Digital technologies have created a borderless, worldwide marketplace for even the smallest businesses. Global e-commerce – using the Internet to buy and sell goods and services on an international scale – is rapidly booming, as is the need for transporting those products from seller to buyer. Global e-commerce topped $1.3 trillion in 2014 – exceeding 2013 levels by 24 percent – and is expected to grow another 20 percent in 2015. This growth has a profound effect on small and medium-sized enterprises (SME), as it allows them to participate in and help drive international trade in ways similar to their larger counterparts. SMEs are gaining unprecedented access to international customers, helping the nation’s economy in the process.
There are over 28 million SMEs operating in the U.S. today. The extent to which these SMEs are involved in international exporting, however, is divergent. On one hand, SMEs that do export are very active in the market. In 2013, SMEs made up more than 98 percent of the 304,000 U.S. companies that exported goods and were responsible for about 34 percent of the total goods export value. On the other hand, only a small portion of the 28 million U.S. SMEs export their goods (about 1 percent), suggesting there is enormous potential for export growth in this sector.
The U.S. government launched strategies to promote international trade for SMEs, revitalizing the economy in the process. A 2010 presidential executive order1 mandated that programs be developed to improve information and other technical assistance to first-time exporters, while helping current exporters identify new opportunities in international markets.
The U.S. Postal Service is uniquely positioned to help SMEs enter global e-commerce. It is an internationally trusted brand and has an extensive operations network and a variety of international product and service offerings. The Postal Service, however, continues to struggle to capture a greater segment of the SME export market, as it faces substantial competition from domestic and international companies.
The objective of this paper was to identify opportunities for the Postal Service to increase revenue from SME exports. We evaluated the Postal Service’s current initiatives pertaining to SME exports; interviewed subject matter experts and Postal Service officials; and reviewed corresponding market research, government data, laws, and regulations.
The Postal Service has major opportunities to increase revenue from SME exports by developing an all-inclusive “one-stop shop.” This one-stop shop (such as a website) can provide an electronic, user-friendly platform, creating a “hasslefree” experience for global consumers and SMEs. Such an online platform could provide significant benefits to two distinct SME groups:
■Current SME exporters – the online platform could make the Postal Service a more favorable shipping option, as it would increase shopper and SME efficiency by removing some barriers, such as uncertain total costs and Customs requirements. This could result in the Postal Service capturing growth from its current customers, but also possibly gaining market share from its competitors.
■Potential SME exporters – the online platform could help clarify the exporting process, which could encourage SMEs that had been hesitant to enter the export market.
One way to accomplish this is by exploring partnerships, or “strategic alliances,” with other entities currently well-positioned in the information technology arena. These companies may be more responsive to market, operational, and technological changes. These alliances could result in more efficient exporting process for SME exporters, increasing Postal Service revenue in the process.
Additionally, the Postal Service has new revenue-generating opportunities by pursuing legal changes. While the Postal Service is currently prohibited from shipping consumable alcohol both domestically and internationally, SMEs and consumers use competitors to export billions of dollars in alcohol each year. Legal changes in this area would provide the Postal Service an opportunity to capture a piece of this multi-billion dollar market, generating new revenue in the process.
The export market, including global e-commerce, is continuing to expand. SMEs, their customers, and the Postal Service will continue to be key players in this market. The Postal Service’s ability to serve SME exporters could help it capture greater market share, thereby enhancing its overall financial condition.