Did you know that 99.5 per cent of Canadian businesses that use eBay marketplaces are exporters? And that these exporters ship to an average of 19 countries? These are just some of the key findings from eBay Canada’s Commerce 3.0 report.
“Technology is causing a huge shift in the way international trade is conducted,” says Andrea Stairs, Managing Director for eBay Canada. “It’s creating a new breed of exporters.”
Different from traditional exporters, these ‘Technology-Enabled Small Businesses’ are using the Internet, and eBay, to tap directly into consumer markets around the world.
“They might not look like a traditional exporter, but make no mistake these entrepreneurs are selling their products and services around the world.”
Obviously, this is not the eBay of old. In fact, over the past 15 years eBay has evolved tremendously, transitioning from a primarily used-goods and collectibles auction site, into a retail powerhouse helping fuel Canada’s export market. Today, more than 80 per cent of purchases by Canadians are for new products, and 75 per cent are made at fixed prices.
It was a buyer-led evolution, notes Stairs. “The economy evolved with technology, while eBay’s range of inventory began to evolve. Then we began to understand that most buyers and consumers, regardless of the country, generally want new inventory at a fixed price.”
Indeed. And what are some of the hottest sellers on eBay today? Fashion, auto parts and heavy machinery. That’s right; heavy machinery … sold through eBay.
“Traditionally, small entrepreneurs couldn’t get into the export game, because of the high capital investments,” says Stairs.
“Today, that’s changed. More and more Canadian entrepreneurs are using the Internet to engage in trade – because of its ability to provide instant global scale, access to about 2.6 billion people.”
And it’s paying off. eBay’s own research indicates that these technology-enabled small businesses had 14 per cent greater sales in 2013, than they did in 2008; this during a time when overall Canadian exports were down 2 per cent.
Their research uncovered some other interesting facts: While most indicators show that only 10 per cent of Canadian SMEs are exporting today, the data from eBay marketplaces tells a different story. In 2013, almost all – 99.5 per cent – of technology-enabled business exported. More often than not, these businesses are small companies, sometimes individual entrepreneurs, who have overcome the traditional challenges of scale and access to foreign markets. Micro-multinationals, if you will.
eBay exporters more successful
Furthermore, while the overwhelming majority of Canadian exporters (57 per cent) sell primarily to the U.S., 95 per cent of eBay marketplace sellers export to both the U.S. and other countries. “There’s a multiplier effect when a company or an entrepreneur exports,” says Stairs. “And that speaks directly to their bottom line. And the beauty is there’s no real incremental investment when these companies diversify to 20 countries or just two.”
“Most entrepreneurs are export-oriented to begin with, notes Stairs. “And diversifying your portfolio of buyers just gives you that all-important hedge. We know how important diversification to more countries is; just look at what happened during the recession.”
Stairs believes that this type of technology-enabled trade is only going to grow, and that Canada has an opportunity to become a global leader in this arena. Which is why eBay Canada is working hard to help grow this new entrepreneurial class of traders.
Primarily because these technology-enabled small businesses still have to deal with typical problems of traditional exporters: namely, language, customs and border issues, shipping, logistics …
The next step for eBay is to help reduce some of these frictions, by finding ways to extend the benefits of Free Trade Agreements for example, to eBay exporters, or by increasing the customs import duty exemption thresholds to reduce the time and cost of moving goods across Canada’s border.
“We hope to see Canada’s trade strategy recognize the potential of these technology-enabled exporters,” says Stairs. “This type of technology-enabled trade is only going to grow, and Canada has an opportunity to become a global leader in this arena. “
Did you know?
- Technology platforms can boost small business exports 60 – 80%
- The smallest 10% of technology-enabled small businesses reached an average of 11 markets
- 83% of new online businesses sell to 2 or more markets in their first year
- Electronic payments have driven ¼ of GDP growth in Canada