New technologies such as advanced robotics, 3D-printing, big data and the Internet of Things are rapidly changing the way firms do business. The same way they’ve disrupted companies domestic operations, they’ve incredibly shaped the way in which enterprises expand into new international markets.
Today, 3.8 billion people are online around the globe, up 38 million since January 2017 Tweet This!. All of which adds up to limitless opportunities for businesses to reach and engage with potential customers abroad.
In parallel, technology has profoundly impacted consumer behavior. Today’s consumers are borderless. Customers often don’t know, and importantly, don’t care where a business is based as long as the product or service they offer meets their expectations. So when it comes to shopping online, if the buying experience is right, they’re happy to continue purchasing from a business that’s based abroad.
96% of people, for example, didn’t know that Booking.com is from the Netherlands — and of these, 90% said this wouldn’t affect the likelihood of buying from the company again. Tweet This!
Online businesses are born with global expansion in their DNA. It’s quicker and easier than ever to leap into new markets and expand exponentially. It no longer takes years for a business to go global and this is mostly due to the role that three main technology trends have played on shaping up global trade.
1. Easier access to information
One of the most significant hurdles to the successful entry of SMEs into an international market is their relative lack of access to information. In fact, in recent research run by Google, 60% of exporters said that acquiring Market Insights is by far the most critical capability. Tweet This! Entering new markets usually requires substantial investment in information gathering. To lower risks when exporting, it is necessary to acquire relevant market information (on the consumer behavior, country economic profile, etc.) and information regarding the establishment of appropriate operations beyond the borders.
New technologies and the Internet, in particular, have played a key role in democratizing the access to information, improving the decision making for SMEs and diminishing traditional market failures such information asymmetries between SMEs and multinational companies.
2. The rise of the platform economy
The second most significant trend is the rise of the platform economy. Non-linear value chains that provide an open, participative infrastructure for these interactions and sets governance conditions for them. The platform’s overarching purpose is to consummate matches among users and facilitate the exchange of goods, services or social currency, thereby enabling value creation for all participants.
Without a shadow of a doubt, platform-based business models are driving the most profound global macroeconomic change since the industrial revolution, and they have become the foundation for new value creation.
In recent research run by Accenture, 81% of the surveyed executives said platform-based business models would be core to their growth strategy within three years. Moreover, the reality is that technology platforms are indeed no longer just about tech and born-digital organizations. This is the case of Caterpillar, known for its massive construction vehicles and equipment, which has over the last decade and a half transformed its business around digital technologies and IoT solutions and services; or the cargo shipping giant Maersk which has recently announced its partnership with IBM to launch TradeLens, a technology that applies blockchain to reduce shipping time and costs.
While platforms provide a set of different services, they usually offer three main benefits to companies:
- Help reduce search costs by facilitating matchmaking in one place at one time.
- They also save on shared costs for both buyers and sellers by providing a unique infrastructure for transactions.
- Also, they enhance the efficiency of the market and resource allocation through continuous gathering and processing of data.
3. More affordable computing power
The last trend, and possibly the foundation of the previous two, is the access to more affordable computing power.
Today, everyone has in his or her pockets access to x4 times more computing power that Nasa Guidance Computer had onboard each Apollo Command Module. Tweet This! If we extrapolate this to the SMEs reality, this means that SMEs have the same technological capabilities as big multinationals and IT firms used to have in the 70s reducing this way the gap between medium-sized and big companies.
Technology has played a vital role in shaping up global trade, reducing the uncertainty and entry barriers when expanding internationally and most importantly, it’s helping companies reach that 3.8 billion people in search of their product and services around the world.