Transcript
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EXECUTIVE SUMMARY

In the last two years, from January 2013 to December 2014 we executed a publicly funded project titled

PECOS4SMEs – Personalised eCommerce Strategies from SMEs.

The project was funded under the LifeLong Learning Programme of the European Commission and 7

partners from 7 EU countries were directly involved as partners in the execution of the project.

The purpose of the project was the promotion of useful e-Commerce strategies for SMEs including transfer

of knowledge and practices from top performing countries in e-Commerce to lagers. The intention was to

bridge the cross border sales gap between Northern and Southern Europe and thus help the economic

recovery of the hard hit European South. As a consequence of the introduction of new technologies and

concepts facilitating cross border e-Commerce, (e.g. effective link building, search engine user attitudes

etc.), SMEs have the opportunity make their businesses more profitable while at the same time improve

their ICT competence.

Based on the work carried out in the context of the project we identified and present here the barriers to

SMEs for growth via cross-border sales. We present these barriers from a practical viewpoint by looking at

specific SME practices in relation to the most important elements of the e-Commerce lifecycle. We don’t

elaborate on the barriers at a higher level as we consider them on the one hand obvious (e.g. high market

entry costs, product specific issues) while on the other hand several very credible publications1 are

presenting them in sufficient detail in order to assist policy making. We intentionally stick to a simplistic

analysis of the barriers by associating them to inadequate e-Commerce practices adopted by SMEs today in

order to immediately assist SMEs improve their current turn over from cross-border sales.

1 A good reference is an Accenture publication titled “European Cross-border E-commerce The Challenge of Achieving Profitable Growth

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TABLE OF CONTENTS

PECOS4SMES 1

1. INTRODUCTION 4

1.1 Methodology 4

2. SME E-COMMERCE PRACTICES 6

1.2 Ordering 9

3.2 Payment 11

3.3 Delivery 12

3.4 Communication 13

3.5 Overall Service 14

3.6 Promotion 16

LIST OF TABLES

TABLE 1 - LIFECYCLE ELEMENTS PER SME SECTOR 7

LIST OF FIGURES

FIGURE 1 - ANALYSIS METHODOLOGY 5

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1. INTRODUCTION

In the present document we have summed our combined conclusions on e-Commerce barriers to SMEs

stemming from the analysis work we conducted but also from designing, developing and validating the

PECOS4SMEs training system during this 2 year project.

In the present section we describe the analysis methodology used for identifying the barriers for SMEs. The

outcomes of the analysis methodology are available through the PECOS4SMEs project

(www.pecos4smes.eu) while specifically for the European Overview there is an interactive presentation

available online here (http://www.ccs-samples.com/EU-Overview/menu.html).

The identification of barriers provided also the knowledge to design an e-Commerce Cheat Sheet for SMEs,

kind of a fast track to improving present e-Commerce performance (http://ccs-

samples.com/PECOS4SMEs/eCommerce_Cheat_Sheet.pdf).

In the sections that follow we present our viewpoint on the barriers to SMEs in cross border e-Commerce in

terms of the different elements of the e-Commerce lifecycle.

1.1 METHODOLOGY

For executing the project, an analysis methodology was elaborated with distinct phases, activities and

outputs.

The methodological framework which guided the analysis phase of the project is depicted in the figure

below in terms of high level activities and outputs:

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Figure 1 - Analysis Methodology

The three phases of the analysis depicted above are the following:

Phase 1 is the National Phase, during which we collected most recent sources about e-

Commerce and isolated based on a set of pre-defined criteria the material which were

considered for further analysis resulting to the elaboration of 7 country reports2 on the e-

Commerce state of play.

Phase 2 comprised Needs Identification Phase during which the business and learning

needs (for e-Commerce related skills) and requirements (for the usability of the delivery

tools) were identified and were later transcribed to didactical and technical requirements

for guiding the development of e-Commerce strategies for SMEs, the training content and

delivery tools.

Phase 3 is the Translational Phase during which a comparative overview was

elaborated depicting from a critical viewpoint the SME e-Commerce state of play in the

partner countries. In the context of this work it was possible to identify practices leading

to improved revenues from online sales.

2 The Netherlands, Belgium, U.K., Greece, Italy, Cyprus, Poland

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2. SME E-COMMERCE PRACTICES

The SME sectors taken into consideration are presented in the table below accompanied by the elements of

the e-Commerce lifecycle relevant to each sector.

