The Hindu Business Line : Individuals now reach their global customers

IT IS not easy to be an entrepreneur. If you are creative enough to have a product or service you think is wanted by customers, reaching them becomes a major issue. Some entrepreneurs look for safety and turn themselves into ancillaries of another unit so they do not have to worry about marketing — till a crisis hits when the sole buyer decides to shut down or look for another source. Advertising, having a sales force, building a channel of distribution, appointing agents, all take time and money. It is also difficult to allocate scarce funds for these activities since there is no direct cause-and-effect relationship. One event that has changed the dynamics for entrepreneurs is the Internet. The Web places the whole world at your finger, at just a click.

It was not too long ago that one needed to be a multinational corporation in order to have a global reach. The need to maintain an office or have an agent in different countries raised costs and served as an entry barrier to companies which did not have the volumes or cash to spare to justify the expansion.

But thanks to the Web, you can reach as far as you want. And you do not need to be a company. Even individuals with limited budgets operating out of a one-room appartment can have global reach. This is giving rise to the phenomenon that is being increasingly referred to as the `mini-global' or the `born-global.'

It takes minutes to get your domain name, some hours to build a Web site and with the e-mail address that comes with it, you are global!

The on-line auction house, eBay, needs to take a lot of the credit for building the business dreams of millions of people. Beginning in 1995, the company initially provided a place where individuals who wanted to get rid of stuff lying around at home could find buyers. Hobbyists found it to a great way to find that little something they had been looking for a long time.

The ease with which one can buy and sell on-line has made it a dream come true for all closet entrepreneurs. Very quickly, the more ambitious individuals were quitting jobs to become full-time entrepreneurs. Small firms found in the on-line auctions a great add-on to their existing range of distribution. Large firms saw these auctions as a way of getting rid of old models or excess production.

The rapid growth of eBay prompted other companies, in particular Amazon and Yahoo!, to offer similar services.

A market is a place where buyers and sellers congregate and exchange goods. And what an enormous virtual market is now within reach from the safety of our couches! eBay says it now has about 147 million users world-wide. It is estimated that 430,000 individuals in the US earn a major part or the whole of their livelihood from these auction Web sites.

Though the process may seem fairly straightforward, eBay has been organising what it calls `eBay University' since 2000. These are one-day seminars held around the US at different locations. The public (and several small business persons) enroll for a fee of $59 (about Rs 2600) to learn the ropes.

Companies follow different business models in the services they provide. While eBay charges the seller a listing fee and then a commission when the sale takes place, Amazon does not charge a listing fee and only a commission at the time of sale. Credit card companies and on-line payment processors such as PayPal have helped to make business easy for the small player by simplifying their methods and procedures to make it easy to collect the cash and get detailed statements for accounting purposes.

Credit card companies are now advertising how small businessmen even run their whole business on their credit cards, thereby bypassing all working capital problems.

Apart from using an online auction, `born-globals' can choose other ways to reach their customers by taking advantage of the technology available. Many who start with establishing a clientele through the online auctions slowly graduate to having their own Web sites so they can save on the fees paid to the auction houses. The web also affords them several clever ways to advertise.

Search-engines such as Yahoo! allow simple and inexpensive advertising methods. You can identify key words that would closely describe your product or service and these search engines will display your text advertisement to appear whenever anyone uses those key words in a search. This is very effective, targeted advertising.

Unlike a hoarding that shouts at everyone passing by or a newspaper ad that hopes an interested reader will notice, the key words ensure that a person specifically interested in those terms will see your advertisement. That yields a fairly high success rate on money spent.

Once your sale has been made, you need to ship the goods. An example is how the government-run US Postal Service (USPS) comes in. Faced with Internet competing for mail and other package delivery companies such as UPS and FedEx, the USPS has been forced to keep inventing itself on a regular basis to stay above the competition. One received an invitation in the mail from the postal service to a free program.

eBay and the USPS have entered into a partnership to show customers how to sell and ship items. Through their `Click-N-Ship' and `Carrier Pick Up' facility, the post-office would allow one to print mailing labels and schedule the postal carrier to pick up the item from one's home. Competitively priced and with a vast network of offices, the postal service is ideally suited to provide the service and is taking advantage of it.

With online banking growing rapidly and direct online transfers of money, the postal service has been pushing firms to increase their direct-mail service (to compensate for loss of revenue from people mailing). And it has been successful in this effort, which is surprising considering the competition from email. If you call a toll-free number, you will receive an attractive folder full of information on how the facility can help you run your small business. On complying, one found information on how to send coupons to customers, put an event together and invite the public to attend, remind customers to visit the store, and so on. There was even a booklet on catalog design.

All the ideas, of course, involve the postal service in some way by carrying the mail or the packages as the case may be. Everyone, at some time or the other, has fantasised about becoming an entrepreneur. It is becoming easier to give that fantasy a fair trial.

(The author is professor of international business and strategic management at Suffolk University, Boston, US. His Internet address is cgopinat@suffolk.edu)

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