The role of trading technology in Australia’s international business activity

16 Oct 2018

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  • Divya Skene
  • AIBS 2018

AIBS respondents are experienced exporters, but we have found in two separate surveys that around half of our respondents do not engage in e-commerce.

In 2016[1], 53 percent of respondents used e-commerce for sales and in 2018, 44 percent reported they use e-commerce.

Of the 44 percent engaged in e-commerce in our latest survey, 11 per cent relied on online channels ‘entirely’ for export sales, and 32 percent relied on online channels ‘to a great extent’. This leaves around 57 percent whose responses range from relying ‘not at all’ to relying ‘to some extent’, on online channels for export sales.

Another way to understand the adoption of technology by our sample is to enquire how many use online channels for their international marketing. Again, we find that around half of our respondents did not rely on online channels for international marketing, or only relied on online ‘to some extent’.

This e-commerce profile might be explained by the fact that many of the experienced exporters in our sample are selling to businesses within the retail and wholesale trade sectors.

However a closer look at the technology responses in our survey reveals the potential for greater uptake.

The following graphic compares those using online channels for export sales, with those that sell to consumers. We would expect that digital and mobile technology has given firms selling to consumers greater access to new markets and payment methods, and anticipate that many of these firms would have established e-commerce systems to access international marketplaces.

However the following graphic shows that three-quarters of those that answered that they do not rely on online channels for exports (or do not rely a great deal on these channels) earn at least three quarters of their export sales from consumers. This raises the question why those firms are not yet taking advantage of digital technology to access and service international customers.

 

The following graphic compares firms’ top revenue markets with their use of online channels for international marketing.

This chart shows that those firms earning their highest revenues in USA are more likely to use online marketing. Over 21 percent of the 300 firms that rely ‘entirely’, ‘to a great extent’ or ‘to some extent’ on online marketing earn their highest revenues in the US, followed by China (15 percent of those using online marketing) and New Zealand (9 percent). So almost half of our survey’s comfortable users of online marketing channels earn their highest revenues in these 3 markets.

 

There is some regional variation in the key channels used by these 300 firms. While use of their own website is important across all regions, those selling to China and East Asia rely next on Alibaba brands, whilst those selling to ASEAN, North America and the United Kingdom rely next on Facebook.

Yet despite the potential for greater uptake of e-commerce revealed through the survey, that path is set to be challenging for firms.

Barriers raised by firms include a mixed set of issues ranging from the challenge of ‘competing against brands with stronger localised propositions’ (cited by 25 percent of all firms surveyed) through to ‘marketing issues’ (21 percent), ‘managing international logistics’ (15 percent) ‘regulatory barriers and compliance issues’ (14 percent) and ‘protection of intellectual property’ (14 percent).

Finally, the state of digital/mobile technology adoption for generating international revenue is revealed in survey responses to the question of future adoption - whilst 60 percent or respondents plan to increase the use of digital/mobile and online technologies over the next year, almost 40 percent of all our respondents say they do not plan to, or are unsure of their future plans in this area.

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[1]  Some of the variation between 2016 and 2018 might reflect variations in the sample, as different sets of companies were surveyed on both occasions.