2CHAPTER I : REVISITING THE DEVELOPMENT POTENTIAL OF ECOMMERCE

A. E-COMMERCE AND
DEVELOPMENT
The promise of ICTs to allow entrepreneurs and
enterprises to buy and sell their products over
digital networks has been among the development
priorities for the international community since the
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major engine for trade and development on a global
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adopted, the e-commerce promise remains on
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development goals, notably in connection with
womens empowerment, infrastructure and as
enabling technologies. 1
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of enhanced participation in international value
chains, increased market access and reach, and
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lower transaction costs. However, the uptake of
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large enterprises in developed countries (UNCTAD,
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inadequate ICT infrastructure and use, unreliable and
costly power supply, limited use of credit cards, lack
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systems. Sociopolitical barriers may involve weak
legal and regulatory frameworks that limit the extent

Box I.1.

INFORMATION ECONOMY REPORT 20152

to which people trust online transactions, cultural

preferences for face-to-face interaction and reliance
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to poor ICT literacy, awareness and knowledge
related to e-commerce among both consumers
and enterprises. Such barriers impair a countrys
ability to participate on equal terms in international
e-commerce.
Changes in the ICT landscape have enlarged the
scope for businesses in developing countries to
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Alibaba Group a Chinese e-commerce enterprise
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which is part of African Internet Group, announced
that it was expanding into Cameroon, Ghana and
Uganda, complementing its existing operations in
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of the growing importance of developing countries in
the transforming world of e-commerce. Indeed, the
fastest growth of e-commerce is now witnessed in
Asia and Africa (chapter II).
Although most micro and small enterprises in
developing countries have yet to start buying or
selling products online, recent developments have
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The connectivity situation has greatly improved,
notably as a result of the widespread uptake of
mobile telephony and social media, which has
enabled more people and enterprises to have
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enabled by deployment of international and
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E-commerce, the World Summit on the Information Society and the World Trade Organization

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economic/development opportunities, with special consideration of the situation in developing countries, particularly
in least developed country (LDC) members and least connected countries. It shall continue to examine opportunities
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SURGXFHUV DQG VXSSOLHUVr

Source: UNCTAD.

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provide a wider choice for both enterprises
and consumers to conduct transactions online
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New applications, platforms and services are
making e-commerce more accessible and
easier to navigate, thereby lowering the barriers
to entry. New digital products (such as mobile
applications and games) and remotely delivered
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new growth areas for developing countries
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Local companies sometimes backed by
foreign investors providing e-commerce
solutions are rapidly appearing in developing
countries, with offers that are tailored to the
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There is growing readiness among enterprises
and consumers to conduct business online as
well as more awareness among Governments
and lawmakers of the need for relevant
legislation and regulation to enhance trust in
e-commerce
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B. DEFINITIONS
OF ECOMMERCE

the sale or purchase of goods or services, conducted

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designed for the purpose of receiving or placing of
orders. The goods or services are ordered by those
methods, but the payment and the ultimate delivery
of the goods or services do not have to be conducted
online. An e-commerce transaction can be between
enterprises, households, individuals, governments,
and other public or private organisations. To be
included are orders made over the web, extranet or
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the method of placing the order. To be excluded are
orders made by telephone calls, facsimile or manually
typed e-mail.

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e-commerce will cover purchases and sales
conducted over computer networks, using
multiple formats and devices, including the web
and electronic data interchange, using personal
computers, laptops, tablets and mobile phones of
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involve physical goods as well as intangible (digital)
products and services that can be delivered
digitally.
There are various electronic relationships between
Governments, enterprises, individuals/consumers
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Where appropriate, reference is also made to
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Box I.2.

Types of e-commerce

B2B: Accounts for the bulk of e-commerce (chapter II). It involves transactions between businesses, such as
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certain industries or value chains.

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and small businesses to reach new markets, both domestically and internationally. There is a wide range of channels
to reach consumers, including social networks, crowdsourcing platforms, dedicated e-commerce websites,
mobile applications and more.

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platforms offer possibilities for informal enterprises to engage in e-commerce.

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case
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eprocurement.

Source: UNCTAD.

C. IMPLICATIONS OF
E-COMMERCE
1. The e-commerce value chain
The shift towards e-commerce is already
transforming the behaviour of businesses and
consumers. The role of ICT applications and
services is expanding across the entire value chain
of e-commerce. The e-commerce process can
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gathering, agreement, transaction and delivery.
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e-commerce. At each stage, there are potential
implications for consumers, enterprises and other
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various social networking platforms help consumers to
compare prices and features of products rather than
relying on traditional information sources, including
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websites with reviews conducted by other consumers
and make their purchases at times that are convenient

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consumer choice is expanded as products from far
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delivered over long distances. The consumer surplus
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that enhanced choice from buying online rather than
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welfare gains for consumers than lower prices (Civic
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At the second and third stages, online applications
and payment solutions represent alternative solutions
to having to visit a shop or making a phone call,
using cash or paying by credit card at the shop in
question.
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example, downloading an e-book) as opposed to
physically (shipping a book).
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to change their behaviour and start making
purchases online despite the advantages. This may

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be linked to concerns that payments will be lost,

that data provided online will be compromised or
shared without their consent, that goods or
services acquired will not meet the quality
expected, and that it will be difficult to return
them if so desired.
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inadequate or expensive ICT infrastructure and
services, poor logistics and transportation services,
or a preference among consumers to touch and
feel the products before making a decision to
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of delivering physical products through dedicated

