My name is Gordon Reed. I am the director of customer solutions for UPS Canada.
Over the last 22 years, I've worked with Canadian companies, helping them to become competitive both within Canada and globally, from the one-man business to some of the largest companies in the world. Technology is putting more power in the hands of both Canadian businesses and consumers. Businesses can now target markets beyond their backyard, and consumers now have greater accessibility and choice in purchasing goods and services regardless of their physical location.
From UPS's perspective—not as a participant in selling of goods over the Internet but as a company that provides technology and a delivery network to assist others to become successful—Canada is at a critical point with e-commerce. Online sales offer Canada accessibility to worldwide markets and the opportunity to make ourselves one of the most relevant players in global commerce.
I'm going to take the next few minutes to outline, from UPS's perspective, Canada's current adoption of e-commerce, how to increase engagement by Canadian businesses and consumers, the future of e-commerce, and how we can ensure that Canada stays ahead of the curve.
In Canada, we are seeing increased adoption by large companies as well some small- to medium-size enterprises. While some small businesses are increasing their adoption and engagement of e-commerce, we have a long road ahead. If Canada is going to be serious in supporting e-commerce growth, it will be important to engage, educate, and support small businesses in taking this step. We must encourage e-commerce adoption rates and help turn Canada into the powerhouse it can be. As the markets evolve and expand, this is good for all of us, creating jobs here in Canada while exposing our strengths and ingenuity to the world.
So what's standing in the way? Adopting e-commerce can create more work initially for a business until processes are in place. Businesses must be able to effectively handle order fluctuations, return requests, and delivery inquiries. They may feel overwhelmed with all of the back-end resources that need to be set up and with the unknown number of inquiries they will receive, potentially from around the world and in multiple languages. Because of this, many end up shying away from moving towards online sales.
Another barrier is the fear of going global. They may be afraid that sending goods across the border would cause delays or add unexpected additional costs, thereby affecting the service and experience of the end customer. According to feedback from a recent UPS survey, small- to medium-size enterprises indicate that one of the biggest barriers to engaging in global trade is the time it takes to learn how to sift through all of the paperwork that comes from shipping and communicating outside of Canada.
So how can we cut through the red tape? To increase adoption of e-commerce sales, we need to communicate and demonstrate the benefits to businesses and consumers of selling and buying online. Suppliers and governments must be committed to supporting businesses as they embark in this new area. For example, UPS has invested in technology infrastructure to help support e-commerce. We've developed free APIs or online tools for businesses to enhance the functionality of their websites while reducing inbound calls and taking away the uncertainty of shipping within Canada or around the world. Companies should be aware of the resources available to them to build their back end e-commerce processes; they don't have to do it all themselves and the cost of outsourcing does not need to be overwhelming.
Regarding the fear of exporting and the paperwork required, education will continue to be critical in this area, along with dealing with knowledgeable partners. Encouraging education and making it easy for Canadian businesses to go global is the responsibility of both Canadian corporations and the government.
Today, the BRIC nations--Brazil, Russia, India and China--make up one quarter of the world's GDP, 42% of the world's population, and 45% cent of the world's labour force. The consulting firm McKinsey estimated that a billion people from these nations will reach middle class standing within 10 years, doubling their spending power to more than $9 trillion. With the right strategy, product offerings, and service options, our small businesses could be very profitable serving these people.
Some critical factors e-commerce leaders have figured out include creating a positive experience for the end customer and managing processes and costs. A major difference between an online customer experience and an in-store one is the lack of personal contact online.
Websites must be easy to navigate and be formatted for the target audience. When the end customer checks out, there should be no surprises in their shopping carts, such as undisclosed administrative fees or shipping fees. Ensuring this is the case not only decreases abandon rates at the time of checkout, but it also improves customer confidence and can help forge a lasting relationship with the business.
We encourage our clients to communicate an accurate date and time of delivery for the package to their customers. This is a best practice in the industry. Especially for an audience with an “I want it now” mentality, the ability to offer time-definite options for the consumer to choose from helps set e-tailers apart and helps them build lasting relationships with their customers.
We also encourage e-tailers to minimize such competitive barriers as charging high fees for shipping. Consumers will look at the total cost of the purchase, including the cost of goods, additional fees, and shipping. This total cost needs to be competitive with traditional commerce in order to allow businesses to grow.
Cost factors for e-tailers are different from those for traditional businesses. Businesses need to better understand their costs and options and market themselves effectively in order to compete in the global market.
One option to help companies attract new or repeat customers is to include free or discounted shipping for high-value purchases, or to give any other kind of volume discount to reward customers for large or repeat purchases. Another option is investing in sustainable business practices and satisfying the demand for eco-friendly products. More often, consumers are looking for a convenient, cost-effective means to address climate change in a real or tangible way. Online green-tailers who have integrated UPS into their websites are able to offer this to customers through access to carbon-neutral shipping.
For larger-volume companies, distribution centres need to be strategically located as close as possible to the density of their customer base. This should be reviewed by companies regularly to allow them to remain competitive as their markets grow.
Hybrid transportation solutions, such as UPS's Trade Direct Cross Border program, will allow larger companies to move shipments in bulk to foreign locations and then enter the transportation system as a domestic movement.