How the internet is globalizing small and mid-sized enterprises

In 2012, then University of Washington student, Ryan French invented an easy way to connect a smartphone to a games console controller and hold both devices at once. He Internetcalled it the Gamekilp. Thanks to online sales and payments Ryan has sold the product to customers in more than 80 countries. Internet-based marketing made the business instantly global and Ryan states, “I can’t imagine something like the GameKlip being successful without online sales and payments, I never considered launching only in the domestic market. Around half of GameKlips are purchased from outside the US, with Canada, the UK, Australia and Germany proving the biggest markets so far.”[1]

What are the specific drivers behind Ryan’s success? The primary driver for the success of the Gameklip is the global Internet, which enables a small entrepreneurial business like Ryan’s to connect directly with 3 billion potential customers around the world. The second driver is online platforms like web marketing and electronic payments processors that enable Ryan to find and engage in trusted transactions with customers from around the world. The third driver is global express shipping services, which enable Ryan to deliver the Gameklip to customers around the world safely and securely.

The primary key benefit of the Internet-based model for cross border commerce are the low barriers to global market entry. Thanks to online platforms, Ryan could setup his website, market the product, accept payments, and deliver all without large scale capital investments or an international sales team and organisation. Another key benefit of Internet-enabled cross border trade is the ability to rapidly scale globally. Ryan put up his website and within the matter of a year had sold to 80 countries.

Innovative software that can calculate fully-landed costs upfront are a major enabler. The ebay.com Global Shipping Program is an example for an enabler of cross border trade. The program makes products located in the United States of America and the United Kingdom available to buyers around the world. There are three elements which are key to the success of the program. Firstly, the global eBay Marketplace platform with over 150 million users. Secondly, the partnership between eBay and Pitney Bowes. Thirdly, the creation of national logistics hubs where outbound international shipments can be aggregated and prepared for global shipping and distribution.

Is the regulatory framework ready for this development? Global public policy officials need to recognize that this type of trade is vital for healthy and inclusive economic growth, and that it has unique barriers associated with it. Ryan is not a known trader that can secure expedited treatment through customs for his goods. Ryan’s goods can be held up at borders and he would have no recourse because he does not have a dedicated customs agent to help facilitate the goods across borders. Specific policies are needed to support the small global entrepreneurs and the small and mid-sized enterprises.

Today, the Internet connects millions of entrepreneurs with billions of buyers. We are not surprised anymore about billion dollar businesses born in dorm rooms or garages. But the hidden stories that might be even more important in the long run are the countless micro-businesses that could survive and thrive in the technology-enabled global market that would have otherwise withered and died in the traditional 20th-Century model of globalization.

This blog was originally posted on the World Economic Forum Agenda.

Author: Brian Bieron, Executive Director, eBay Inc. Public Policy Lab. Wolfgang Lehmacher, Director, Head of Supply Chain and Transport Industries, World Economic Forum.

Image: A zoomed image of a computer monitor shows a website selling button clipart for online shops in Vienna November 27, 2013. REUTERS/Heinz-Peter Bader

[1] PayPal (2013) Modern Spice Routes – The Cultural Impact and Economic Opportunity of Cross-Border Shopping

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s