Among the three trends identified by BDC in a recent blog that will impact exports in 2021, is the shift to ecommerce as a means to export. Since the article states, “online marketplaces such as Amazon are an attractive way to start exporting;” we thought we’d take a look at this topic and its implications for the small to medium sized enterprises Innovation Guelph works with.
Abokichi Experiencing Increased US Sales
For entrepreneur Fumi Tsukamoto of Abokichi, the company’s ecommerce strategy includes the US market that is about 500 million compared to approximately 50 million in Canada. Tsukamoto said this is super important especially due to Canada’s proximity to the US. Although exporting represents 10 to 25 per cent of Abokichi’s revenue, the higher percentage occurs in months where the partners place orders for their own inventory. Having these partners and brokers has helped them sell their products wholesale and to US consumers.
Tsukamoto says the company has experienced some technical issues but decided to move forward. “You just need to do it,” she says. To accept American currency, the entrepreneurs created a .com website from their .ca platform. They also have a presence on Amazon where growth has been steady. Overall, Tsukamoto says the SME sector is getting considerable growth faster than prior to the pandemic with ecommerce contributing to improved brand awareness.
Quinta Quinoa Ecommerce Can Be a Marketing and Brand Building Resource
IG Client, business owner and founder of Quinta Quinoa and Junto Business Solutions, Jamie Draves says while ecommerce and export are two ways to increase revenues, the challenge in the food business is that the cost to ship is very high, so unless your products are very light in weight, ecommerce can be limiting. “Amazon and other large online sources have fees that really can limit profits unless you have a high margin product,” he said. “For those reasons [ecommerce] becomes a marketing and brand building resource, and potentially a revenue driver, but not a top profit driver.” Draves says export is advantageous too. “New markets always have a threshold you’ll need to overcome before seeing success, but certainly the US presents a lot of opportunity in the future,” Draves says.
As for SMEs in Canada, he says it is important to maximize the current opportunity arising from an emphasis on buying local first since it’s getting a lot of traction right now, and it’s also important to adapt messaging to specific audiences. “Our focus has been Canada as we are the top local Canadian Quinoa – which gets recognized by our customers; but as we shift to the US our key messaging will shift to more of a focus on our much higher nutritional content over market quinoa.”
Penny Lane Organics Experienced Increased eCommerce Results During COVID
While Alexa Campbell of Penny Lane Organics says ecommerce was already established when she purchased the company. She says it has been challenging to keep things running properly, due to the increasing traffic flow and keeping shipping free for customers with a minimum purchase.
“I saw results immediately,” Campbell says. “Especially with the onset of COVID this past year. About 20 per cent of my revenue was attributed to ecommerce directly from my website with Well.ca and wholesale distributors accounted for the other 80 per cent.” Campbell explained that prior to COVID sales were almost equally divided between her website and Well.ca. However due to COVID-related spa and store closures, Well.ca accounted for about 55 per cent of revenue in 2020. Penny Lane Organics has recently become available on Amazon as well. She says that she feels ecommerce is vitally important to both SMEs and the Canadian economy.
Innovation Guelph Can Help
SMEs can access help with either ecommerce, export or other support to help scale their companies or address hurdles at Innovation Guelph. Contact program manager Linda Horowitz for more information or visit our website.