possible?

Recently, through the export training courses I give, and, through my daily experience

in the world of export in which I move myself, I learnt about several companies that

export100% of their turnover through E- commerce. Companies here in Spain:

Barcelona's Moma Bikes sells bicycles, Millu Millu1 from Barcelona sells luxury

handbags, Hawkers2 from Murcia sells sunglasses. They sell both in Spain and abroad.

And all online.

Having 25 years of experience in export, I have seen how the world of export has

changed gradually, and the big role Internet has played in this.

Undoubtedly, today's e-commerce for many companies is an important sales channel.

But I was pleasantly surprised noting that we can export exclusively through Internet.

Does this mean the end of the classic way of exporting through agents and distributors,

exotic trips around the world, visiting fairs, ..?

Can any company jump on this train?

Does E-commerce allow us to export to everybody?

Is it true that is more economical for the company, as you save a lot on the costs related

to the "classic" way of exporting?

If we study these companies a little bit more in detail, we can make the following

interesting observations:

It concerns companies who have opted for a clear strategy of online sales from

the very start

They sell non-industrial products, and mostly we are talking about B2C

(Business to Consumer) or B2B2C (Business to Business to Consumer) and not

of B2B (Business to Business)

They are mainly non-customized products that are ideally suited for E-

commerce business, as they have no problems of expiration dates, logistical

problems (they do not need a special type of transport, as can be the case for

certain food products, which need a strict temperature control), special

certificates needs, and they are not subject to complicated methods of payment.

In the next three paragraphs we will observe that the working methods of E-commerce

for a company are pretty much the same, no matter whether the company exports 100%

of its sales figure online, or only a part of it, but in the case of 100% it is obviously

much more important to meet the requirements of this new channel.

A company that does not export everything over the Internet may have the hassle of

having to manage multiple sales channels simultaneously and, therefore, having to split

its resources, but it will have the advantage of always being able to sell through other

channels if the E-commerce does not result interesting.

1 In the mean time, Millu Millu has opened a Boutique in London

2 Read this interesting article about Hawkers: Hawkers en El Confidencial

2 © Jan Jonckheere

1. Types of E-commerce:

There are several types of E-commerce, the main ones being:

You may have your own online sales platform associated (or not) to your own

website; keep in mind that it has to be a very practical platform, customer

friendly and easy to use (so that anyone can use it), that encourages the purchase

decision, etc .; positioning well the platform is of the highest importance: if

customers can not find your platform, you will not sell.

Generalist E-marketplaces like Amazon and E-Bay, where you will introduce

and manage your products directly on their platforms;

E-marketplaces like Monoqi, Westwing, Privalia, Wayfair, etc. Some may

request to introduce data directly onto their platforms, but in most cases the

platform takes care of this itself;

Each type has its own specific characteristics and it is important to study these well

before starting.

Companies that export 100% through E-commerce (like many other companies that

export both through E-commerce and through the traditional export channels) usually

use a combination of these various types. But obviously, it is important to have a clear

price strategy, since your products will be on multiple platforms at the same time with

prices that may be different, and which you can not always control.

2. Important issues to consider:

• First of all, it is important to note that for e-commerce, as it is for export through other

channels, you must have a well differentiated product and provide clear added value,

something which to many companies seems very obvious, but very often this is not the

case; the time that E-commerce served to sell old stocks has long been gone!

• You will need high quality pictures and mood pictures (pictures where the product is

located in its natural setting: a chair in the dining room, a lamp on a bedside table, a

painting on the wall); and you will need a picture for each color and finishing; many

platforms will only offer products of which they receive good pictures;

• Having sufficient staff, that is very well trained:

Certain platforms require the exporter to enter all of the data of their products on

their websites

Depending on the type of E-commerce-platform, orders can be very fragmented

(E-Bay and Amazon allow ordering only 1 unit), whereby the ratio number of

units / order will be usually significantly lower than in the classic export

business, and as a consequence the administrative work increases a lot (someone

has to manage the orders, prepare transport, control the payments etc);

3 © Jan Jonckheere

By law, E-commerce operations in most countries allow consumers to return the

product if they do not like it, which may result in very significant return rates

(percentages can vary greatly from one geographic region to another, so it is

imperative to be well informed before choosing your markets); and you must

have a clear procedure what to do with these returns (the products are not always

returned in good shape);

In the case of E-marketplaces like Amazon, the company will have to answer

questions from their customers , so a good Customer Service is necessary; and in

several languages if the company works with Amazon platforms in several

countries;

It should also be noted that many problems related to the products, quality and

warranty issues will have to be dealt with directly by the exporter.

It is an issue that is very underestimated by companies, but it takes a lot of work.

