‘E-Commerce Offers Opportunities, But Many Challenges To SMEs’ 02/05/2017 by Peter Kenny for Intellectual Property Watch 2 Comments Share this:Click to share on Twitter (Opens in new window)Click to share on LinkedIn (Opens in new window)Click to share on Facebook (Opens in new window)Click to email this to a friend (Opens in new window)Click to print (Opens in new window)E-commerce represents the micro and the massive in business. It offers tremendous potential for business enterprises to access global markets and is there for organisations such as sole traders through small and medium outlets to global giants such as Alibaba and Amazon. For its third E-Commerce Week from 24-28 April UNCTAD (the United Nations Conference on Trade and Development) had the theme, “Towards Inclusive E-Commerce.” Arancha Gonzalez, executive director of the International Trade Centre in Geneva, a joint agency of the World Trade Organisation (WTO) and the United Nations, moderated a session titled, “Supporting the Involvement of Small and Medium-Sized Enterprises in E-commerce” on 27 April. She spoke of the “huge potential” of the e-commerce market. “It represents today 12 percent of international trade and is growing,” she said. “This is the part of international trade that is growing exponentially – not only in goods but also in services.” ITC Executive Director Arancha Gonzalez She noted, however, “There is a huge digital gap with 4 billion people in developing countries remaining offline, and with one billion in living in LDCs (least developed countries) there are only 89 million users, so there is a big growing market,” but a massive digital divide. Buyers and sellers use e-commerce (electronic commerce or EC) as their vehicle for the selling of goods and services, or the transmitting of funds or data, over an electronic network, primarily the internet. UK Leadership Julian Braithwaite, the ambassador of the United Kingdom to the UN and other international organisations in Geneva, said that a “multi-stakeholder approach” is vital for truly reaching “solutions on how to bridge the digital divide between developed and developing countries and their citizens and businesses.” His prepared remarks are available here [pdf]. UK Ambassador to the UN in Geneva Julian Braithwaite He stated, “By reducing distance and transactional costs digital trade has the potential to empower entrepreneurs and businesses of all sizes, connecting them to the global economy.” Braithwaite spoke in the place of Liam Fox, the UK minister in charge of international trade, and noted, “The UK believes that the digital economy, and e-commerce in particular, are important drivers to wider economic growth. This is especially true in the UK.” He cited UNCTAD’s own statistics that the overall UK e-commerce market was worth US$845 billion in 2015. B2C (business to consumer) e-commerce accounted for US$200 billion, which UNCTAD estimates to be the third biggest market in the world behind the United States and China. As there is some movement to negotiate on digital trade at the multilateral level, he said, “We are supporters of ambitious outcomes in multilateral fora on digital trade yet this agenda has not advanced as far as we would have hoped.” “Part of the problem,” he said, “is that the digital agenda is in many ways fragmented with different international institutions leading on discrete parts of it.” The UK has been working with other delegations “to encourage the Geneva institutions to recognise the economic potential of the global digital market and to work to break down some of the silos and remove barriers to digital trade.” The threat of failure of the international system to catch up with advances is that “protectionist tendencies start to take root,” he said, harming economies of all sizes and stifling economic opportunities. He gave a nod to the importance of considering the public interest as well. Braithwaite signalled some good signs coming out of Geneva, however. “I personally have been very encouraged to hear about the type of discussions that have been taking place this week involving delegations from across the globe, representatives from business and a whole host of donor organisations,” he said. “This demonstrates the more joined-up approach that the world needs to make real progress on the digital agenda, for all countries.” Micro-market Sellers at Etsy Angela Steen, the European Union public policy & government relations director of Etsy.com, spoke about its peer-to-peer e-commerce website focused on handmade or vintage items and supplies, as well as unique factory-manufactured items. She said, “We have 1.7 million sellers on our etsy.com platform and 87 percent of these sellers are women.” For over half of the sellers on etsy.com this is is the first place they have sold on online the sellers are more likely to be “younger than the average entrepreneur”. The majority run their businesses from home combining raising families while working or looking after elderly relatives, and 50 percent of its sellers, ship internationally. She noted, “E-commerce has democratised entrepreneurship,” but “many of our sellers continue to face significant challenges in selling their goods.” Steen cited trade laws that have not