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Table 1 - LifeCycle Elements per SME Sector

Sector

Life Cycle

Retail and Wholesale

Ordering

Payment

Delivery

Communication

Overall Service

Promotion

Manufacturing

Ordering

Payment

Payment

Delivery

Communication

Overall Service

Promotion

Real estate

Buying

Contracting

Payment

Overall Service

Communication

Promotion

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Sector

Life Cycle

Accommodation

Booking

Payment

Payment

Communication

Overall Service

Promotion

Construction

Trading

Contracting

Payment

Promotion

The problems with current SME practices are presented in the sub-sections that follow per lifecycle element

without direct reference to sector. This was not deemed necessary as the practices are described below in a

simple manner making it easy for SMEs to visualize how they apply to their specific situation. As such, the

explicit incorporation of sector related information would impact negatively readability without adding

significant value.

The SME readers are encouraged after reading the present publication to refer to deliverable D3.3 of the

PECOS4SMEs project, titled “Cross-border e-Commerce Strategies”, available through the project website.

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1.2 ORDERING

In relation to Ordering, the following

weaknesses have been identified in relation to

the most frequent approaches of SMEs to e-

Commerce:

Customer data not used: The potential of utilizing information from customer

profiles and order history is largely ignored. At the very least, such customer data

can be used to make personalized suggestions about what others with similar

profiles have purchased (Amazon and eBay are good examples). Ideally, SMEs will

maximize benefits by personalizing the site to reflect each customer's needs by

providing customer-focused marketing campaigns and promotions such as banners, recommendations and

special offers.

Consumer feedback not encouraged: Shoppers are largely influenced by reviews

from other shoppers and there are many good review platform available facilitating

the incorporation of consumer reviews to items of the e-Shop catalogue. Consumer

reviews will also maximize conversions through price aggregators as shoppers will be

looking for a combination of good price and good reviews about the e-Shop they will

use.

Product comparisons not available: It is not uncommon for consumers to

struggle between two or more similar products. In such situations a product

comparison functionality will make a difference by allowing the shopper to review the

features of each product one by one before deciding. The more extensive a product

catalogue is the more necessary to provide product comparison functionality, especially since most shopping

carts provide today this functionality out of the box.

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Power of video is downgraded: Digital marketing is about informing and

educating consumers and selling indirectly by monetizing on a good online reputation.

To this end SMEs are not attributing the necessary attention to the use of product

demos to show, explain and educate consumers about specific products. The majority

of manufacturers already provide such videos for their products and all that is needed

is to integrate this video on the e-Shop or at the very least provide an http link to the page on

manufacturer’s website or video channel with the product demos.

Search box importance is ignored: Shoppers come in all flavours. A great deal of

them will not spend any time browsing through the e-Shop for various reasons but will

use the search box to search on specific items. The more sophisticated and friendly

search box the more the chances to make a sale. However, many SMEs provide no

search box or at best just a box to write text which returns results from all over the

site. A good example demonstrating the importance of the search functionality is the display “recently

viewed and purchased” items and popular customer buys, providing multiple search options and the ability

to filter on the basis of specific attributes. Strong search is important not only in retail but also in

manufacturing due to the size and complexity of product catalogs.

Order management not taken into account: The process is not over when the

shopper places an item to the shopping cart. It should be possible to link back to

the product page to make sure it is the right product and it should be

straightforward to change quantities or remove items from the cart. The impact

varies off course depending on the products but can be substantial. SMEs should

thus spend adequate time reviewing the cart functionality to make sure it is the most suitable one for their

e-Shop. This is of special importance to the manufacturing sector where customers often need to configure

products to specifications and there is today widely available e-Commerce technology allowing customers to

configure and view multi-featured products in real-time, confirming desired product dimensions before

placing orders.

Is it long now? Where am I? An ordering process with many steps taking a lot of

time is not going to be popular with shoppers. A mechanism displaying the progress of

the order is not a luxury feature. Especially as m-Commerce is gaining in popularity.

Navigation between step sis also important as it should be flexible in terms of

accessing previous steps and not sequential while it is beneficial to have a “proceed to

checkout” button or link on each page of the ordering process. Sadly many SMEs do not consider this

important.

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What if I want….? More relevant to the manufacturing sector is the provision of

functionality for requesting a quote. Due to the nature of the products/items sold by

manufacturing SMEs it makes sense to provide functionality to customers to ask for a

quotation based on their provided conditions. Complementary to the direct sales, the

quotation functionality can positively affect sales. This not a widely applied practice

among manufacturing SMEs today because they rely on the customer picking up the phone or sending a

fax/email with a request for a quote. This is logically what is going to happen with local customers but may

not be the case with foreign customers. In order to break the natural resistance of foreign shoppers in the

manufacturing sector it is helpful if a well thought out quotation tool is made available online to deal among

others with the communication of two parties in a third language.

3.2 PAYMENT

In relation to Payment, the following

weaknesses have been identified in the most

frequent e-Commerce practices of SMEs:

Limited flexibility: Many SMEs are stuck to the old ways of doing things and

fail to grasp the importance of flexibility when it comes to receiving payment.

