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
III ECOMMERCE AND SMALL ENTREPRENEURS - To learn more about this author, visit OECD Development Centre's Website.
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Kim CastleWith nearly two decades in the advertising and design business, with clients like Domino's Pizza, General Motors, Direct TV, Pedigree, Wolfgang Puck, Higher Octave Music, Hollywood Celebrity Products, Disney, and Paramount, as well as thousands of entrepreneurs around the world define, structure, communicate, and position their business for greater profits, BrandU(R) co-creators Kim Castle and W. Vito Montone discovered that entrepreneurs could experience the same power that big brands command for a fraction of the cost with the world's only process-based results-drive Integral approach to business creation. BrandU(R) is helping entrepreneurs grow with the power of extreme clarity from idea...to brand...to market(TM) and helping one million entrepreneurs become successful and whole so that they can make a difference in the world. Are you one of them? If you want to experience clarity all the way to the bank(TM), get started now at http://www.brandu.com. - Visit Kim Castle's Website |
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