Any business that sells goods or services online, can call itself an e-commerce business.

Over the past few decades, a number of businesses have risen from very humble beginnings and adapted their existing strategies to become titans of the e-commerce world, worth billions of dollars.

Ebay, Apple, Walmart, and Amazon are all companies that perfectly exemplify this shift. Here is a closer look at these companies, and four lessons you can learn from them to boost your own business’s growth.

1. eBay: Swift payments are key

Founded in 1995 by Pierre Omidyar, eBay is an international auction website where people sell a wide variety of items. In just over two decades, eBay went from a small startup in San Jose, California, to a global e-commerce powerhouse. In 2016 alone, eBay generated a colossal $8.9 billion in revenue, making it a true giant in the industry.

Due to the extremely high volumes of transactions that eBay experiences every day (currently over 2 billion), the company needed to make its payment methods as swift as possible.

To optimize online payments, eBay purchased and developed its own online payment system called Billpoint. However, Billpoint failed to outcompete PayPal in the online payments space. So, eBay simply acquired PayPal for $1.5 billion in 2002.

Since this acquisition, PayPal has been fully integrated into eBay’s system, and this swift payment option continues to help eBay process incredibly high volumes of transactions every day.

2. Apple: Pivoting to respond to market needs can expand profits exponentially

Apple was founded in 1976 in a garage in Los Altos, California. In roughly four decades since Steve Jobs and Steve Wozniak first started assembling computers together, Apple has grown into one of the largest companies in the world.

In fact, the computer and electronics business is so successful that it saw over $215 billion in sales in 2016, more money than many governments spend in a year.

Apple began as a personal computer company. Its early models helped to revolutionize the personal computing industry and bring computers into homes all over the world.

However, sensing opportunities to fill market needs with other types of products, Apple transitioned from being just a computer company, to a much more diverse products and services retailer in the electronics space.

For example, a large portion of Apple’s profits now come from smartphones, tablets, watches, and even iTunes, its music platform. In fact, iTunes alone generated over $16 billion in 2013.

So, the lesson e-commerce companies can learn from Apple is to avoid being pigeonholed into one type of product if you know that your company can deliver a wider range, and you also know that the market is demanding them.

3. Walmart: Adapting to keeping up with the competition is crucial

Historically, Walmart was built on a retail model with shoppers flocking to its many brick and mortar stores. However, in the last decade, Walmart has been transitioning to accommodate a larger e-commerce segment of its business.

In an effort to grow its e-commerce business, Walmart has made a number of key moves. These include closing or planning to close hundreds of physical stores around the world, opening a large e-commerce fulfilment center in Georgia, and hiring many programmers and software engineers to optimize its e-commerce platforms and apps.

Walmart also created its own competing version of Amazon Prime called Shipping Pass. This service only costs $50 per year, roughly half the price of Amazon Prime, while offering many of the same benefits, such as expedited delivery.

All of the effort that Walmart has made in its e-commerce segment, including a 30% growth in Q4 2016 alone in U.S. e-commerce sales, have helped the company to generate over $478 billion in revenue in 2016.

Although Walmart has been a dominant retailer for many decades, it faced the threat of losing a large amount of their market share to tech-driven competitors such as Amazon and eBay if it could not modernize to keep up.

Recognizing the need to adapt to keep up with the modern economy, Walmart has aggressively pursued its e-commerce offerings. This is proving to be quite successful and in the coming years, Walmart is poised to battle with Amazon and a few other major corporations for control of the largest shares of the e-commerce market.

4. Amazon: The importance of vision should never be underestimated

Amazon, one of the world’s largest retailers, was also founded in a garage, just like Apple. Amazon was founded by a 30-year-old entrepreneur named Jeff Bezos in 1994. He saw and understood the retail opportunities that the internet would provide far earlier than most, and created Amazon to take advantage of these opportunities.

Within Amazon’s first 60 days in business, the company was already generating $20,000 a week in sales. In just over two decades, Amazon has become one of the most powerful and successful companies in the world, with $135 billion in revenue in 2016. The company has also become synonymous with efficiency, innovation, and reliability. Today it sells an extremely wide variety of products all over the world.

The concept of Amazon is relatively simple; take real-life products and sell them over the internet. Many people could have taken this idea and ran with it as Jeff Bezos did. However, Bezos had the vision first, and beat everyone to the punch. That is why he was able to establish Amazon as a major market force so early into the “dot-com” revolution.

Bezos’ vision, combined with his work ethic, and the constant innovation of his company has allowed him to reach the lofty heights of the third richest person in the world. Vision is largely what propelled both he and his company and onto incredible levels of success.

Have any other lessons or tips for budding e-commerce entrepreneurs? Share them in the comments below!

The post 4 lessons your company can learn from major e-commerce success stories appeared first on Trade Ready.

Trade finance has shifted from a fairly esoteric, focused and niche element of global trade to become an integral part of the most fundamental aspect of international trade: the global supply chain.

A slow but inexorable shift away from traditional trade finance instruments, such as documentary letters of credit, has motivated banks and other providers to seek ways to stay engaged in, and critical to, the conduct of trade and the provision of trade finance.

