From Etsy to eBay, consumers around the world have spent almost USD 3.46 trillion online, with revenues expected to keep growing each year. ECommerce, along with other disruptive technologies such as online payments, blockchain, and artificial intelligence, is opening opportunities for businesses around the world to trade across borders. It can do the same in the most remote regions of the globe.
“ECommerce can be transformative,” says Erin Endean, Vice President of Economic Growth at Palladium. “For a woman artisan in rural India, Ghana, or Brazil, local demand is limited and tourist markets may be distant. But with eCommerce, artisans can sell to holiday shoppers anywhere around the globe. ECommerce platforms can bring their wares to the fingertips of consumers in wealthier markets.”
The United States Agency for International Development (USAID) has made an award to Palladium to create and manage the Alliance for eTrade Development II, a new Global Development Alliance (GDA). USAID developed the GDA mechanism to foster partnerships with the private sector and leverage public funds with private sector resources and expertise.
The Alliance includes Cargill, DHL, Element, Etsy, the Latin American eCommerce Institute, Mastercard, Paypal, Roam, UPS, and Visa.
Kati Suominen, Technical Director of the Alliance and CEO of partner firm Nextrade, believes that “eCommerce is an unstoppable force” spreading around the world. ”It enables small and medium-sized enterprises to engage in trade, grow, and create new well-paying jobs,” she says.
Addressing the Entire Ecosystem
ECommerce has given rise to entire ecosystems of logistics, digital, and payment businesses that have created millions of jobs in places like India. “But there are a few especially thorny challenges that small – particularly underserved and remote – enterprises face to engage in eCommerce,” explains Suominen.
Many developing countries need different policies and regulations to facilitate the growth of an inclusive digital trade environment. Sellers often need initial working capital to be competitive online. Groups who are underserved need training and new skills, as well as access to credit and logistics services.
“We’re looking at the entire eCommerce ecosystem, from a country’s enabling environment down to the individuals,” says Endean.
Digital trade presents issues and opportunities not just for small entrepreneurs but also for global supply chains. Smallholder farmers and international commodities firms can both benefit from integration into digital platforms that improve the traceability of their goods, streamline purchasing, and facilitate access to credit.
The project will look at five specific challenges: policy and digital regulations, online payment and financial technology, logistics and trade facilitation, e-skills, and gender and urban-rural inclusion.
Recent research also suggests that eCommerce can balance the gender disparities seen in traditional offline businesses, such as a firm’s size, growth, and access to key services. ECommerce may level the playing field between female- and male-led businesses.
The project will work across Africa, Asia, and Latin America, targeting typically underserved rural and women-led firms. It will enable more small businesses to engage in digital trade and improve their access to low-cost logistics, working capital, and online global platforms.
For Palladium’s Endean, the Alliance’s activities will also help to inform future work. “We’ll have case studies and actionable strategies for continuing to open up the benefits that come from eCommerce beyond the life of this project.”
Palladium, together with Nextrade, is a partner in the Global Development Alliance (GDA) to implement the USAID-supported Alliance for eTrade Development II project.