e-marketplaces: Selling the USA

A promising new e-marketplace has been launched for US exporters that offers clicks, mortar and plenty of buyers. Tristan Digby reports on BuyUSA.com.

Can e-commerce help triple the 1% of all US businesses that exported goods last year? US Commercial Service officials hope so and are banking on a new e-marketplace to introduce thousands of mainly small and mid-sized companies during the next couple of years to 95% of the world’s consumers.

BuyUSA.com, created by the Commercial Service and IBM and launched in June, is the vehicle for linking businesses in the US with qualified buyers and potential business partners around the world. The site allows US-based companies to find foreign buyers and distributors for their products. Similarly, businesses located outside the US can view product catalogues and background information on US companies that have been pre-qualified by trade Commercial Service trade experts.

Click and mortar to the rescue

But what makes BuyUSA.com a better bet to succeed than a whole pull down menu of favourite B2B marketplaces that haven’t turned a profit, or have tanked during the recent dotcom meltdown? One difference may be that BuyUSA.com has a large network of offices and people and the ‘bricks and mortar’ side of the equation seems to be a major factor separating e-marketplace winners and losers. The click and mortar service offers online access to US trade specialists who can assist buyers and sellers with issues such as regulatory compliance and credit screening – things that can tongue-tie many e-commerce help desks.

Also, a marketplace whose managers know local market conditions and understand cultural nuances can prevent sellers from fumbling in unfamiliar places. For example, a US company wanted to move into the Swedish market with the domain name getgift.com. Makes total sense in English, but means “go get poison for goats” in Swedish.

BuyUSA.com aims to provide access to new markets while dramatically reducing the costs and risks of entry. “This is a very sophisticated marketplace,” says Jerry Mitchell, acting director general of the US Commercial Service. “Standing behind each business relationship and transaction is our worldwide network of 1,800 experienced professional trade specialists in 105 US export assistance centres and 157 offices co-located in US embassies and missions in 84 countries worldwide. We can help build value-adding business relationships where none exist.”

IBM agreed to partner with a federal government agency in part because of this global network that matches its own in geographic coverage. But IBM also seemed to recognise that this is not an ordinary government organisation.

“The US Commercial Service is a very entrepreneurial government agency,” says Rusine Mitchell-Sinclair, general manager, managed e-business services, IBM Global Services.

“Together we were able to rapidly develop and launch a marketplace that can help small and mid-sized businesses find new markets around the world. This project demonstrates how the public and private sectors can join forces to develop cost-effective technology solutions aimed at fostering economic development.”

Going global without betting the farm

How cost-effective? Although prices are coming down and features going up, a business these days can easily spend up to a US$1 million for a higher-end transactional website. In contrast, the BuyUSA.com basic annual membership is US$300, or US$600 for a catalogue containing up to 20 product or service descriptions – and you can have a virtual presence with money left for a cup of coffee. In addition, the opportunities for high return on investment could be substantial, as the Commercial Service catered offline to about 20,000 mostly small US firms last year and facilitated sales worth more than US$21 billion.

Affordability was a major selling point for Liz Serrano of Philadelphia-based Hunt International, a 100-year-old manufacturer of office supplies including Boston staplers and pencil sharpeners. After subscribing to BuyUSA.com before its rollout, Serrano is sharpening her pencil with hopes of some new business from abroad. “Using the BuyUSA.com catalogue to target international customers at a low cost is the feature that most interested us,” she explains. “We get limited inquiries through our existing website from foreign businesses, but they are mostly end consumers or small stores.”

What Serrano hopes to get from BuyUSA is more interest from potential distributors. She likes the fact that there is a US export assistance centre in Philadelphia that will work hand in glove with her and BuyUSA.com to target the best markets and expand Hunt’s business.

Another appeal of BuyUSA.com for businessespeople who have signed up for the service is that it comes as close as they have seen to a true one-stop shop. Elizabeth Austin, business development and marketing manager for Scandinavian Naturals, says the service seems “to bring together more pieces of the puzzle – buyers, sellers and trade opportunities.”

Scandinavian Naturals, a manufacturer of nutritional supplements, skin care and other products for the natural healthcare market, currently exports to 30 countries. “There are a million different places to go” to look for distributors and agents, says Austin, “so simplifying my job and facilitating my exposure to foreign distributors and agents is very important.”

Taking the fear out of clicking

The Commercial Service spends a great deal of effort identifying qualified buyers in the markets where it had offices and knows the lay of the land. In the crazy quilt world of languages and business practices, knowing who pays the bills on time and enjoys a good reputation for delivering the goods is invaluable – for buyers and sellers.

The trust factor was a particularly strong selling point for BuyUSA.com subscriber Robert Coglia, president of Lactona Corporation, a Pennsylvania-based manufacturer or oral hygiene products. “Frankly, I’m afraid when I get contacted out of the blue by a potential overseas customer,” he says. “I need to expand by customer base, but I need to know who I’m dealing with.”

When asked about seeking help from the US government, Coglia says he has absolutely no qualms. “Working with the Department of Commerce gives me confidence. It gives me a good feeling, and I know other small businesspeople who have never exported before but are ready to sign up for the same reason.”

Foreign buyers often mirror the concerns of US businesses. Here’s how BuyUSA.com works from the foreign buyer side. Say a Brazilian natural healthcare products distributor or retailer is looking for new products from the US. The Brazilian firm, whose bona fides have been checked by the Commercial Service, can post a lead on the site. US suppliers such as Scandinavian Naturals (which now doesn’t have to worry about speaking fractured Swedish) can contact the Brazilian directly online. If the Brazilian is unsure about the US supplier, they can contact their local US Commercial Service (located in Sao Paulo, Rio de Janeiro, Brasilia, and Belo Horizonte) office to get more information about the supplier. These offices also provide access to local Commercial Service experts, business and industry information on all 50 states, assistance scheduling meetings with US suppliers either face-to-face or via videoconference, online discussion forums, and a calendar of US trade events.

US members get automated (e-mail alerts) trade lead matching, online business opportunity postings, customised counseling, shipment logistics guidance, and international market research on individual countries and industries. In the next enhancement to the marketplace, which is expected later this year, members will be able to conduct the whole transaction entirely online with help from an array of logistics and financing partners.

BuyUSA.com uses the WebSphere Commerce Suite that allows subscribers to build their own catalogues and provides a web browser. A user logs on and employs the search engine to find a product, searching by key words or harmonised code. The user can also create a search agent that keeps on searching after the session ends. If the match is not found with the desired product, the buyer is alerted with an e-mail. IBM created this feature using Net.Data to find matches and a Java programme for the email application.

But what are the prospects for exports sold online and should small companies be spending time and money pursuing new business this way? Looking beyond the wreckage of inflated stock prices and failed e-business plans, trends suggest that faith in this realm is not misplaced. Forrester Research estimates that exports arranged online should top US$100 billion by the end of the year. And this figure should jump to US$350 billion in 2002, US$775 billion in 2003, and nearly US$1.4 trillion or 18% of total global trade in 2004.

One estimate has e-marketplaces grabbing US$408 billion, or 30% of online global exports, in 2004. US exporters could do US$22 billion-worth of business through e-marketplaces this year and up to US$210 billion in 2004. Other countries that will reportedly lead the way as major importers and exporters of goods via B2B marketplaces are, in order of estimated volume: Western Europe, led by Germany; NAFTA nations, led by Canada; and the Asia-Pacific region, led by Japan.

But buyers can come from any country that has access to the internet, it doesn’t take many to make a big difference to the bottomline.

Originally published in e-mmerce