One of the largest byproducts of the pandemic has been the global surge of e-commerce. Small and medium-sized businesses (SMBs) have been forced to pivot to keep up with constantly shifting regulations and customer needs due to the Coronavirus disease (COVID-19) pandemic, and many have expanded into new, international markets for the first time. As we see a general decline in COVID-19 cases in the United States and beyond, imports are surging. That trend is expected to continue throughout the summer. However, supply chain disruptions experienced over the past year will persist. In addition to backed-up ports, among other things, recent studies show that international payments are a challenge businesses can’t seem to shake and it’s affecting overseas operations.
As we enter “the New Normal” and the global supply chain smooths out, expect more SMBs to leverage the following areas in order to keep their international operations efficient.
Identify region-specific marketplaces
As SMBs expand overseas, they’re noticing a massive, unique opportunity for international sellers - and U.S. sellers in particular - to penetrate markets that are already accustomed to buying western products. Thanks to big-box retailers and existing e-commerce giants, consumers in markets like Europe and Australia are already primed for international sellers. In a recent study out of OFX, 40% of small business owners said they entered into a new market for the first time. Of those, 98% agreed that expanding into a new international market increased their overall revenue in 2020. International marketplaces like Allegro are becoming more meaningful as e-commerce continues to grow, and the opportunity to secure market share is still fresh.
Localize supply chains
As businesses take advantage of these new marketplaces, they must also find a way to enable quicker fulfillment and delivery overseas. The pandemic (and the recent crisis in the Suez Canal) has laid bare the need to have options when it comes to international imports and exports. Supply chain diversification is necessary to ensure the continued flow of goods in the event of a crisis, change in regulations, or anything else that may cause significant backups in shipping. SMBs must turn to local suppliers - or suppliers closer in proximity to each marketplace where they operate - instead of having 100% of their supply come from one country.
Adopt multi-currency payment solutions
Neither of the methods mentioned above are feasible unless SMBs have the ability to send and receive payments in local currencies. But, business-to-business (B2B) payments are surprisingly still a very real challenge for SMBs, no matter their size or industry. OFX’s study shows 60% of SMBs that expanded into a new market feel challenged by their lack of knowledge about foreign currency exchange. Expanding internationally is a difficult feat without the added worry of opening overseas accounts full of hidden, hefty fees. But multi-currency payments can drive international efficiency for businesses by enabling faster payments for both customers and suppliers. SMBs that adopt modernized payment solutions will have a leg up on their competitors, due to their ability to pay suppliers more quickly, enable low-cost cross-border transfers and even automate money transfers when exchange rates are optimal.
There’s an important distinction to make here. Despite the cryptocurrency craze sweeping across the globe right now, crypto simply isn’t a feasible payment solution for SMBs just yet, and it certainly isn’t an accessible form of payment for consumers. Businesses that want to take advantage of this age of digital payments should focus their efforts on currency exchange outside of the crypto sphere, no matter how flashy and exciting that area might be for entrepreneurs.
In 2021, look for continued acceleration in both e-commerce and international expansion for SMBs. Businesses that adopt localized marketplaces and suppliers, along with multi-currency payment solutions will be primed to win in the future.