Developing countries E-commerce prospects and challenges

The first ten years of the new millennium have changed the relationship between companies and customers. The introduction of the internet and its improved connectivity led to rapid development in e-commerce in the last few years. This is obvious from the transformation from Amazon to a trillion-dollar business.

E-commerce has also been highly innovative in other e-commerce giants, including Alibaba, AliExpress, and E-bay. The benefits of e-commerce are clear - it helps firms to enter customers without caring about time or distance.

The total volume of e-commerce revenues in 2019 is estimated to hit $3.46 trillion, according to a McKinsey survey. It demonstrates that e-commerce continues to provide many opportunities for abuse & development in developed countries. Challenges also occur when prospects exist

In India, while the volume of e-commerce revenue in another developed world is a mere $84 billion, it is worse than its African counterparts. In a World Bank study, countries in South Asia have tremendous growth potential in this region, but barriers prevent them from realizing their true potential.

This article addresses numerous e-commerce opportunities and problems in developed countries.

Opportunities

Capital growth

A McKinsey report reveals that by 2020 1,4 billion would join the world's middle class. The Asian Pacific region will account for 85 percent of 1.4 billion (South Asia, Southeast Asia are a part of this region). It illustrates that people have more money to spend on other things with rising sales in this area. It is also a welcome chance for firms to make use of it. No entity needs to establish a physical presence in any region. Therefore it is more practical to use online sites to market your goods and services. In brief, e-commerce investments are now financially viable.

Trade

E-commerce could boost trade between countries, especially regions. Simply put, firms may extend to international markets, while governments enjoy the profits of the expanded industry. The study also showed that e-commerce raises the knowledge spill from developed countries into emerging countries, with a substantial effect on developing countries' innovation and productivity.

It also saves substantial money for developed countries. They do not need technical enhancement studies, compared to developing countries. They are free to buy the latest technical updates or developed countries could develop them for their purposes in developing countries.

Creation of jobs

One factor policymakers need to build an atmosphere conducive to e-commerce is growth in jobs. E-commerce would certainly destroy those kinds of employment. However, it would probably generate more workers than it will kill. In diverse industries such as IT, logistics, and transportation, e-commerce generates employment.

Development included

Experience in China shows that e-commerce can help people get out of poverty. But e-commerce alone is not enough. It must be borne in mind. A broad range of other measures must also be enforced. Together, they play an important part in improving household welfare. Home income for e-commerce families in Taobao villages in China is 80% higher than for non-Chinese families. Similarly, people in rural areas employed in the world of e-commerce have similar or higher incomes than those working in the urban private sector.

 

Challenges

Climate Regulatory & Legal

The legislative and legal framework for economic development in many developed countries is not favorable. There are no consumer rights regulations in many developed countries. The cases of fraud are very high in these countries. For starters, there are no safe online payment systems in Nepal, Bangladesh, and many African countries. Credit card theft is moderately high in those countries. Consumers are therefore ignoring e-commerce sites.

Financial access

Many businesses have tremendous growth opportunities. But restricted funding opportunities hinder them. That will keep you from engaging in innovative technology that will help you realize your true potential for success. A study of different organizations in Africa has shown that because of money constraints they do not have the best expertise or infrastructure. In many African countries too, access to loans is restricted, because even if organizations try to go digital, they cannot.

Likewise, it is not necessary to simply mention a commodity on a website. Organizations need to sell capital to other markets for their goods. For instance, in India or Southeast Asia, if a Pakistani company would like to market its goods or services, it would require money to do so. Financing is problematic for such entities, as banks and other financial sources are unable to participate in such undertakings.

Systems of online payment

Mobile payment services have played an important part in the expansion of e-commerce worldwide and other online payment systems. The common online payment methods are Apple Pay, PayPal, WeChat Pay, and Alipay. Sadly, safe online payment services are scarce in most developed countries.

This impedes the purchasing of goods or services online by customers. The same happens to countries such as India, where customers are also worried about the fraud potentials. Only good customer protection regulations will fill the void in confidence.

Surprisingly, when it comes to mobile payment services, a nation like Kenya is far ahead. M-Pesa has become groundbreaking in Kenya and is a mobile payment network. Initially, local growth was encouraged by reducing the cost of financing. The functionality of the scheme as a whole still made it more a mobile payment system than a local growth mechanism. Surprisingly, 55% of Kenya's GDP is reflected by mobile payments.

Infrastructure Networking & IT

Another big problem in developed countries is the Internet & IT technology. Most developed countries have weak IT networks and access. The poorer have low access to these services in better countries. Consequently, people cannot appreciate e-commerce to the fullest degree they desire.

Logistics & Shipping

Transportation & logistics are undeniably crucial to fostering e-commerce in a region. Not only domestic e-commerce but international e-commerce are relevant. In developed countries the transport and logistics networks of metropolitan cities are reputable, but congestion is also obstructive. Rural regions, on the other hand, lack the most basic infrastructure of transport and logistics.

 

Similarly, the distribution of parcels is low inconsistency. The government is in charge of distributing packages by a postal office in several developed nations. There are no privately-owned distribution systems. In others, one or two service delivery services have again been monopolized, which results in a shortage of quality services.

Interestingly, certain services do not deliver beyond urban centers, since there is no proper addressing system in rural areas. For instance, in Nepal, e-commerce is confined only to the Kathmandu Valley & a few urban centers. In short, only metropolitan centers can use e-commerce services. In the case of cross border e-commerce, customs & tax-related problems constitute a major challenge.

Last but not least

There is a tremendous opportunity for e-commerce in developed countries. The first-mover benefit in developed countries is bound to be paid richly from the investor's point of view. There are however numerous problems that must be overcome. Unfortunately, these problems cannot be addressed by the consumer alone. The government must also play its proper part to encourage e-commerce and to provide developers and customers with a favorable climate.

Visit Indglobal Digital for All e-commerce Development 

More Related Topic Also Covered 

What is an important factor in Developing an E-commerce website 

Why do You Have to get a Website For E-commerce Today