2020 was a tough year for most businesses. However, businesses that had diversified their sales into different markets and that were fast adopters of technology were able to survive and even thrive.
Now everyone is scrambling for their share of online sales and for a place in the wealthy or fast-growing foreign markets.
For as far as exporting online makes perfect sense (it always had, even more nowadays), it is important that businesses, especially SMEs, have a clear understanding of what it means to sell B2C versus B2B online, what the consequences are, and how to do that.
Selling Abroad B2B Online
I shall start with B2B because it is usually the easiest thing to do.
Now, B2B means business to business, therefore in a B2B transaction the seller will be looking for another company as a buyer, not a consumer.
It could be an industrial company, which uses the products as input, or a distributor, which buys the goods with the aim of reselling them in its market.
The beauty of the B2B trade is that, if done properly, it can be carried out with relatively little effort.
There are two types of B2B buyers: the ones who buy in bulk and the ones who prefer a long term partnership. In both cases it means that a business may earn a great amount of money from just one or a few orders (in the case of a partnership even recurrent orders, a small business’ dream).
This allows for a concentrated marketing effort focused on finding just one (or a few) business partner. It does not sound like a big deal, but you save a lot of time and resources compared to B2C marketing.
From a legal perspective, the buyer will usually take care of most of the importing country’s requirements, especially in the case of a small business supplying to an established distributor. This is usually reflected in the sales contract being closed under Incoterms rules such as FCA or FOB, which place little burden on the seller.
The sales channels are also quite straightforward. The market for bulk purchasing is essentially divided among a few well-established B2B online marketplaces such as Alibaba, DHgate, Global Sources, eWorldTrade, and Thomasnet.
Most of them are focused on Asia (especially China) in part because Asian businesses are tech-friendly, in part as a consequence of the meteoric rise of the industrial production of Asian countries.
As per long term partnerships, it is not difficult to find a B2B website where to carry on business: Globartis, Enterprise Europe Network, Opportunity Network are just a few names in the B2B e-partnering world.
More recently, even global banks have moved to create their own networks between SMEs. While banks are not exactly champions of technology, their marketplaces should offer more compliance within the platform, as only banking clients are admitted.
That is important because, in the end, the only real issue that a business may incur in an online B2B transaction abroad is that the buyer is unreliable (marketplaces will provide help, but it is always better to perform your own due diligence).
If you find the right buyer, everything should go smoothly.
Selling Abroad B2C Online
B2C means business to consumer, i.e. selling directly to the final customer. There are some variations such as B2B2C, but the concept is the same.
First of all, B2C will only make sense for businesses that sell a final product, and not for industrial companies that supply intermediate goods, machinery, or equipment to other production companies.
Hence, the great advantage of selling B2C abroad is that there is no need of a local distributor or importer.
This means not only that there is no leakage of profits, but also that the company can decide when and where to do business on its own.
That is the good part. The bad part is that a) the marketing effort is huge and b) the legal consequences are much more complicated than under B2B.
What I am saying is obvious: if you want to sell B2C, you need local customers. Hence, you need the marketing effort to attract thousands of people to your product.
There is no shortage of channels to do so (social media platforms, for example), the problem is that it requires a lot of effort.
Additionally, if you sell B2C the final customer will expect the product to arrive at their door. Hence, you will be selling under the D-group Incoterms rules, most likely DDP, which places everything (transportation, import clearance, taxes) on the seller.
There is another way to go B2C, that is through an online B2C marketplace. Now, the world of such platforms is huge, as many are country- or sector-specific, and all have their own features.
For example, some are pure marketplaces (eBay), whereas others are retailers (Amazon).
The most famous are PayPay Mall, Mercado Libre, AliExpress, and Rakuten.
A final way to sell B2C abroad online is through B2B2C, also known as dropshipping. What happens is that a dropshipping platform such as Shopify will take care of production and logistics, leaving to you only the marketing effort.
This makes sense only for businesses with strong R&D and marketing capabilities, that do not have the manufacturing and logistic capacity to serve many clients in different markets.
Selling abroad online is both feasible and rewarding, as businesses diversify from their domestic market and explore new sales channels such as online marketplaces.
The important thing to decide is whether to go B2B or B2C. While there are compelling arguments for both, it may be better for a small business with little exporting experience and marketing capabilities to go first B2B.
The company may start out with a bulk sale, then find a partner, and later on shift to B2C when things become more consolidated.