The impact of ecommerce on the developing world

Last week I was having a Skype call with a colleague who is leading the sales function at Kaymu for one of Asia’s developing markets. While explaining to me the challenges faced by his vendor management team in educating their vendors he mentioned that:

There are vendors who will click the ‘Dispatch’ button on their online portal dashboard and assume that the package has been dispatched.

At that moment, I found the incident quite hilarious, we had a nice laugh and moved on with the meeting. But later in the day I realized how these challenges, and the way they are managed on a routine basis, are laying the foundation for establishing ecommerce as a credible business platform in emerging markets.

The challenges are not just limited to the vendor or business end only; building a viable consumer base is detrimental to the sustainability of the industry.

For Pakistan, where today we have a thriving online business community, conducting trade through something a simple Facebook page to managed startups with professional human resource, consumers’ trust in conducting business transactions online has developed only recently. I personally recall that less than a decade ago the owner of one online retailer dealing in computer accessories used to develop relations with his target market through online forums before he could make any headway with generating business.

With all these efforts, his customers at the end of the day were tech-savvy teenagers predisposed towards exploring new channels of retail. Today, everyone from teenagers to housewives belonging to a wide social strata are purchasing online – a clear indicator of how quickly and to what extent the reach of the industry has evolved.

The exponential increase in consumer acceptance of online retail as a viable shopping alternative has come about due to persistent efforts of online retailers such as the one I mentioned above and through the wealth of experience brought in by professional ecommerce ventures.

These ventures not only bring with them experience and best practices from developed markets, they also invest a considerable amount of time and resources in educating their stakeholders and business partners on how to conduct business, engage with customers and provide premium service in the online business environment.

In the ecommerce environment for developing markets, the real battle for trust starts after the customer has made the purchasing decision.

While well-minded entrepreneurs can attract buyers through quality merchandise, competitive pricing and presentable online stores, customers’ trust in the virtual, online environment is built by creating strong processes, developing robust operations and generating excellent customer experience. It is in the realm of process creation and operation development where startups backed by global, professional VC firms come in with the wealth of knowledge and financial muscle to create a more conducive environment towards online retail.

From personal experiences, I am a strong believer that multinational companies (MNCs) bring with them experiences and introduce innovative business practices. These practices are then adopted by local players; eventually leading to overall development of the business sector. For example, the emergence and exponential growth of modern retail stores in Pakistan is a direct consequence of entries of large international retailers.

However, for ecommerce in developing markets, it is not enough for MNCs to simply bring in an innovative business model and see it turn into a raging success. Success is built upon dedicating time, resources and capital to build the industry from ground up; including educating the local market, introducing business practices and engaging with customers to develop a consumer base.