The rise of E-commerce is a unique opportunity for economic development

E-commerce – defined in this report as the sale of goods and services online – is creating new pathways for economic development. Between 2014 and 2019, global retail e-commerce sales nearly tripled – reaching US$ 3.5 trillion by 2019. The COVID-19 crisis has further accelerated growth of the sector. In the second quarter of 2020, ecommerce sales in the US, by some estimates, increased to above 16 percent of all retail sales. Online marketplaces such as Amazon and Alibaba have become among the most valuable companies in the world. Taking into account online business-to-business (B2B) transactions – a market now estimated at US$ 12.2 trillion – e-commerce is rapidly revolutionizing the way markets work.

For sellers of goods and services, e-commerce represents a unique growth opportunity. Through an online sales channel, businesses can reach customers that may not be physically close – whether on the domestic market or abroad. By offering 24-hour online shopping and door-to-door delivery of products, companies can offer customers a new level of convenience. By potentially reaching more affluent customers with greater willingness to pay, online businesses can grow their margins. Online sourcing of supplies and equipment can help businesses identify new technology solutions and lower cost options.

New jobs can be created through the emergence of a rich eco-system of firms that facilitate online sales. Payment service providers enable sellers to process online transactions. Third party logistics (3PL) services facilitate delivery of purchases to the customer. Consultancies, IT companies and lawyers help sellers to navigate the process of developing an online business, from designing an online sales presence, to engineering back office processes and navigating the online regulatory environment. E-commerce platforms can offer standardized solutions to connect sellers and buyers online, starting with simple online matchmaking all the way to offering packaged payment, warehousing and delivery services.

Customers stand to gain through access to greater choice and convenience. Customers can make purchases at any time and from the comfort of their own home. At their fingertips, they have access to amuch wider variety of product choices than would be available at local stores – selecting among both domestic and international online shops. Online product comparisons and product reviews can help customers make better purchasing decisions. Websites can identify visitors and offer a more personalized shopping experience. Greater competition through online shops can encourages low prices and customer service.

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