Many shoppers are looking for specific payment methods in e-Shops in order to

shop. Online stores commonly use credit and debit cards, gift vouchers, cash on

delivery, PayPal, etc. as their main payment system3. Credit cards still dominate

the online payment sphere, but the demand for alternative payments such as e-wallets, cloud-based

payments and mPOS, is on the rise4. Payment details should be displayed on the home page in plain sight.

3 A detailed breakdown of payment preferences in key markets can be found in the Payvision infographics

library http://www.payvision.com/infographic and the Paypers country factsheets http://www.thepaypers.com/cross-border-ecommerce

4 White paper "Key Business Drivers and Opportunities in Cross-border

Ecommerce": http://www.payvision.com/cross-border-ecommerce-report-survey-2014

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Inadequate security: Even though the majority of SMEs are aware of the

impact of payment security on shoppers, they fall short on offering a secure

payment environment because they think it is too complex or expensive or

they feel that the responsibility rests solely to their payment solution

provider. However, it is not difficult to protect Internet communications via

encryption and utilize secure communication channels (SSL, VPN). A good practice is to use Trustmarks

(small images or logos that show a security guarantee by an external party indicating that it is safe to shop

on the site). Shoppers will be more inclined to make a purchase if they know that their payment details are

safe from prying eyes.

Not mobile friendly: Many SMEs still ignore mobile payments as an important

payment option for their customers and are thus not aligned with the e-Commerce

landscape of tomorrow. However, more and more consumers are shopping on-the-

go from the palm of their hands. There are over 200 alternative payments across

multiple markets in the e-Commerce industry today but it is predicted that over the

next 5 years most of these options will evaporate and the vast majority of payments will be made online5.

While cross-border spending is largely driven by credit cards, and will remain so in the near future, cross-

border e-Commerce will be propelled by mobile payments in the future.

3.3 DELIVERY

The following weaknesses have been identified in the most frequent

e-Commerce practices of SMEs in relation to Delivery:

No delivery tracking: SMEs are not reaping the benefits of order tracking which is

relatively easy to facilitate. Order tracking, apart from enhancing the business profile

of an SME leading to repetitive sales, it can potentially save time by eliminating phone

calls or email communication from shoppers to check the status of their order. Foreign

shoppers in particular will be looking to track their order real time.

5 White paper "Key Business Drivers and Opportunities in Cross-border Ecommerce":

http://www.payvision.com/cross-border-ecommerce-report-survey-2014

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Poor delivery management: This involves several different functionalities,

some more important than others:

o Rearranging and personal collection: There are still many

SMEs today who after the sale they direct the shopper to a

courier service without bothering about the flexibility and

the overall service provision of the courier service. The choice of carrier is crucial.

o Flexibility in returns: Some SMEs were quick to grasp the importance of offering

various options to shoppers for returning unwanted items. Including a full refund.

Other SMEs are still failing miserably in this area.

o Out of the norm delivery times: Deliveries on a Saturday or after 18:00, even the

choice of a specific delivery slot are not commonly offered by SMEs today but only

from main e-Commerce players the likes of Amazon. Automatically this means that an

SME which is offering such services is ahead of the competition and is likely to enjoy

excessive online sales revenues during the Christmas period.

Lack of customs related information: A frequently ignored aspect of cross border

sales by SMEs is the customs and duties levied by each country. Unless customs

charges information is provided to shoppers, they are not able to calculate the entire

cost of their purchase, leading to friction. Custom charges refer to additional shipping

charges, credit card fees, taxes, etc. and should be provided and added to the price

information. Online calculators are freely available for EU sellers6 and so there is no reason for SMEs to lose

out by not providing accurate custom charges on cross-border orders.

3.4 COMMUNICATION

The following weaknesses have been identified in the

most frequent e-Commerce practices of SMEs in relation

to Communication:

6 http://ec.europa.eu/taxation_customs/customs/customs_duties/index_en.htm

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No toll free customer service number: Even though the cost associated with

the provision of a toll free number is today very low and it is very easy to set up it

is not a frequently encountered practice among SMEs. However, research has

shown that having a toll free number displayed in the template of an e-Commerce

store will increase its conversion rate, in some cases as high as ¼.

Non-systematic monitoring of social media: Sporadic postings and

responses and “poor” profiles are the norm among SME social media profiles.

Communication monitoring and responding via social media can yield a lot of

business but only is done systematically based on a long term strategy. SMEs

should try harder with SM, start small and gradually upscale their game.

Not universally accessible Live Chat: The power of Live chat is not harnessed

by SMEs today even though it is essential towards the provision of high quality

customer service. Ideally both forms of live chat are offered (written chat room

and call back) but even one of them will make a difference, especially in cross

border sales.

