Small businesses are increasingly using the internet as a tool to connect with suppliers to export and import goods, industry experts say, with one marketplace claiming the rate at which Australian businesses are now sourcing goods is outpacing the rest of the world.
Alibaba.com said yesterday its enquiries from Australian SMEs to overseas suppliers have increased by 31% during the past six months, while the US and Britain have recorded enquiry growth rates of just 8%.
Sabrina Peng, vice president of international operations at Alibaba.com, says there are now over 316,000 Australian businesses using the online marketplace out of a total user base of 12.5 million.
Ian Murray, executive director of the Australian Institute of Export, says small businesses are “undoubtedly” using the internet to source suppliers and clients, and says the growth of online commerce has made it easier for businesses to access opportunities they couldn’t have a decade ago.
“There’s been a lot of evidence over the past five years showing how the internet has helped the industry tremendously. Internet commerce for exporting and importing has helped regional Australia, as well as different rural parts of the county.”
“The internet and eCommerce has taken away the tyranny of distance to a great extent. Very effective websites are allowing businesses to connect and source supplies, and it’s making an incredible difference for small Australian businesses.”
Alibaba says consumer electronics are the most popular import for Australian businesses at 16%, followed by fashion at 14% and sporting goods at 6%.
The company also released data confirming a strong opportunity for Australian businesses to work with Chinese companies, reporting that 62% of sourcing enquiries are directed to the country, followed by Hong Kong and India.
There is also large demand for Australian products from China, which is the largest buyer of local products on the site. It accounts for 17% of all enquiries to Australian companies, followed by India at 9%.
Peng says Australian SMEs want to either export or import goods, but don’t have the first idea how to enter the market. Online marketplaces, she says, provide a safe environment where businesses can “dip their toe into the water”.
“We find a lot of businesses want to work outside the country but they don’t know how to do it. The issues like tax and currency are often difficult to overcome, and they find it a little bit overwhelming.”
“But the Australian market is a key market for exporters, specifically because we’re seeing a demand from China. Online marketplaces are well suited for trade, and we think we’re able to offer a good opportunity for businesses.”
Alibaba promotes business-to-business contact. SMEs sign up and either offer their products, or can source parts from different businesses around the world – anything from handbag handles to guitar straps. It recorded revenue of $567.3 million during 2009.
As online retail continues to grow in Australia, Peng says, demand for trade via marketplaces should also continue. “It’s often difficult for small businesses to reach different businesses around the world, logistics are hard. But eCommerce allows them to do it without the expense.”
“The majority of people joining our site are looking for international sourcing opportunities. Businesses, even sole traders, are using the marketplace to find different products they can’t find here, or can’t at a good price.”
“We think the more online retail grows and Australian business move online, they are going to want to connect more. We provide a place to do that, build communities, and trade. The future will be about direct engagement between businesses.”
Patrick Stafford is a freelance journalist and a former deputy editor of SmartCompany.