kept up with the growth of global e-commerce, the income volatility of sellers in such markets who have no safeguards against income loss, which employed workers have. Then there are customs regulations and laws regarding businesses, to name just a few. “Most etsy sellers are sole traders” and while they may be small they are part of a growing global economy, so she called on government to “recognise micro business and not place burdens on them.” World SME Forum Berna Özşar Kumcu, secretary general of the World SME Forum (WSF), moved up the scale in size and noted the trading networks allow small and medium enterprises to connect to markets, but that it is not a level playing field between developed and developing countries. Berna Özşar Kumcu, World SME Forum In developing countries she said, “SMEs tend to be dynamic exporters who are digitally capable,” but SMEs in developing nations can lag behind because they don’t fully understand and access digital platforms. “If SMEs cannot capture the opportunities that are being offered by digital trade and find new ways of doing business this gap will continue to grow,” she cautioned. To help those developing country SMEs the World SME Forum is in May launching a platform called SME.market and will start with three target countries, Azerbaijan, Georgia and Turkey helping SMEs go “from offline to online.” eBay Looking To Smaller Companies Hanne Melin Olbe, director of global public policy at eBay, said her company is dedicated to helping smaller companies operate in the e-commerce arena, so it is looking at those who are “unconnected.” “For us the unconnected are those who have not been connected to world markets, those who have been [excluded] from world trade,” micro or small firms in remote places, or firms in developing countries, often due to the costs of connecting to world markets. Hanne Melin Olbe of eBay She said connecting can be costly and cited an example of the Swedish international home market outlet IKEA that has 300 stores in 37 countries. Such connections are not the way for small retailers said Olbe. Unless the costs of getting to the markets starts to lower, the smaller retailers will not have a chance. Still, Olbe said, “Online is a potentially powerful vehicles for connecting the unconnected to markets because of the costs of connecting countries,” but unless the cost for getting to the markets lower smaller outlets won’t connect. The eBay policy lab had a report last year on nine emerging and nine advanced economies, she explained. “Small firms whether in Italy, Chile, South Africa or Indonesia use online seller planforms to sell to consumers worldwide,” and micro retailers served consumers in an average of 32 different countries, the report found. The goal is for reducing non-tariff barriers and enhanced buying information advocated by the WTO and the World Economic Forum. She said eBay is working with the ITC in trying to connect African sellers to European markets, but success depends on building block payments, delivery and awareness and education of small businesses of the opportunities. Pro-Bono Legal Advice Colette van der Ven, an associate of Sidley Austin LLP, represents clients on all aspects of international trade law with a particular focus on WTO law and WTO dispute settlement. She is the Geneva coordinator and previously interim director of Sidley’s Emerging Enterprises Pro Bono Program, actively involved in advising government officials, entrepreneurs, and small enterprises in Africa on how to overcome market access barriers. Colette van der Ven of Sidley Austin “We have been getting a lot of questions on setting up in e-commerce,” said Van der Ven. “The law is another issue that needs to be overcome.” The consumer is now deciding where the markets are and while the world is looking increasingly at e-commerce, she noted, “you need to have commerce,” to begin with. Areas where small retailers in e-commerce need advice relate to problems such as tax issues, dealing with shipping in small packages rather than containers that are governed by different laws. Van der Ven said her company has set up a platform with the ITC to tackle some of the problems through a cooperative that gives access to sellers who otherwise would have to go through different lawyers. Separately, from the audience, a representative from Syria talked about the determined effort of those in Syria and refugees to use e-commerce to survive, drawing a grand applause from the room. Also separately, it was remarked that the panel was all women and one man, to whom it was remarked that this is how it often feels for women on panels. This also drew laughs and applause from the audience. William New contributed to this report. Image Credits: Peter Kenny Share this:Click to share on Twitter (Opens in new window)Click to share on LinkedIn (Opens in new window)Click to share on Facebook (Opens in new window)Click to email this to a friend (Opens in new window)Click to print (Opens in new window) Related Peter Kenny may be reached at email@example.com."‘E-Commerce Offers Opportunities, But Many Challenges To SMEs’" by Intellectual Property Watch is licensed under a Creative Commons Attribution-NonCommercial-ShareAlike 4.0 International License.