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In the e-commerce sector itself, entrepreneurs and
enterprises in developing countries are discovering
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the introduction of payment solutions (for example,
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the motorbike delivery services of Giao Hang Nhanh in
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At the same time, most micro and small enterprises
in developing countries are still unaware of the
possibilities presented by e-commerce (Stockdale
and Standing,
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opportunities and risks. New ICT applications and
services are helping to reduce various costs for
suppliers. Leveraging different online and mobile
channels may enable a seller to reach more potential
customers (both consumers and businesses) in
domestic and foreign markets in a more targeted
way and sometimes at lower cost than through
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more (or entirely) on e-commerce may be able to
reduce investments in physical infrastructure (such
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may be ways to reduce the delivery cost (especially
for digital products), and to use innovative ways

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Prefer to touch and feel the product

before buying
36.8

Do not trust online payments

Afraid the products will not suit me

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Products do not interest me

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Do not trust the site

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Long delivery times

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a potential threat to some enterprises. With the
entrance of competitors offering new product features
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and-mortar stores need to adapt to enhanced price
transparency and competition by providing new online
sales channels, investing in new equipment and
services, building complementary skills and revising
their business strategies. This transition is not easy
and even leading retailers have wrestled with it.
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spur new job creation in the ICT sector, related
to software development, information technology
(IT) consultancy services, web hosting and, of
course, in enterprises that become more successful
thanks to expanded online sales. It may help to
boost exports, when domestic enterprises are
able to break into foreign markets to connect with
international supply chains, and add competitive
pressure in the economy.
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greater market shares from e-commerce compared
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sales has also been associated with a proliferation of
fraudulent activities and various cybercrimes (chapter
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burden on customs and posts, which has led to the
implementation of new practices to increase detection
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e-commerce has given rise to concerns related to the
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to medicines there are doubts related to transparency,
fraud, product quality, and even its viability as an
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2. Economic impacts of e-commerce

The literature on ICTs as an enabler of economic
growth is vast, ranging from the aggregates (Stiroh
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to more disaggregated studies on selected groups
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impact, possibly increasing over time, but with the
caveat that ICTs need to be well embedded to give
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could mean complementary investments in skills
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between broadband-Internet-enabled employees
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intensity of usage comes close to saturation, but
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able to sell to markets otherwise not reachable due
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reducing the barriers to trade, the Internet facilitates
international e-commerce, with most of the shortterm gains expected to arise in developed countries
but with a shift to developing countries in the long
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considerably smaller in the case of e-commerce
thanks to lower information costs and greater trust
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of selling goods or services online found the most
important effects of e-commerce to be reduced
transaction time and faster business processes,
lower transaction costs and ability to reach new
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e-business and online sales has also been found
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channel provided significant improvements in
sales, cost, inventory and return on investments.
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positive significant effect on firm efficiency among
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3. New evidence on the productivity

impact of e-commerce in Europe
Until recently, data did not allow for econometrical
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activities and enterprise productivity. This is still the
case for developing countries. However, a unique data
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analysis. The use of a dynamic panel data model
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to distinguish between short- and long-term effects
and to control for endogeneity of e-sales activities.9
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websites, and as the share of sales conducted online.
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Despite considerable growth in the past decade, the
proportion of e-sales to total sales remains small in
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measured by the proportion of broadband-Internetenabled employees, tend to have a higher level of
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relationship between changes in labour productivity
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in e-sales. Industries with an increase in the
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labour productivity growth.11 The magnitude of the
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points over a two-year period. Given the low rate of
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effect is not negligible. The relationship appears to be
stronger for services than for manufacturing, and the
effect is higher over the long term.
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points per year).
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sector in the countries included. Investigation of the
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model and estimation methods.
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performance. In summary, a considerable share of
the total labour productivity growth during the period
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e-sales. The results furthermore indicate that the
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for small enterprises.14 The analysis refers to a region
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research are therefore needed to establish to what
extent these results can be extended to countries at
lower levels of ICT readiness. However, in combination
with previous studies this analysis offers empirical
evidence that a higher degree of e-sales helps
enterprises become more productive.
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on the broader impacts of e-commerce, concerning
effects on, for example, employment, income
distribution, competition, structural transformation,
taxation and the balance of trade.

D. ROADMAP TO THE
REPORT
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greater uptake of e-commerce, the following chapters
of the report examine trends and developments in
the evolving e-commerce ecosystem and discuss
possible implications for developing countries. The
report is structured as follows.
Chapter II reviews global and regional e-commerce
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statistics and private-sector data, it investigates the
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and considers the extent of uptake in different parts
of the world. It highlights the leading e-commerce
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are most frequently traded online. The second part

of the chapter provides brief insights into regional
developments in Africa, Asia and Latin America.
Chapter III sets out to measure the e-commerce
readiness of countries. It discusses the main factors
facilitating and constraining e-commerce with an
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connectivity, payment systems and delivery systems.
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particularly useful given the dearth of data about
e-commerce usage in many low-income economies.
The Index represents a new tool for countries to
benchmark their e-commerce readiness against
other locations and to identify areas of strengths and
weaknesses.
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micro and small enterprises can explore to engage
effectively in e-commerce. It examines various
platforms and tools to determine their relevance for
marketing and selling different products online. It
discusses
the
respective
advantages
and
disadvantages, taking into account issues related to
payment processing and

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make use of certain global e-commerce platforms and
payment solutions. The second part of the chapter is
devoted to rural e-commerce and analyses the diverse
experiences of three Asian economies in this area.
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areas of e-commerce around the world. Special
attention is given to e-transaction laws, consumer
protection, data protection and privacy, and
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compatibility of laws and their enforcement in view
of the development of electronic transactions. The
chapter furthermore highlights selected legal issues
currently facing e-commerce development globally
and proposes a set of recommendations.
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recommendations for the development of national
strategies and policies for the promotion of ecommerce LQ GHYHORSLQJ FRXQWULHV ,W DOVR HPSKDVL]HV
WKH UROH RI the international community in creating an
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