Breaking the barriers to cross border e-commerce for european smes

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  • D6.11 Breaking the Barriers to Cross-border e-Commerce to European SMEs Page: 2 of 19

    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 dont

    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

    manufacturers 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...

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