3.5 OVERALL SERVICE

The following weaknesses have been identified in the most

frequent e-Commerce practices of SMEs in relation to their

overall service:

Insufficient information provision: The value of accurate information is not

fully appreciated by many SMEs with the best example being the inability to

offer their customers exact and accurate information on delivery time and costs.

Detailed and accurate information should be provided not only before the

checkout process as a summary, but also on each products' page. Inaccurate

information may lead to loss of trust in customers' eyes.

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Not mobile friendly: Utilisation of m-Commerce and tablets, if done properly

can generate a decent profit margin. Google research suggests that spontaneity

plays a major role in shopping activities and that this is estimated to affect 81%

of smartphone purchases. However, not all SMEs understand what m-

Commerce can do for them and are slow to shift towards mobile friendly e-

Shops.

Low quality product images/no alternate views: Even though the importance of

good quality images is easy to grasp by everyone, today’s reality is that SMEs are not

likely to pay a professional photographer and/or graphical designer for this purpose.

SMEs until now paid architects and designers to set up or renovate their physical store

but are not very willing to pay a graphical designer and/or professional photographer a

fraction of the cost. Perhaps they would be convinced to do so if their turn over from on line sales became

substantial but this may happen unless they invest on high quality images first. So, kind of a chicken-egg

problem to be solved here.

No online promotions: SMEs are not helping online shoppers to stay

loyal by not offering promotions and savings to encourage them to

make a purchase. Promotion through free or discounted delivery is

very helpful also and good to advertise across the e-Shop. At the very

least there should be a threshold over which deliveries are free of

charge.

Not bothering about the design of the delivery boxes: Surprisingly

enough most SMEs have never even thought about bothering with the boxes

used for delivering their goods to customers. Simple carton boxes are used by

the majority of SMEs, blank, without any logo or business information on them

or a nice graphical design which would encourage the customer to keep and

re-use the box thus constituting a constant reminder of a good shopping experience.

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Gift wrapping? Not relevant throughout the year but critical during the

Christmas season there are not many SMEs advertising gift wrapping for

online sales during Christmas. It can produce good results while it requires

practically nothing to provide it online.

3.6 PROMOTION

The following weaknesses have been identified in the most frequent e-Commerce practices of SMEs in

relation to Promotion:

No or insufficient SEO: Even though its impact on turnover is probably over rated

today the fact remains that it is simple for SMEs to improve their SEO approaches

improving their ranking7.

Unprofessional newsletters: Newsletters are a specific type of email

marketing and as such needs to bear a professional design and catchy

content. SMEs first need to consider if they need a newsletter. If they

conclude that the do, then they should make sure they approach this

professionally preferably with external, specialized help.

Not using PLAs: The Product Listing Ads (PLAs) Google addition to AdWords is

becoming a popular means of promotion. However they are not widely used by SMEs

today who are missing out on the opportunity to effectively promote their products.

7 SME readers are encouraged to download the PECOS4SMEs e-Commerce game (www.ccs-

samples.com/PECOS4SMEs/PecosGame.zip) to assess their present knowledge on such issues and to take

the SEO/SEM survey (https://ec.europa.eu/eusurvey/runner/SEOSEM).

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SMM Misconception: This is probably today the most confusing promotional

technique for SMEs. Many different opinions about what Social Media Marketing

is and how it is used. Many SMEs have Web 2.0 profiles and think that SMM is

about directly promoting their products through their profiles. The reality is that

when doing this it is also very possible that they are turning potential

customers away. It is important to understand that SMM is about engaging with (future) customers and

building a good online reputation by providing high quality information. Sales are indirect by cashing in the

online reputation. This requires substantial and continuous work and as such it is not for all SMEs.

Sharing options not provided: The social aspect of buying is still

ignored today by many SMEs when it comes to online purchases. Many

advantages which come with the provision of sharing options (e.g. email

a friend, ShareThis, AddThis, etc.) are thus missed.

“Submit to Index” not used: Google offers the “Submit to Index”

functionality that allows web shop administrators to submit or resubmit

URLs that should be visited by Google’s indexing bots. After using this

functionality a bot usually visits one’s URL within a day. This simple action

will speed up the inclusion of one’s web shop in Google’s search results,

thus speeding up the moment that Internet users will start finding the shop.

Power of analytics not harnessed: Analytics is an important instrument to

monitor the effectiveness of an e-Shop. Analytics provide insight at which moment

shoppers abandon the buying process. SMEs should focus on at least some key

metrics, such as:

o Number of visitors

o Page views

o Referring sites

o Bounce rate/Exit pages

o Keywords and Phrases

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Shoppers not profiled: The vast majority of SMEs are not pro-active in terms of

predicting the behavior of their visitors/customers. However, the possibility to compare

visitors/customers to industry data in order to understand to what content they are

likely to react best is there offered by profiling service providers the likes of Adobe

Analytics and Google Analytics Premium.

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