Don't Think Your Business is Global
Message from the President
It's quite easy to list the various barriers to doing business globally via the Internet. Among those barriers are limited Internet access and usage by target customers in foreign countries; confusing and possibly conflicting taxation issues and laws; trade barriers and tariffs: content restrictions; and maybe most troublesome of all -- cultural barriers. Today, efforts are underway to overcome many of these barriers. Almost every industrialized nation is working on some aspect of global electronic commerce. However, the ability to engage in large-scale global business over the Internet is still far from practical, and in fact, may never be reachable.
We all know -- or at least have been told many times over -- that the Internet is global. We see how information can be accessed from just about anywhere on the planet at anytime and we hear merchants give glowing testimonials about how they have received orders from obscure countries. However, with all that global activity, does it really mean that your business is global or that electronic commerce (EC) is ready for the global marketplace?
Unless your company is among a small, special segment, your business doesn't become global simply by taking a few orders over the Internet or by having some people in foreign countries access your Web site. We do a great disservice to the EC marketplace by continually stating that EC is global in nature when it really isn't.
When I say that such global business may never be reachable, I am referring to the misconception that any customer around the world can be reached via the Web in a similar way regardless of his or her location, and that markets will evolve based on customers having Internet access rather than on customers evolving through a natural clustering. Although such physical clustering will play a smaller and smaller role in the definition of markets, you shouldn't structure your strategies to assume that you can reach international markets with one international EC site.
Why not assume that you have an international reach to customers through EC? For a start, look at how most customers cluster in the physical world. Customers typically cluster based on attributes such as physical distribution channels, availability of resources or raw materials, and product life cycyles. Even though some of those attributes will be changed -- and have already been changed -- by the Internet, most of them will continue to play a significant role in determining where your best customers are located.
For example, a company that sells a perishable product like fresh food will not be able to effectively sell the product internationally due to the constraints of physical distribution. No matter how good the company's Web site is, the Internet won't change the dynamics of physical distribution. Maybe over time expanded use of the Internet could allow businesses to restructure their approaches to distribution, but that will take time and a large amount of effort. Today's question isn't how to do business with someone halfway around the world, but rather how to use the Internet to maximize contact with key customers.
The first step in maximizing contact with customers is to understand where customers are and why they cluster together. For example, do your customers cluster in a particular geographic location close to your business, or do they cluster in some other virtual manner? The second step is to identify your best customers (those that generate the largest amount of profit) and their locations. I would contend that for most companies, the highest profit customers are typically domestic customers and may even be located just down the street.
Your electronic commerce strategy should shift from creating a single virtual presence for anyone around the world to supporting specific business relationships through customized sites. That approach can work well when you know exactly who your customer is and how that customer does business with you even if the customer happens to be in a different country.
The strategy is to think globally, but to act locally. Acting locally with your EC strategy means treating all of your target customers as if they were local customers, regardless of their location. In that way, you shift from a single global presence (your perspective) to a local presence for your target customers (your customers' perspective). Remember, your customers will always have a local perspective. They assume that you deal with them based on where they are located rather than where you are located.
Reaching international customers, therefore, means localizing your international sites to accommodate different cultures and ways of doing business. Regardless of how good global Internet access is and how good your content is, global EC shouldn't mean that you implement the same content in all places and do business the same way everywhere. You can't be global on the Internet, but you can be local in all your key markets.
Acting locally doesn't mean that we should dismiss global issues altogether. Many worldwide issues will impact your business and how you do business on the Web. A consistent and stable business environment throughout the world will definitely lower the cost and complexity of global EC for everyone. Therefore, you need to keep track of what's happening around the world and maintain a global perspective to understand the various international barriers and challenges to EC.
The bottom line is that the leaders in worldwide electronic commerce will be those who think globally but act locally.
CommerceNet is the leading industry consortium (non-profit) dedicated to accelerating the growth of Internet commerce, and creating business opportunities for its members. CommerceNet draws its strength from its broad base of nearly 500 member companies and global partners, comprised of industry and technology leaders, whose mission is to foster Internet-based electronic commerce by:
- Identifying and working to resolve key industry issues,
- Providing a global, multi-industry forum for collaboration, and
- Serving as an advocate through public policy and education.
For further information or any other inquiries, you are invited to contact:
Director of Member Services
Telephone: (415) 858-1930 -- FAX: (415) 858-1936
Your comments and suggestions for these pages are most welcome!
Revised: April 16, 1998 TAF
© 1998 Electronic Commerce Media Inc., All Rights Reserved.