Adapting to the new era of supply chain management

Settlement of international trade transactions on an open account basis—in effect, settlement of an invoice by cheque—has eliminated historically attractive margins for trade finance providers, and has removed several lucrative risk-mitigation features that were available under traditional instruments.

Banks and trade finance providers have been working for several years to devise product and service offerings that could usefully and credibly be offered to the market while generating acceptable returns for the providers.

Enter SCF, or supply chain finance.

Trade financiers’ interest in supply chain finance comes at a time when global sourcing patterns are changing drastically and becoming concentrated in Asia, which for many importing nations means supply chains become extended—geographically, and in terms of the time required for transactions to complete.

Similarly, payment cycles extended for some time, with key metrics such as days sales outstanding (DSO) on the rise.

Out with transactions, in with solutions

Trade finance specialists have taken a markedly greater solution orientation in responding to the needs of their customers, and have become very directly involved in efforts to optimize the financial efficiency of global supply chains for their clients and for their clients’ business partners in the supply chain.

This contrasts sharply with the much more transaction-oriented view that prevailed only a few years ago, and likely better serves the efficient conduct of international trade across the globe.

An often-quoted analogy is the idea that trade bankers are now much more interested in designing and building a structure, rather than simply providing a “brick” when a trade client needs help.

As indicated, trade finance providers are becoming active earlier in the life of a trade transaction, now providing solutions, such as financing based on purchase orders, and remaining engaged beyond the traditional point of financial settlement.

By engaging closely with importers and exporters, banks have learned significantly more about their clients’ businesses, and leading trade financiers have been able to develop event-triggered financing solutions across the transaction lifecycle and across the supply chain.

Innovation led online trading platforms into the mainstream

The future of international trade—and therefore, trade finance—promises more change and innovation than the industry has seen in its entire history to date.

As online trading platforms become increasingly mainstream and able to credibly handle a wider range of products and services, the financing of exchange (trade) on such forums will start to gather momentum.

Clearly, this will be limited to smaller items, generally for small businesses, yet it is often noted that small businesses are the drivers of leading global economies.

eBay, the pioneering—and leading—online marketplace has taken some acquisition steps that line up interestingly with the core value propositions in trade finance. eBay provides a rough process for assessing the risk of trading with a potential importer or exporter (the user’s “Feedback Profile,” which is a collection of comments provided by others who have transacted with the individual or company).

The platform provides customized software to assist with inventory management, including a dispute resolution mechanism, and identifies its top exporters through tiered “levels” based on monthly volumes.

eBay acquired online payments provider PayPal in October 2002, adding payment facilitation on a global basis to its trade-finance-type capabilities. Most of PayPal’s major competitors have since shut down—similar Internet-based payment systems from Citibank, Yahoo! Inc. and even Western Union could not compete against the PayPal brand.

Relative newcomers like Paypal are challenging traditional providers

PayPal now has more than 169 million active accounts in 190 markets and 25 currencies around the world

As much as trade finance has been a conservative line of business, in keeping with its banking DNA, the changing realities and dynamics of global commerce are demanding—and will continue to demand—innovation and responsiveness from leading providers of trade finance.

Traditional providers of financing and payment solutions to international trade are being challenged by numerous entrants to the market, including courier companies (now logistics solution providers) with trade finance units such as UPS Capital, specialized hedge funds supporting trade, investment bankers such as Merrill Lynch, and even the finance arms of global companies such as GE Capital.

From a technology perspective, the variety of providers increases the likelihood that “out of the box” thinking will add to the dynamics of innovation.

These new players will help shape the application of technology to the development of additional solutions and value propositions in trade finance.

These new and emerging providers of trade finance are noted to raise awareness: while UPS Capital has provided trade finance to their logistics customer base for over a decade, a number of the new providers, including those from the investment finance arena (as opposed to banking), are still working to carve out unique and sustainable offerings in trade finance.

Some new players, such as London or New York–based hedge funds, may focus on enabling trade with higher-risk emerging markets, in hopes of generating higher returns for their financing activities.

An appreciation for the technology options and solutions in the market can help international traders determine their approach to the conduct of international trade and global business, tailoring the solution to specific requirements.

As more companies go global, and do so earlier in their lifecycle (as evidenced by the expression “the global start-up”), trade finance solutions will need to be creative, flexible and responsive—all facilitated and enabled through technology.

How do you see supply chain finance changing over the years? Are you enjoying the advantages of a more solution-based approach to trade finance?

The post Why the future of supply chain finance belongs to financiers who think ‘outside the box” appeared first on Trade Ready.

Here are some of the most famous market entry failures of the past few decades, and the lessons to be learned from them.

1. Target – Canadian Market Entry

In 2011, Target bought 124 former Zellers department stores across Canada. The plan was to quickly convert these stores and enter the Canadian market in a blitzkrieg of expansion. Target believed that its Canadian sector could be profitable by 2013.

However, within two years, Target closed down its Canadian business. An investment of over 4 billion dollars turned out to be a giant failure.