• Having your stock controlled: especially in the case of flash campaigns, e-commerce

platforms work with a reservation system: the platform requires the company to reserve

a certain amount of units of a product: in this way, the platform will be sure to be able

to deliver what they sell. If the platform does not sell the complete reserved quantity,

the company will release the excess which then becomes available to other potential

customers; this is what usually happens, because the platforms make safe bets.

However, occasionally, the platform may notice in the first stage of the campaign that

they can potentially sell much more than reserved: in such case they will negotiate with

the company in order to increase the reservations, knowing that in the worst case (that

is, the company can not or will not increase the reservations) they will not be able to

deliver the products to some customers. For this reason, before reaching this point, the

platform usually will contact the company in time to increase reservations, and if this is

not possible, communicate on its website that the product is already sold out.

But, there is another important issue related to stocks: imagine that your company

works with several platforms at once, and is making reservations for each of these

platforms. Sooner or later you will find yourself in a situation where you can not

provide a reference to a customer or platform because ...your complete inventory from

this reference is already reserved for other platforms.

If on top of that , your company does not have a business software system that controls

the stocks (something very usual in small companies) you can get to very unclear, and

sometimes chaotic situations, which, believe me, you want to avoid.

Some readers will wonder whether they can sell, without keeping products in stock?

Yes, but it depends from platform to platform. The platforms that do accept this, will

impose their conditions (especially in terms of delivery times) and charge penalty fines

if these conditions are not met. And these periods are usually a few weeks, not months.

4 © Jan Jonckheere

• Cash flow: Many platforms are partially financed by the companies, requesting them

payment terms of 30-45-60 days from date of invoice, and on the other hand they get

paid cash through debit cards, or through credit cards or other payment systems (such as

Paypal), so they are sure to get the payments from their customers. You as a company

have to keep in mind that sooner or later (for the first orders you may get more

favorable payment conditions), the platform will impose its payment conditions;

furthermore, we already informed about the fact that usually we must have stock

available, which also affects your cash flow.

• Marketing costs: If your company decides to export 100% online, it will probably need

its own platform (in addition to other 3rd party platforms on the market). In this case, it

is imperative to have a Digital Marketing Plan and someone with the necessary skills to

carry out this plan: SEO, SEM, Social Media, etc. should help increase your visibility

and improve your position in a huge market, where every day more and more

companies are offering their products and services directly. If you are not visible to this

world, you will not sell.

And believe me, as the author of this article, I can confirm that these costs can become

quite high, and that companies very often underestimate these.

3. Don't start without this!:

• A good logistics partner: obviously you can not work without one or more logistics

partners, who have enough ability and agility to get your products to the farthest and

least accessible parts of the planet, or at least the locations of the countries that your

company has decided to export to (and here we return to the classical way of exporting:

even for e-commerce, you have to do your market selection, although the criteria by

which you will choose your markets may vary considerably).

Your logistics partner will need to have the flexibility to deliver on different moments

during the day (your client will not always be waiting all day at home for the arrival of

the package), or offer innovative solutions, and has to be able to manage the returns to

its customer, which is you, the company.

Logistics partners do not work for free, and every extra condition you want to impose

on them will have an extra price ticket, so: make sure to control the costs!

• Think global, act local (culturally, politically, legally, fiscally): what works for one

country does not work for another, and this must be taken into consideration when

opening markets: make sure to do a preliminary study for each country to see how to

comply with all legal requirements, which vary from country to country (although

within the EU, at legal level, there is little difference). Also, there are important cultural

differences that make f.i. that returns in some countries are considerably lower than in

other countries, that the delivery within a certain timeframe may be more (eg if

Germany) or less (eg Latin America) strict etc.

5 © Jan Jonckheere

In conclusion, we could say that there are indeed quite some obstacles when you want

to start exporting 100% online, but Moma Bikes, Millu Millu and Hawkers have

shown that with a good strategy and adapting yourself to the rules of this new sales

channel, you can have a perfectly profitable business, so I kindly invite young

companies to think carefully about this fascinating subject.

I decided to write this article in the first place because I found this very interesting news

about Moma Bikes, Millu Millu and Hawkers, but also because I have lived the

experiences of companies who started the E-commerce adventure with little or no

preparation, and I think it is important to inform about these issues.

I thank my friend Rafa Olano, author of Export 2.0. and expert on the subject, and also

Jan Bastiaans of SalesSupply, a company dedicated to assist companies in the process

of developing its E-commerce. On several occasions we have extensively discussed this

topic, which has also helped me to write this article.

You can contact me at:

Jan Jonckheere

Spain Mobile: (+34) 628 056 562

jan_jonckheere@yahoo.es

skype: jonckheerejan

twitter:jonckheere_jan

http://es.linkedin.com/in/janjonckheere/