On 8 and 9 April, the World Trade Organisation held a workshop on e-commerce, development and SMEs. The topic of this workshop goes right to our Commerce 3.0 project and research findings. Hanne Melin of eBay’s Policy Lab attended and reports on two-days of interesting discussions.

If I would sum up the technical, legal, practical and academic discussions I listened to over the course of the workshop, it would be in the form of a call to the WTO and governments: Encourage community-based platforms and solve the nuts and bolts of getting goods across borders!

There are two messages in this call. Let me give a bit more detail.

Simply setting up a website does not automatically mean participation in global commerce

Richard Duncombe from University of Manchester introduced the conceptual idea of “innofusion” – the linking of innovation and diffusion, a role most effectively played by innovation intermediaries that adapt and domesticate innovations.

A practical example was provided by Dr. Daniel Salcedo, founder of Peoplink.org, in OpenEntry.com. It is an initiative fully owned by Peoplink and part of an ambition to build tools that empower artisans and small businesses in developing countries to create and maintain their own e-commerce store:

“In 1999, Dan realized the need for a tool to enable SMEs in building their own transactional stores and also to make it easy for SME networks to aggregate their members' individual stores into a branded market capable of generating the necessary visibility and credibility. He wrote out the functional specifications for the CatGen [relaunched in 2009 as OpenEntry.com] e-commerce platform and Jeff Skoll, then Vice President for Strategic Planning at eBay, helped launch it with a generous personal donation.”

Dan Salcedo presents at the WTO workshop.

OpenEntry.com creates branded marketplaces with, amongst others, the World Chambers Network and the World Fair Trade Organization where artisans and businesses come together under a quality stamp.  This is about overlaying traditional business networks with technology, explained Salcedo. The very same role eBay plays in developed as well as developing countries, OpenEntry’s branded marketplaces enable small businesses to overcome the key challenges of visibility, credibility and trust.

Similar mechanisms are at play in M-Kazi’s platform for jobseekers in Kenya and the online marketplace Amardesh eShop connecting rural entrepreneurs with city buyers in Bangladesh. The presentation by the founders of these two companies, Nancy Tingze Want and Sadequa Hassan Sejuti, supported Duncombe’s observation that Kenya and Bangladesh are successful environments for the development of these types of businesses thanks to their strong local collaborative innovation systems.

Connecting and building trust through innovative technologies mean little if the products can’t reach the buyer

Almost all participants stressed how uptake of ICT for commerce stands and falls with the solving of traditional trade issues, including:

• Simplifying tax and customs regimes. Marcos Pueryrredon of eInstituto described how m-commerce is giving rise to an omnipresent and demanding consumer. Allowing businesses to service this consumer requires governments to facilitate the supply flow.
• Overcoming fragmentation in consumer protection rules. As part of an e-commerce focus, the Philippine Government has recently started to address consumer issues in an international cross-border context. They are engaging with the International Consumer Protection & Enforcement Network and Consumers International.
• The need to develop supportive industries such as delivery. Logistical issues must form part of e-commerce policies, as Paul Donohoe of the Universal Postal Union expressed it.

Marcos Pueryrredon talks about the new ecosystem of the online business.

These are long-standing trade facilitation issues. However, as participants at a recent OECD Business Dialogue roundtable noted: “relatively simple measures can go a long way to ease the burden for SMEs with international ambitions, such as raised and harmonised de minimis levels (i.e. the monetary level below which an importer is exempted from customs duty and paperwork requirements) and VAT registration thresholds.”

And for more technical trade barriers (e.g. customs processes), there are certainly innovative solutions waiting in the wing thanks to technological innovation, increases in data acquisition capability, computing power, etc. Indeed, Daniel Annerose of the company Manobi forcefully encouraged governments to use data in order to create better policy strategies. Governments need to define policies based on data, he said with emphasis. But in developing countries there is in general a lack of data, and so governments create policy strategies that do not reflect market reality, he claimed. Annerose warned that insufficient data limit governments’ capacity to legislate and create policies, suggesting that businesses should share information and data to give governments better tools. Annerose: “Everyday I collect data that can be given to the Government. Governments can benefit from what businesses do.”

For sure, when it comes to supporting the role of technology-powered commerce to connect world markets, there are issues specifically acute in developing countries, including lack of data, infrastructure and reliable internet connectivity. But there are also universal issues. Those are the familiar trade facilitation issues listed above that should now be given new impetus with the opportunities the combination of ICT and trade creates.

Dawit Bekely of the Internet Society in Ethiopia sums up these still untapped opportunities, in fact the very goal, in simple terms: “The ability to buy directly from other markets opens up the world.” Encouraging community-based platforms and solving the nuts and bolts of getting goods across borders should take us closer to that goal.

“The gains from the adoption of eBay are larger in those areas of the world where they are most needed – in remote countries with bad institutions. Thus, e-commerce can become a development tool by helping remote sellers from instable countries integrate into world markets. Export promotion agencies in these countries should probably redirect part of their effort towards connecting producers to online markets.”  World Bank blog post