Ecommerce: the answer to poverty eradication in developing countries?

 

Fact: it is forecast that mobile e-commerce will reach $218 billion by 2019, with global retail ecommerce sales reaching a whopping $4.5 trillion – a 246.15 percent increase from 2014 – by 2021.

Here’s another: 96% of Americans with internet access have made an online purchase in their life, 80% in the past month alone.

And in case the magnitude of it all hasn’t quite sunk in, one more: the number of internet shoppers in the US will reach 217 million this year.

Do I have your attention?

Ecommerce, the act of facilitating business via the Internet, sprung up only a few decades ago but has since reached monumental proportions on a global scale. CompuServe kicked things off back in 1984 when it launched the world’s first Electronic Mall in the USA and Canada and the industry has since grown to a point where one is able to access and purchase almost any product in the world at any time of day, be it an electric toothbrush, illegal contraband or your very own island.

The benefits are simple: ecommerce transactions allow businesses to reach global markets, despite geographical distance and time differences. And boy are companies – and countries – boarding the e-growth bandwagon. China raked in $899.09 billion in ecommerce transactions this year alone, followed by the US coming in with $423.34 billion.

But are developing countries taking advantage of ever-growing ecommerce opportunities?

Often seen as the great equalizer, the internet is perhaps the most valuable tool for any business, particularly those operating out of regions that depend largely on exporting goods and services. But progress in such regions has been slow in this respect, very slow.

A report published by UNCTAD (United Nations Conference on Trade and Development) in 2015 which explored how information and communications technologies can be harnessed to support sustainable development and economic growth highlighted how some of the most vigorous activity and progress in electronic commerce can be found in developing countries, but that potential is far from fully realized.

Africa remains the region with the lowest penetration of ecommerce, with Africa and the Middle East accounting for just 2.2 percent of global B2C ecommerce in 2013, with most of the US$25 trillion in online sales in 2015 taking place in developed economies with the exception of China. In Latin America in the same year, B2C sales for accounted for a mere 4 percent of global sales. And this goes for buyer statistics too: in 2013 digital buyers in Asia and Oceania represented less than 15 percent of the population compared with 60 percent in Western Europe and North America.

So, while a significant number of ecommerce players have emerged in developing countries in recent years, mostly thanks to the support of foreign investors, very few have been able to reach significant scale.

Dr Mukhisa Kituyi, UNCTAD Secretary-General, acknowledged at the Intergovernmental Group’s meeting in Geneva in October that no developing or transition economy – barring China – was among the top 10 ecommerce markets this year.

“Our statistics show the picture: very low development of inclusion, limited infrastructure, even limited use of mobile Internet in the most vulnerable countries, and phenomenal growth of the digital economy and digital players in the more developed countries,” he said.

Low GDP, lack of adequate access to broadband and an inability to make payments online have typically prevented the inclusion of buyers from developing countries as digital participants in ecommerce’s global growth – but this doesn’t mean business in such regions need to miss out.

While assessing trends in developing regions is difficult, nay, almost impossible given the lack of official and comparable data on the subject, it is obvious that scope for e-commerce is rapidly improving in such areas. Increasing access to and activity on social networks, consistent improvements in terms of mobile Internet access and innovation in delivery possibilities are fostering evolving opportunities in electronic commerce operations. The key to unlocking this growth potential is continued support by foreign investors, some of whom are already leveraging this potential.

The vast majority of the world’s 1.1. billion digital buyers are living in developing countries, with population growth continuing to boom year on year. Will these countries that the same leap as China and emerge as global B2C ecommerce leaders in the coming decade? It is forecast that Asia will rise to the challenge in 2018, with an estimated 30 percent growth rate by the end of 2017 compared with a 15 percent growth rate in the US.

But if developing countries do succeed in jumping aboard the digital revolution, what matters most is that the right people benefit from the change. The potential value of ecommerce for developing countries is undeniable – not only can it drive GDP growth but it can support the creation of a new economy, new jobs and enable affordable, consistent access to goods and services.

In light of that we are on the cusp of a new era, where data is beginning to overtake oil as the world’s most valuable commodity, Dr Kituya issued a warning to this effect.

“The digital revolution may leave out many businesses and consumers in developing countries, who stand to benefit most from opportunities like direct access to customers all over the world and a larger choice of goods and services at lower prices,” he said.

Ecommerce is developing regions is an issue firmly imprinted on the international development agenda, hailed as the key to unlocking economic growth in countries that until now been trapped in the vicious cycle of underdevelopment and exploitation by developed economies. The question is: will they take the bait?

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