10 years ago I noticed parcel deliveries to my Australian home were becoming more regular. My teenage kids had discovered they can go online and order computers, gadgets all manner of things from low cost countries like Hong Kong. Delivery time was a couple of days. To my kids this is “normal” – as electricity is to my generation.
Recently, I was in Hong Kong so I visited one of their favorite places to shop. It wasn't a large modern warehouse. It's was a tiny little shop in a back alley. It was impossible to walk around the shop because staff were falling over each other wrapping parcels everywhere. In a back room was a kid working on their website. To say it was a low cost operation would be an understatement. I'm pretty sure they switched the lights off to save electricity when I left the shop.
Last year, I met a guy who lives on a beach in Thailand. Using the Internet he searches worldwide to find products that are being undersold, he bulk purchases, aand ships to drop shipping warehouses in the USA and retails direct from "USA websites" - all from his computer. Other than stock, he has no overheads of any significance. All while traveling and enjoying a different lifestyle.
Consumer interacting with retailers has permanently changed. Both are learning new ways to do business.
The downside is if you sell something you need to change. The upside is the world is now your market.
The Philippines has 105 million people. It's a Christian society where education in English is compulsory. The Philippines is the third largest English speaking country in the world. Filipino to Filipino wages average $50 a week. The offshoring sector typically pays $120 a week for university degree, super keen workers.
In Australia, one of the largest carpet cleaning businesses only has the franchisees who clean carpets in Australia. No other employees or administration office. All the Marketing (finding and contacting potential clients), sales (phone and online), administration processes, payments, accounting etc. are based in the Philippines.
A friend recently sold his Australian business cleaning service to an International company. He had perfected contacting potential business clients and selling his services - all from the Philippines. They paid a huge premium for the low cost B2B systems he had perfected.
Even Service businesses are squeezing lower costs with higher productivity out of globalisation.
Many Australian business, from large to micro businesses, even located in the most remote places - organize their marketing needs, web, graphic, marketing processes, writing needs "online". Often, these services come from home based business with the providers based anywhere in the World. UpWork (formally ODesk) has 9.3 million providers servicing 3.4 million businesses. With Australia being the second highest user if this site - it is certainly influencing the economics of business.
In Manila, there is an accounting business that has in one room a heap of "Australianised” Filipino accountants, in another room -USA accountants, and in another room- UK accountants. They provide all the normal services most local accountants do in western Countries. They base their charges on $22AUD an hour - compared to $300 an hour in Australia. They directly target small and medium businesses - not support services for other Accountants.
Professional Services are now selling direct from low cost countries
The relevance of these examples?
Irrespective of the business size or location, the business model of nearly every business is undergoing a radical change. Large corporations are losing their low cost advantage over small business. Small business ability to make decisions and change quickly are become the weapon of competition.
As a business owner you ether evolve or wither.
How can you learn to take advantage of this?
Mike O'Hagan is a semi-retired serial entrepreneur. Today he runs an intensive 3 day Business learning tour in Manila. Be prepared for a huge dose of business remodelling / entrepreneurship while visiting 20+ offshoring businesses. You will learn the tips and secrets of successful offshoring. You will be exposed to the 7 different ways you can engage people or services with what works and doesn't work. See and understand the culture differences and how you can develop truly significant productivity from the resources. Irrespective if pre-start up just looking for ideas to a listed western company this learning experience will go direct to your bottomline.
Check out www.MikesManilaTours.com Contact Mike via LinkedIn he's always happy to just chat about business.