Trade Forum Features

Transforming lives through e-solutions

5 July 2016
ITC News

Ever since the World Wide Web was conceived at CERN on the Franco- Swiss border and released into the public domain in 1993, the internet has continued to spin out new opportunities for information and commerce. News has become instant, we can stream films and music, and in many parts of the world we can buy whatever we want from online retailers.

Online retailing – or e-commerce – has become a huge market, with global business-to-consumer (B2C) transactions expected to total more than US$ 1.5 trillion in 2016. The global business-to-business (B2B) e-commerce market is even bigger, and is expected to be worth close to US$7 trillion by 2020.

While some of the most celebrated e-commerce successes are based in developed countries, companies in developing countries are rapidly catching up. Alibaba, the Chinese online retailing giant, was founded just over a decade ago and is today eclipsing many of the traditional online retailers in terms of sales (see pages 16-17).

In all developing countries, e-commerce holds tremendous promise for spurring economic growth and creating new opportunities. One only has to look at how Rwanda is working to create digital platforms to market and sell products ‘made in Rwanda’ to understand that the size of economy of landlocked countries need not hinder moving in the direction of digital solutions. By 2018, Latin America B2B e-commerce is expected to grow to around US$ 90 billion and Africa’s B2C e-commerce market is destined to hit US$ 50 billion. Despite those figures, Latin America’s is just over 4%, and Africa’s share of the global e-commerce market is estimated to be well below 2% suggesting there is a vast untapped potential in this area.

The International Trade Centre’s (ITC) work in this area addresses the policy dimensions of e-commerce, the infrastructure needed to make the digital economy work, and supporting on the ground e-solutions transactions. E-commerce – B2C and B2B – will play a key role in eliminating poverty and achieving Goal 1 of the 2030 Agenda for Sustainable Development. E-commerce makes it easier for small and medium-sized enterprises (SMEs) in developing countries to trade across borders.

Easier, however, does not equal perfect. Many challenges remain. A recent ITC report, Bringing SMEs onto the e-Commerce Highway, identified four major challenges for developing countries to succeed in the world of online retail: establishing an online presence for business, international e-payments, international delivery and after-sale services.

To help developing countries and their SMEs improve their e-commerce capacities, ITC has teamed up with a range of partners, including large players such as eBay and DHL, as well as smaller specialised firms in related fields, such as legal advisory services. In the past year we organized a series of pop-up stores – dubbed e-Com Souks – in Switzerland and Rwanda to raise awareness about goods made in developing countries such as Cote d’Ivoire, Ethiopia, Morocco, Senegal and Syria (see page 31-32). And at the end of June, we organized an e-Commerce Caravan that travelled from these countries to Geneva and Zurich.

A major challenge is to overcome the complexities of handling duties and taxes and complying with local fiscal and legal

conditions: all of which appears at first highly opaque and beyond the capacity of small firms operating out of developing countries. And yet once these compliance issues are solved the world of e-commerce begins to open up: financial transactions become easier and accounts can be opened on the world’s biggest marketplaces.

Through this exercise we are building trust between potential buyers and sellers. By allowing people to touch, feel and taste products, and confirm they are of high quality, these customers and sellers become ambassadors for greater online trade from developing countries.

Step by step, we are tapping the potential of e-commerce to ensure that SMEs in developing countries can play a greater part in this sea-change in global commerce.

Bringing developing country SMEs onto the e-commerce highway will also speed up development and bring us closer to eliminating poverty.