By: Greg Hewitt, CEO of DHL Express U.S.
It may seem counterintuitive, but for many small businesses today, the shortest path to success may actually be the one that takes them all the way around the world. That’s because global trade is helping even the smallest startup, or the most niche local store, achieve sustained growth and resilience in the face of changing market conditions.
According to the U.S. Small Business Administration (SBA), more than 1.3 million American small companies export goods to customers in other countries. Many are also importing goods or materials from abroad. Most are taking advantage of the power of e-commerce, along with advances in logistics and shipping, to target and reach new buyers and to move their goods quickly and efficiently to them. Consider that in 2023, global retail e-commerce sales came in at an estimated $5.8 trillion, with a projected 39% growth in the next four years, and you get a sense of just how vast the international marketplace really is.
I’ve had the chance to talk to small-business owners across the country and to learn about their global journeys. What’s clear is this: Cross-border trade can be absolutely transformative, but it requires careful planning, a strong alignment with target international markets and the ability to navigate the complex and changing landscape of customs rules and regulations.
So, if you are planning to move your company into new global markets, consider the following key areas as you advance your strategy.
Know everything about the consumer markets.
Looking beyond the domestic marketplace for sustained growth for your business makes mathematical sense. By globalizing your footprint, you are expanding your pool of potential buyers. But not every international market will be right for your products at every moment in time. Market opportunities are constantly changing based on economic circumstances, geo-political events and competitive factors.
The first step, then, is to dig in deep and do the research. Today, for instance, Mexico and Canada are the largest and second-largest trading partners for the U.S., respectively. Given global trade trends, these critical cross-border relationships are expected to continue to offer expanding opportunities. Mexico is the world’s 14th-largest economy and the second-largest in Latin America after Brazil. The country has 101 million internet users and saw 3.18% GDP growth in 2023. According to the U.S. International Trade Administration (ITA), Mexico’s e-commerce market is growing quickly, and 80% of Mexican online shoppers purchased from international retailers in 2022.
Trade with both Mexico and Canada benefits from the United States-Mexico-Canada Agreement (USMCA) – a free trade agreement that promotes the movement of goods between the countries. The USMCA, along with the 20 comprehensive free trade agreements the U.S. has with other nations, can help your company by simplifying export and import processes, modernizing trade rules and protecting intellectual property. Trade with Canada, like Mexico, is robust for U.S. businesses. In fact, the country is traditionally the top U.S. export market, accounting for more than 14% of all U.S. goods exports in 2022.
We also know that the United Kingdom (U.K.) and the countries of the European Union (EU) are important and growing e-commerce markets that merit special attention. Each country within the EU has its own distinct characteristics and demands. For instance, Germany, as the largest online marketplace in Europe, offers vast opportunities but, at the same time, special challenges. German consumers have high expectations for fast delivery, exceptional customer service and transparency. Austria and the Czech Republic are also critical EU e-commerce markets, with the Czech Republic in particular showing increasing demand for imported goods.
To determine the right markets for your company, whether it is one of those just mentioned or another growing hub in Southeast Asia, Latin America or Australia, you will need to thoroughly research potential consumer markets. Key aspects include understanding cultural preferences, language barriers, purchasing habits and market-specific trends. For example, you should look at the local top-selling products and sales holidays to ensure your offerings align with market demands.
There are many other resources at your disposal when doing this research. The U.S. International Trade Administration (ITA), the Small Business Administration (SBA) and resources from private partners offer valuable tools and guidance to navigate the complexities of global trade.
Learn everything you can about international shipping.
I know it’s unrealistic for small businesses to know everything about global shipping. It can be complicated for small businesses to assess the constantly evolving world of trade regulations and to learn every detail about import and export rules, duties and taxes, packaging and goods restrictions, shipping routes and local delivery options. It may be difficult to understand the differences from market to market when it comes to intellectual property regulations, employment laws, data privacy rules and other legal requirements. But failure to comply with trade rules can lead to costly penalties, fines or reputational damage.
When considering international shipping for your chosen markets, it’s crucial to familiarize yourself with customs and tariff requirements, as well as any free trade agreements like the USMCA that might benefit your operations. Each market will have its own specific trade rules; however, there are many resources available to help in this regard.
Logistics and shipping organizations have developed advanced tools to align shipments with trade rules by market. You can also leverage the advice of experts available to help with customs procedures and integrate these requirements and costs into your international e-commerce platform so that your customers fully understand the costs and the process from the start.
Conclusion
Ultimately, by accessing a vast audience of potential new customers across borders, your business can tap into opportunities once available to only the largest global organizations. But before you get started on the journey, you’ll need to research, prepare and partner.
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