Tweet

III. E-COMMERCE AND SMALL ENTREPRENEURS

Guest post by: OECD Development Centre

Article Overview: The share of value added that potentially lends itself to electronic commerce represents around 30 per cent of GDP, most importantly distribution, finance, and business services (Pérez-Esteve and Schuknecht, 1999). E-commerce is also likely to boost international flows of many services significantly.

III. E-COMMERCE AND SMALL ENTREPRENEURS

The share of value added that potentially lends itself to electronic commerce represents
around 30 per cent of GDP, most importantly distribution, finance, and business services
(Pérez-Esteve and Schuknecht, 1999). E-commerce is also likely to boost international
flows of many services significantly10. At present the biggest volume of electronic trade by
far is business-to-business (B2B), mainly involving big firms setting up online exchanges
to buy industrial inputs, such as steel, chemicals, or car components. A recent Goldman
Sachs report estimates that firms’ possible savings from purchasing over the Internet vary
from 2 per cent in the coal industry to up to 40 per cent in electronic components11. Yet
some of the biggest potential gains from B2B may lie in smaller firms’ purchases of indirect
inputs, such as telephone services, office equipment and furniture, and electricity, which
together account for 30-60 per cent of firms’ total non-labour costs. By pooling the buying
power of small businesses, online intermediaries can negotiate discounts. And by making
the procurement process more efficient, they can also cut processing costs12. The businessto-
consumer (B2C) segment is the second-largest form of e-commerce, embracing normal
retail activity on the Web, such as Amazon.com. A third type of market is consumer-toconsumer
(C2C), which covers auction sites, while a fourth — consumer-to-business
(C2B) — involves reverse auctions, taking advantage of the power the Internet gives to
customers to drive transactions (e.g. with airlines competing to give travellers best offers
on tickets). Finally, business-to-government (B2G) e-commerce refers to the use of the
Internet to move public procurement, licensing procedures, etc., online.
There are at least four different channels through which e-commerce may impact on
developing country entrepreneurs:
i) making it easier for artisans and SMEs to access B2C world markets;
ii) facilitating activity on the global market for agricultural and tropical products;
iii) allowing firms in poorer countries to tap into the B2B and B2G supply chains; and
iv) allowing service-providing enterprises in developing countries to operate more
efficiently and to provide certain services directly to customers anywhere in the world.

OECD DEVELOPMENT CENTRE
Working Paper No. 164
E-COMMERCE FOR DEVELOPMENT: PROSPECTS AND POLICY ISSUES
by
Andrea Goldstein and David O’Connor

Related Articles
  Go for the best ecommerce Microsoft RMS cart provider
  Learn about Cheap SSL Certificates for eCommerce Sites
  eCommerce
  Top Five SEO Manchester Strategies 2012
  Why eCommerce Internet sites Fall short

Article Tags: amazon, auction sites, best offers, business b2b, c2b, c2c, car components, coal industry, developing country, distribution finance, electronic trade, goldman sachs, industrial inputs, international flows, labour costs, public procurement, report estimates, retail activity, reverse auctions, schuknecht



Related Forum Posts
Re: SEEKING PRIVATE OR ANGEL INVESTOR - Definitely have a thorough and accurate business plan. In the US, you can get help at SCORE - their website is full of great information and you can check for local chapters. If you would like a book that has all kinds of great information about financing options - this one is very good --- HOW TO GET THE FINANCING FOR YOUR NEW SMALL BUSINESS: INNOVATIVE SOLUTIONS FROM THE EXPERTS WHO DO IT EVERY DAY—WITH CD-ROM This new book will provide you with a road map to securing the financing. The book goes into traditional financing methods and assists the reader in setting up proper financial statements and a proper business plan. It details the differences between debt and equity financing and how and why to use each. Valuation techniques are explained for determining what your business is truly worth. However, the book’s real strength is in explaining alternative and creative methods of financing, such as SBA financing, investor angels, IPOs, limited public offerings and venture capital. Essential resources for finding the detailed information you need are included throughout. Item # 9780910627559 $39.95 Shri


Share this article with your friends. Fund someone's dream.

Leave a comment below or share on the left and you'll help support entrepreneurs in Africa through our partnership with Kiva. Over $50,000 raised and counting - Please keep sharing! Learn more.

Tweet

Newsletter

Get advice & tips from famous business
owners, new articles by entrepreneur
experts, my latest website updates, &
special sneak peaks at what's to come!

Name:
Email:

Popular Articles

Local Marketing: 3 Simple Low-Cost Strategies

LISTENING SKILLS IN COACHING

Marketing & Sales tools – going back to basics

Suggestions

Email us your ideas on how to make our
website more valuable! Thank you Sharon
from Toronto Salsa Lessons / Classes for
your suggestions to make the newsletter
look like the website and profile younger
entrepreneurs like Jennifer Lopez.