In the past, small companies had a local reach whilst larger companies sold to consumers globally. Only a large entity could source the best raw materials from around the world, and only a large entity could have the reach to sell products to consumers internationally.
Companies like Ford Motor Company would create their own global supply chain, making steel, rubber and glass to be used in their cars. But technology has changed this equation.
Here are five areas where technology has reduced the required size for a global organisation.
Reduced transaction costs
Having an integrated supply chain makes sense when transaction costs are high and the transparency around global suppliers is low.
Internet technology reduces transaction costs, increases transparency, and makes it possible for anyone to source products directly from a Chinese factory, at a low cost and at relatively low risks.
The Chinese sourcing website Alibaba has grown huge for this demand.
Connect to consumers directly
More and more consumers are willing to buy over the internet from companies they have never heard of before. In addition to a growing trust in e-commerce, this is supported by ways of generating trust between strangers, such as five-star reviews and organisations that act as trusted third parties.
SMEs can use tools like Google AdWords and Facebook Ads to reach consumers anywhere in the world, and send them to a website offering products to purchase. A number of platforms such as Amazon, eBay and Etsy take a small commission to bring international buyers and sellers together, and to underwrite the transaction and generate trust.
It’s important to be aware that these seemingly global platforms are not always dominant in all markets, for example, the Chinese market is dominated by local platforms that are unique to China.
Advances in shipping
The rise of e-commerce has been a boon for all the specialist shipping companies around the world. In the past, shipping products to consumers required substantial time and resources. But these days, it is very easy and relatively cheap to ship almost anything between two points of the globe after just five minutes searching the internet for the right shipping company.
SMEs can now easily hire people with the required skills from remote workers or freelancers on a per-project, hourly or other remuneration structure. SMEs can also offer customer service in foreign countries on a pay-per-use basis.
New production methods
Digital technologies have created a range of new production methods that favour SMEs. Large companies are better at getting 10,000 injection moulded parts from a Chinese factory, but a smaller company can easily compete when batch sizes are five or 10 and the mass-customisation production method is using 3D printing machines.
Printing is another example where digital printers can easily make millions of versions, with each printed version being slightly different. The recent experiment by Coca Cola in offering multiple names on bottles is a prime example of how products may look in the future. All the main luxury companies are currently looking into increasing personalisation of their products, driven by these new technologies.
It is important to highlight that culture still drives and divides most countries. If you are going to sell successfully to consumers in another country, you need to adapt your offerings for them. For example, a company selling products to the UK or US may assume that consumers are confident in paying online, whilst a website targeting Italian consumers needs to take into account both Italians unfamiliarity and lower confidence with buying online, and the fact that a lot of Italians prefer to use prepaid cards like PostePay.
Succeeding as a global SME is possible as long as you find your niche. By giving customers a better product than what exists today, you can benefit from all these changes in the market place and become your own boss. Good luck!
Lars B. Andersen, is the Founder of My Nametags and 3D printing company, Arty Lobster.
My Nametags has received many accolades over the years, including Best Innovation and Overall Winner at the Federation of Small Business Awards and UK champion in the European Business Awards.
He is a trustee of the Guild of Entrepreneurs, as well as a member of the FSB E-Commerce Panel.
He is trusted by UK MPs and ministers, as well as EU MEPs and EU Commissioners, to give advice about e-commerce and European integration.
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