5 reasons to start exporting globally
You’ve got a great product or service, a strong customer base in Australia and a track record of sales success. So where will your next wave of business growth come from? The answer may be beyond your borders.
As technology continues to advance, it’s never been easier for Australian businesses to start exporting internationally. Modern digital technology has helped support and grow Australian small businesses in leaps and bounds both at home and beyond our borders. New applications and services help to make it simpler and more cost-effective to create an online marketplace, manage logistics and exchange payments. New free trade agreements are opening up access to more buyers, thanks to reduced tariffs, and Australia already has a positive reputation globally for quality products and reliable service. Plus, the opportunities are endless with much larger and increasingly affluent markets just a Skype call away. Start thinking about expanding your customer base overseas with these five potential benefits.
1. Fast-track your revenue and profit growth
Your target market in Australia is capped at around 24 million people. But globally, there are another 7 billion who could be interested in buying your products or using your services.
For most export businesses, strong growth and profit opportunities are the main reason for choosing their first international market. According to a recent AIBS Survey, in 2016 the most common first overseas markets for Australian exporters were the US and China – both offering large target markets. Even if you capture a tiny percentage of your potential market in countries like these, you could substantially increase your sales potential.
Identifying a larger target market is one thing, but reaching them profitably is another. It’s also important to consider local pricing and distribution margins.
If you have a quality product – particularly in the health and skincare, fresh food or beverage sectors – the growing Asian middle-class is generally willing to pay a premium price. Recent success stories range from blueberries in Indonesia to healthy snacks in Japan, and beauty products, wine and vitamins in China.
With eCommerce continuing to grow exponentially, this is a good way to test with a direct market. By 2020, eCommerce sales are expected to top $4 trillion globally, and the Asia-Pacific region will make up almost half of global B2C eCommerce sales by 2021.
2. Scale for efficiency
Sales growth can help bring other advantages, including economies of scale in production, marketing and logistics. For example, you could get volume-based discounts on shipping or help reduce your inventory warehousing costs. Establishing a presence overseas also helps you to tap into offshore production opportunities or source lower cost inputs, such as packaging.
This can help you further grow your bottom line, and provide more cash flow for expansion.
3. Spread the risk of local business cycles
If all your customers are in one market, you’re more susceptible to local economic fluctuations and competition. Exporting can also help you spread seasonal fluctuations, taking advantage of different climates and events on the cultural calendar.
For example, hundreds of Australian businesses profit from China’s Singles Day sales on the 11th of November by accessing over 600 million online shoppers through Tmall Global. Launched by Alibaba in 2009, Singles Day is now the world’s biggest online sale – eclipsing the United States’ Black Friday and Cyber Monday combined.
In addition, Australia is already a mature market for some product categories, but emerging economies still offer growth potential. Exporting helps you increase the longevity of a product that may be poised for decline locally.
4. Open your business to new ideas and innovation
Visiting new markets and keeping an eye on global competitors can also open your eyes to different opportunities. This may inspire new product development, marketing campaigns or even production techniques – as well as unexpected customer segments.
Building your global network is a key step in establishing a successful export strategy, and this can also lead to profitable business or investment partnerships.
With the pace of change continuing to accelerate across all industries, it’s never been more important to stay one step ahead of the market – and that all starts with knowing what’s happening beyond your front door.
5. Enhance your brand with staff and local customers
Establishing an international footprint can also help make you more attractive to your current and prospective employees. Your export strategy could attract like-minded talent who are interested and experienced in dealing with global customers and supply chains.
Exporting can also improve the visibility of your brand in your local market, through marketing and PR efforts – which in turn may enhance the perception of your product and brand with your established customer groups.
Ready to go global?
You don’t need to be a large business to start exporting – 31% of 2016 AIBS survey respondents had just one to four staff and 39% of respondents reported total overseas revenue of up to 20% of their company revenue.
Adding up to 20% to your revenue is still a significant growth opportunity – and you can start with just one international market.