Last month, we talked about how SME owners should be excited about the signing of Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP).
The trade deal potentially means more customers for them as the agreement opens up new markets. It also means less tariffs and headaches as there are less restrictions on goods.
After the excitement has died down, SME owners may be confronted with hard questions like:
– How will people in another country find out about my business?
– How will they buy my goods?
– How will my goods reach them?
These questions are challenging to answer and may cause many SMEs to forgo their dreams of selling their products abroad. Let me show you that the challenge is not insurmountable and how the CPTPP can benefit SMEs.
CPTPP: Reduction in Trade Barriers
We pay import taxes, or tariffs when our goods enter another country. This leads to an increase in price to account for the tax, and our goods become less competitive when compared to other local products.
Thanks to the CPTPP, tariffs will be substantially reduced. Most goods would not be subject to this import tax, so our goods will be priced more competitively.
The CPTPP is of particular importance to exporters of processed food, textiles and apparels. The businesses can enjoy greater tariff reductions as a result of “regional cumulation” (which means that input from all CPTPP countries will be recognised as originating content) under the rules of origin.
This allows for the final product to qualify for tariff reductions as it is considered i) to have been made in a CPTPP member country and ii) made with content from CPTPP members countries.
E-Commerce: Becoming a Global Business
The CPTPP has presented an opportunity to SMEs, but the question of how they can tap into this opportunity still looms large. E-commerce is one way that SMEs can be part of this global marketplace. As we embark on this transformation, here are three points to take note of:
1. Create a Global Digital Presence
A friend of mine told me about an encounter he had with a soap maker in Europe. Even though he was already well known in the region, the soap maker continued to send his goods overseas to countries like Australia. How did the Australians find out about him?
With platforms likes Tripadvisor and Facebook, it has become easy for local businesses and food haunts to advertise themselves to tourists from around the world. Similarly, an SME owner can create his own website and use it to sell his products to the world. He just needs to create visibility for himself through digital marketing. Don’t worry, it can be done on a low budget and scaled from there.
2. Smooth User Experience
Before launching a website, take some time to think through the experience that you want to provide your site visitors with. For an e-commerce website, visitors are either i) looking for information or ii) want to buy. Build your website so that customers can achieve their objectives painlessly while also highlighting your value proposition to them.
The user experience also extends to after sales and support. Treat this as an opportunity to develop a strong relationship with your customers. Zappos has done this to great effect and is well known for its level of customer service.
3. Effective Supply Chain
Clinching the sale is not the end of the process. You also need to think about how the goods will reach the customer within an acceptable time frame. You can be sure that a late delivery will result in substantial negative feedback.
Some e-commerce stores start by handling all the posting by themselves in order to save costs. This is not viable when you need to send a 100 packages a day. Third party logistics providers are a key partner to any e-commerce business. Start working with them early and include them as part of your planning processes. This also gives you more time to focus on marketing instead of sticking postal labels.
Take Action Now
No business is an overnight success, e-commerce included. It takes time, effort and significant planning before it can succeed. So start taking those baby steps today. Contact our Biz Friend to embark on this transformation journey today.