Canadians who sell their wares on electronic platforms are, indeed, exporters. Andrea Stairs, managing director of eBay Canada, knows this fact all too well. A full 99.8 per cent of Canadian eBay commercial sellers export, with thousands of them saying more than half their total business is exports. In addition, Canadian eBay commercial sellers export to an average of 20 countries versus 2.5 countries for traditional small and medium businesses (SMBs).
ExportWise sat down with Stairs to ask her about her business.
Can you please explain how e-commerce is helping companies go global?
The key challenge for small and medium businesses (SMBs) is finding buyers. The traditional ‘you hang out your shingle and get traffic walking by your store’ is the same thing on the internet, but it’s hard to do that without help so e-commerce, and particularly platforms like eBay and others, allow SMBs to tap in to traffic and buyers all around the world. And, in many cases, it allows them to incrementally or significantly increase their sales without significant investment. It really is about expanding the population of buyers you’re connecting with and that your products are exposed to.
So to use your analogy, it’s cheaper to get more traffic walking by on the internet than it is in person.
Yes, sites such as eBay and Amazon are driving traffic to the sellers who are listing there on a daily basis. Why not put yourself in the flow of that traffic? Most of these marketplaces have a success-based model so it may not cost you very much to put your inventory in that stream of traffic and then you only pay costs if your products sell. The benefit of a success-based model is that it’s a relatively low-risk strategy. We’ve seen a lot of examples of traditional offline businesses that have gone on eBay to test the waters of e-commerce for that reason. It is a good way to understand what, among your set of inventory, appeals to buyers. And to find out how you need to adjust your pricing and selection without incurring a lot of risk, like you would, for example, if you were opening up another bricks and mortar store or hiring representation in a foreign market. With e-commerce, you can avoid a lot of those costs and get experience without taking on significant risk.
Can you tell me about a few success stories you’ve seen at eBay?
Yes. Every year, we run a competition called the Entrepreneur of the Year awards and it’s a great way of surfacing stories amongst the thousands of sellers on eBay. A recent winner was a man named Jean-Francois Lapointe, who runs a bike shop in Gatineau called BDH [Bicyclettes de Hull] Bikes. He bought the shop from his dad, but in the Ottawa area, selling bikes in January and February is not an easy proposition, so he took a shot at selling parts online. He converted the attic of his store for that purpose. He’s since sold $20 million worth of bike parts, all around the world. A full 80 per cent of those sales are outside of Canada. He paid off his first bike shop ahead of schedule and opened up a second shop. He’s completely transformed his business and has injected benefits into his local community in terms of hiring and building a very stable, long-term business. That’s one type of success story we see fairly frequently.
There’s another man named Michel Robidoux. He had a small hardware store on the south shore of Montreal. He was really struggling and was preparing to go bankrupt and thought he’d launch an online store to see what incremental sales he could drive. He really struggled to drive traffic to that website. As a last ditch effort, he started selling on eBay. He found that he was getting some great volume and started selling fireplaces — large ticket items — and they sold well. He doubled down on that and expanded to selling large outside gazebos and then started sourcing inventory for his eBay channel from China. Most of his sales are south of the border. He’s since opened a new hardware store that is 10 times bigger than his old one, hired more people to staff his store and for e-commerce, and done millions of dollars of sales on eBay.
Not all success stories lead to being a millionaire, but there are other reasons to do it. There’s an amazing woman who found herself in a small town outside of Sudbury and started selling gymnastics clothing on eBay. She found that as a result of the sales in her local community, she couldn’t invest much in inventory. She started selling online to see if she could get more volume through her store. The result is that she’s able to offer her local community a much deeper selection and better pricing. She’s not only built a more robust and stable business, she’s also been able to use the e-commerce sales to enhance what she can offer her community.
With traditional exports, every time you add a new market, there’s a lot of up-front costs in terms of distribution deals and agency deals and all that kind of stuff. On a platform like eBay, it’s a click of the mouse and now you’re suddenly exporting to Australia. As a result, eBay’s small businesses export to many more markets on average. On average, SMB exporters in Canada reach about 2.5 countries on an annual basis. The eBay exporters are reaching more than 20 countries annually. That is a great benefit in terms of diversification. If one market has a tough year, you can offset that downturn with another market that’s doing better. You’re also much more nimble (so long as you can count on enabling infrastructure like Canada Post and customs clearance) and able to respond to pockets of demand.
EDC resources to help you export
Can you give us five tips for would-be exporters using e-commerce?
- Take advantage of marketplaces [such as eBay] so that you don’t have to create your own demand and can tap into the marketing that those marketplaces are doing already.
- You need to have your shipping processes set up. Whether it’s Canada Post or couriers, understanding what it will cost to get your package to those markets is key to making sure your sales in those markets are profitable.
- Having a return policy, even for international customers, is important. It really is table-stakes, meaning it’s the minimum you need to play in retail e-commerce.
- For someone getting started, you may want to focus on markets that share your language. The U.S., U.K. and Australia are a great place for English-speakers to start — although most countries transact in English anyway.
- Think about how your product descriptions will be read in other markets. If, for example, you’re in the fashion category, providing the sizing for other markets (for example, a size 10 in the U.S. is a size 8 in the U.K.) makes a lot of sense.
What kinds of pitfalls await would-be exporters using e-commerce?
I think exporters need to start small, start conservatively. E-commerce does make exporting easy, but not every market is the same. There is a learning curve in engaging in cross-border e-commerce, particularly around pricing and being able to manage the logistics. On platforms such as eBay and others, your reputation is critical. You want to start slow and steady, put your best foot forward and look at it as a learning opportunity and focus on delivering good customer service so you’re managing your reputation from the outside.
What is the No. 1 thing Canadian SMEs that are considering e-commerce should know?
I would say it’s the opportunity. And when the thousands of eBay sellers are doing more than half their business outside of Canada, it gives you an idea of the magnitude of that opportunity.
Do you have any numbers that would paint a picture about how many exporters are using e-commerce?
Well, 99.8 per cent of Canadian eBay commercial sellers are exporting; 64 per cent of them reach four continents annually.
Are there any regulatory issues Canadian companies should know about?
Items are going across the border in ones and twos so duty and customs thresholds really do play a large role. In Canada, the threshold, is $20, which is extremely low. The U.S. is $800 and Australia is $1,000. That really has an impact on sourcing goods and in e-commerce it plays a role in returns because they often get taxed on their return to the country. It’s a core complaint of sellers that we hear. There’s also the cost of shipping in Canada, which is relatively high compared to other markets. That does play a role in being competitive. You will need to be creative and spend more time figuring out the best ways to ship than your competition in the U.S. and elsewhere.
Can you describe the breadth of businesses that are using e-commerce? Retail springs to mind, and maybe software, too, but are there other areas we might not be thinking about?
We see everything from very high-end antiques, collectable cars and fine jewellery, down to very inexpensive electronics accessories, costume jewellery, and other things that sell for a few dollars. The spectrum really is endless. On eBay, there are more than a billion items for sale at any time so you get a sense of the breadth of the spectrum.