Are Micro-Markets a good opportunity for Cross-Border E-Commerce?

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Articles too often consider big or middle-sized markets such as India, China, the United States, Germany, Spain or the other. “Micro-markets” are often disregarded, though they might present a unique opportunity for cross-border e-commerce.
First, let us define what is a “micro-market.” Defining a “micro-market” is fairly difficult as it takes a lot of consideration, I will nonetheless try to define it along these three elements:

  • Access to technology
  • Purchasing power
  • Population

To clarify this definition we can identify the micro-market as a country we would call Country X.
Country X ID Factsheet:

  • Access to technology: At least 30% of the population has access to the internet.
  • Purchasing Power: Minimum income of $7,000/year.
  • Population: Under 5 million inhabitants.

What countries fall into this category?

New Zealand, Croatia, Kuwait, Ireland, Latvia, Qatar, Cyprus, Malta, Iceland can be considered among the micro-markets. They have small populations, a very decent infrastructure to which most of their population has access. Micro-markets are extremely particular both as markets and as environments to operate an e- commerce. And, as in every market, there are pros and cons.

Pro: Competition can be limited

Limited competition is probably the most interesting element, most of the largest corporations disregard micro-markets because they work on volume. E.g.: There is no IKEA in Malta or Amazon in Iceland. That leaves some room for entrepreneurs to fill the gaps, especially if you’re already competing with these stores in your domestic market.

Con: Smaller population means smaller volume

This is probably one of the biggest drawbacks. The population is small, if you plan to work on volume, that’s definitely a no-go. If you focus on high-priced products or services it may be an issue as your customer base will be very small. Your only way to stand out is to deliver a product or a service that the country is missing.

Are cultural bases similar?

Micronations are extremely varied as they are scattered across the whole planet and despite some of them have similarities due to the sharing of the same language. They can have very different perceptions when it comes to values, religions, demographics and many other elements.
For example, you will not be able to market a product in the same way to a Maltese and to a New Zealander, simply because their lifestyles are completely different. There is no change in the fact that you need to adapt your strategy and product to these different cultures. Therefore you should always make sure that you understand the market before jumping in.

What if the market is particularly isolated?

In some specific cases, geographical isolation can be a nightmare for your supply chain, particularly if you import products. E.g.: Iceland is separated from the UK by 1,362km (846mi) and from Norway 1,472km (914mi), New Zealand is 4,155km (2,581mi) distant from Australia. In these cases, your shipping costs will skyrocket to the point that your margin will seriously be crushed unless you produce locally.

10 tips to introduce and successfully integrate into micro-markets

1. Learn as much as you can on the market and the local competitors.
2. Make sure you will be able to differentiate yourself from the local competitors (Your USP).
3. Go there if you can and see how people interact with the type of product or service; if you cannot have someone do the local market research for you.
4. Never disregard the local languages even though a “World Language” (English, French, Spanish) is an official language.
5. Consider the average literacy levels (use video and audio content if literacy is limited)
6. Understand the local regulations and trade agreements existing between your supply country and sales country.
7. Understand the local business culture and the local etiquette when addressing customers.
8. Outsource locally part of the job if you can.
9. Get involved in the society (Celebrate national holidays).
10. Create local events that will appeal the population more than traditional events like Black Friday or Cyber Monday.

5 things to do before your launch

Before launching do not forget to:

  • Find a local lawyer or solicitor to keep you updated with the local laws and regulations
  • Find local partners
  • Let local media know about your existence
  • Find a proper location

For example, do not go to the countryside if your customers are urban, you will only increase your costs. Make sure you do not overestimate or underestimate the market, I can’t stress enough that it’s important to know and understand any market you decide to delve into.
You may be curious about micro-markets, and that is true, they are curiosities. However, the smaller and more isolated they are, the more difficult it becomes to penetrate them. Also, the local cultures play a major role. In New Zealand, the European descendants’ culture and the Māori culture are legally equal. However, the two communities live separated and do not really mix up. Therefore, you may need to take multiple approaches to reach everyone.

“Respect the place you arrive to. […] A culture will never adapt to you. Pretending that it should be the case will only demonstrate a colonialist state of mind that will ruin whatever you do, nothing more.” –  Alberto Lati, Latitudes.Crónica, Viaje y balón