Going forward, more and more brands will be selling digital and physical products. What are the new ecommerce rules within such an environment? We outline the key results of a new Forrester Consulting report, commissioned by Digital River.
In a digital economy, ecommerce presents a massive opportunity for businesses that sell digital content, software or cloud-based technology. However, small-to-medium-sized enterprises (SMEs) often lack the resources and bandwidth to manage the complexities of selling online – particularly when it comes to expanding into new countries. In August 2015, Digital River commissioned Forrester Consulting to evaluate current trends here with regard to SMEs that sell digital products through an ecommerce site.
SMEs experience revenue gains
A key finding was that SMEs that invest in ecommerce channels often find these channels quickly drive revenues. Respondents reported that ecommerce channels now account for an average of 46% of overall revenues. Furthermore, 86% saw ecommerce revenue share increase over the last two years.
International Commerce is Key
Expanding even faster than ecommerce as a whole is international ecommerce. Forrester predicts that the US outbound cross-border ecommerce market will grow at a 16% compound annual growth rate (CAGR) from $24 billion in 2014 to $44 billion in 2018, and that the European outbound cross-border ecommerce market will grow by a CAGR of 11% in the same period.
Risk and Challenges
The potential money and time investments required to build out any form of ecommerce channel can be daunting. Global expansion opens up a whole new set of risks, including compliance with local laws and regulations, fraud management and liability, customer service, and security. When we asked respondents to select their top three concerns when thinking about global ecommerce, they cited protecting customers against online security threats (50%), protecting the business against fraud (49%), staying compliant (43%), and providing great customer service (41%).
Methodology
To create this research, Forrester conducted an online survey of 102 ecommerce leaders in SMEs ($1M to $25M USD in annual revenue) from the US and Germany. Respondents all sell digital content or software and/or cloud-based technology under their own brand names. The auxiliary custom survey began and was completed in August 2015. Download the full report from: MyCommerce.com/TechAdoption
SMEs rely on vendors and platforms SME ebusiness leaders face tremendous pressure to stretch their budgets to grow the business and meet digitally empowered consumer demands. Forrester has found that ebusiness leaders with limited resources, competencies, and capabilities in-house to deliver on these complex commerce initiatives are seeking partners to manage all or parts of ecommerce operations.
There is a wide range of considerations for evaluating vendors, but the considerations with the most number-one rankings are security/compliance expertise, highly rated support capabilities (including localised support in international markets) and ease of use.
Conclusion
International ecommerce expansion is complicated, but SMEs don’t have to go at it alone. There are a number of trusted vendors and platforms in the marketplace that are helping SMEs expand quicker, with less risk, and with less burden on internal resources. With these resources available, SMEs can experiment with ecommerce in untried international markets, knowing the safeguards are in place to protect them from risks that otherwise would prevent or delay entry.
