The internet and social networking
What the internet changed for a global business
- The teaching guide lists the internet and social networking among the changes in the global marketplace, and for a New Zealand exporter it is the change that has done the most.
- Distance stopped determining reach. A business in Ōamaru can be found by a customer in Osaka. Being far from markets is still a freight problem, but it is no longer a discovery problem.
- Selling direct became possible. A business can reach the end consumer without a distributor or a retailer taking a margin — which changes the whole economics of exporting.
- Barriers to entry fell for everyone. The same tools that let a New Zealand business reach the world let the world reach New Zealand, so competition rose in the home market too.
- Information moved to the customer. Buyers compare prices, read reviews and check claims before they ever contact the business.
The opportunities
- Direct-to-consumer sales. Higher margin per unit, direct customer relationships, and data about who is buying and why.
- Cheap market testing. A business can advertise into a market and measure the response before committing to entry.
- Marketing at a cost a small business can afford, targeted far more precisely than traditional advertising allowed.
- Online marketplaces as a low-cost route into markets where the business has no distributor.
- Customer feedback, arriving fast and free, which shortens product development.
- Provenance storytelling. The distance and origin that make New Zealand goods expensive to ship are exactly what social channels are good at selling.
- Recruitment and supply. Finding staff, suppliers and partners internationally.
The risks
- Reputation moves instantly and publicly. A complaint, a failure or a poorly judged post reaches every market at once, and it does not disappear.
- Price transparency. Customers can see what the product costs in other markets, which makes differential pricing hard to sustain and can anger distributors.
- Channel conflict. Selling direct online competes with the distributors and retailers the business relies on, and they will notice.
- Counterfeiting and IP theft. Marketplace listings of copies are easy to create and slow to remove.
- Fulfilment is hard. Selling direct means the business now handles shipping, customs, returns and support for individual overseas consumers.
- Data and privacy law differs by country and carries real penalties.
- Cybersecurity. More systems and more customer data mean more exposure.
- It never stops. Customers expect responses in hours, which is a staffing commitment in a country whose business day does not overlap most of its markets.
Why the response is strategic
- Moving to direct online sales is exactly the kind of decision this standard is about:
- Size — website, systems, fulfilment, marketing budget and staff
- Scope — it changes marketing, sales, despatch, customer service and the relationship with existing distributors
- Timeframe — years to build, and hard to reverse once distributors have been disturbed
- The genuine judgement is whether the higher margin per unit outweighs the cost of doing everything the distributor used to do — and whether the distributor relationship survives the attempt.