Lesson Learned – Locations must be properly chosen.

A big reason why Target failed in Canada is because a lot of the former Zellers stores it bought for conversion were poor locations. Many were in shopping centers that were not conveniently located for the consumers they targeted.

For some, Target took the place of Zellers in shopping centers that were past their height of popularity, as customers had begun to shop at different locations.

For others, distance was a factor, as most customers were forced to drive several miles to shop there, a particular inconvenience during cold and snowy Canadian winters.

Target also had to outlay a great deal of money to renovate the Zellers stores, which increased the financial pressures for early success. Customers were still not always pleased with the store layouts and appearance, in part because of the limitations placed upon them by the former Zellers locations.

Dissatisfied with the poor locations, both geographically and physically, many potential customers avoided shopping at Target, one of the leading factors in its quick and dramatic decline in Canada.

Perhaps Target should have spent more time considering why all the Zellers stores were for sale in the first place.

2. Best Buy – Chinese Market Entry

Best buy entered the Chinese market in 2006, opening nine of its retail stores in the country over the next few years. However, in 2011, five years after it entered the market, it closed all of its stores in China.

Despite the fact that the electronics retailer has widespread success in America and other countries, it was unable to keep its foothold in the country with the largest population on earth.

Lesson Learned – Local competition can’t be underestimated.

Even though Best Buy faces competition in America and other countries, that does not necessarily mean that the competition in every place will be similar. In the Chinese market, Best Buy faced extreme competition from Chinese electronics companies such as GOME Electronics and other local retailers.

These local companies were able to outcompete Best Buy by offering similar products at a cheaper price.

The reason these retailers could do this was because they operated out of smaller shops in areas that did not require as much car parking.

A lot of transportation in China is still done on bike or by foot, so these companies could better appeal to this type of pedestrian traffic. By using locations that could be reached by bike and foot, instead of mainly just by cars,  the stores got more customers and could reduce prices due to higher volume.

Further, these local retailers offered fewer benefits, and paid smaller salaries than Best Buy did. These savings allowed them to undercut the prices of Best Buy, and thus drive the company out of China.

3.  EBay – Chinese Market Entry

In 2004, EBay entered the Chinese market with the goal of gaining a huge market share of the online auctioning business in the country.

However, the company soon found itself embedded in a staunch competition with the newly formed company TaoBao, founded by Jack Ma, who was also the founder of Alibaba.com.

In the two years that followed Ebay’s entry into China, Taobao and EBay were locked in a fierce battle for control of the market. However, eventually, Jack Ma and Taobao won, and eBay bowed out of the country in 2006.

Lesson Learned – Cater toward the local consumer.

The reason Taobao was able to defeat eBay was because it tailored itself specifically to the Chinese population.

For example, Taobao crucially capitalized on the fact that there were 300 million cell phone users compared to 90 million internet users at the time in China.

Because of this statistic, TaoBao included instant messaging and voicemail transactions for buyers and sellers.

This also had the benefit of giving the site a more user friendly feel, and it allowed buyers to make their own judgments about the character of the sellers, as opposed to having to rely mainly on feedback from others.

By communicating directly with the sellers through instant messaging, the buyers could get a better impression of whom they were dealing with. This is because the more you talk to someone, the more you can learn about his or her character, and how he or she does business.

Jack Ma also realized that at the time, in 2004, most small business professionals in China were spending more time watching TV than logging onto the Internet. He therefore decided to prioritize television ads, which helped him reach a larger audience than Ebay with its web-based marketing.

The name “Taobao” is also a clever Chinese wordplay, meaning “digging for treasure,” and also grabbed a lot of attention in its effort to gain an edge over its competitor.

In the end, Taobao outmaneuvered EBay, and ultimately defeated the company for the market. So don’t forget to cater to the local consumer!

4.  McDonald’s – Jamaican Market Entry

After ten years of operation in Jamaica, McDonald’s closed its eleven stores there in 2005. Even though the company was able to keep a foothold in the country for a decade, it proved unable to maintain its business there long term.

Considering the fact that McDonald’s is one of the most successful and internationally recognized companies in the world, it would seem odd that the company would fail in Jamaica. However, that is exactly what happened.

Lesson Learned – Choose new markets wisely.

When McDonald’s entered the Jamaican market, KFC and Burger King were already well established in the country, and McDonalds struggled to supplant their more entrenched competition. Consumers there also allegedly preferred larger burgers, and felt that McDonald’s burgers did not compare favorably in that regard to their competition.

When the Jamaican economy continued to slow, McDonald’s found themselves struggling to bring in new consumers, or draw in customers from their competitors. They therefore decided to leave Jamaica altogether, rather than continue to spend in a market that was not ideal for their products.

When you add all of these factors up, Jamaica was not a very good market for McDonald’s to target. It just goes to show that proper market selection is critical, even for the largest, most successful companies. 

What other famous examples offer lessons for companies looking to enter new markets?

The post 4 lessons learned from famous market entry failures appeared first on Trade Ready.