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Online routes to globalization

Online routes to globalization
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First Published: Thu, Jun 05 2008. 12 13 AM IST

Malay Karmakar / Mint
Malay Karmakar / Mint
Updated: Thu, Jun 05 2008. 12 13 AM IST
Going global has never been easier and more affordable for a small- to medium-sized enterprise (SME), especially from the relative comfort of one’s own factory, shop or home office. While traditional marketing channels have included trade shows, catalogues and trade associations, the Internet has ushered in new tools to bring trading together partners using search engines, portals and online marketplaces.
Malay Karmakar / Mint
But, which channels should a small business with a limited marketing budget choose? Should it buy keywords from search engines or establish a storefront on e-marketplaces, or both? What is the right online marketing mix for an SME?
Having a company profile online and being found by search engines is certainly the first step for any company engaging in e-commerce. Search engines are good for mass marketing to a wide audience and addressing the so-called “long tail” of the Internet.
But, for sellers there are pitfalls. A search engine is more consumer-traffic driven with no budget guarantee, so costs can accumulate without any reasonable assurance of sales. There is also a serious global issue of click fraud, whereby competitors click repeatedly to increase your pay-per-click advertising costs. At this time, there is no known solution that can eliminate 100% of click fraud. A separate problem is the need to build and maintain a website, which can be an additional heavy burden for small companies that might not have the resources or budget for this.
Buyers need to be aware that search engines have no authentication and verification, so they can never be sure if a site they have found is from a legitimate company or a phish website until they do their own investigation. Professional buyers often find search engines less helpful because the wide variety of website formats makes it hard work to compare one seller with another.
Search engine results can cover virtually anything available on the World Wide Web. This includes information from businesses as well as associations, governments, institutes and even individuals. The value of an “online business card” is decreasing as companies now must compete with millions of other sites for a favourable search result ranking. Virtual marketplaces have emerged to fill the need of suppliers for targeted brand exposure.
Online marketplaces target a highly specialized group of people who are interested in global, business-to-business (B2B) trade. They offer features and support services that are customized for this special group and provide an efficient way for SMEs to promote products directly to potential buyers.
Online marketplaces provide SMEs with a standardized supplier storefront and many of the same functions as a corporate website. They offer professional and easy-to-navigate templates, which are specifically designed to attract international buyers and can be updated any time by the registered member. Unlike a simple search engine, e-marketplaces also offer a like-minded sourcing community as well as industry news and trading resources.
Search engines crawl the Web, but their keywords are usually bought on a per-country basis. If you are a supplier in India wanting to sell your goods in the UK, you could buy a few keywords on a search engine targeting the UK. But if buyers in the US, Australia or Europe are also your potential customers, you will have to allocate a separate budget for each market. Suppliers advertising on online marketplaces can rest assured that for the same price, buyers from all over the world can find them as long as they can access the Internet.
The benefit of the Internet is that you can easily measure the effectiveness of your online marketing spend based on the number of inquires you receive. Since online marketplaces usually charge an annual subscription fee for storefronts, SMEs can budget for the fixed fee structure and pay the same price, no matter how many clicks they get from potential customers.
LPI Technology International Ltd, a Hong Kong-based supplier of 3D printing equipment, recently shifted its entire online marketing budget to Alibaba.com from search engines. The company likes the user-friendly website and fixed fee payment terms of the marketplace and the quality sales enquiries it generates worldwide.
I would advise SMEs getting started with online marketing to keep it simple and outsource what they don’t understand. To use search marketing, it is best to have someone in-house with keyword marketing expertise. Otherwise, you should consider using marketing firms which have a proven success rate of getting companies to rank higher in search results.
The right mix of search marketing and B2B websites can really help a business take off, but small companies need to balance their returns on investments with manageability. Make sure their business maximizes the benefits of e-commerce by marketing through the right channels. For a small business new to e-commerce, an online marketplace may be the easiest way to start its online promotion.
David Wei is chief executive officer of Alibaba.com, an online marketplace. Comment at theirview@livemint.com
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First Published: Thu, Jun 05 2008. 12 13 AM IST