Although Caribbean consumers might enjoy shopping online, many Caribbean businesses are suffering and have even shut down. Is e-commerce really to blame?
It would not be an exaggeration to say that electronic (e-)commerce is firmly entrenched to today’s society. To varying degrees, most of us have, at one point or another, paid for goods and/or services online; whilst some of us do so on a regular basis. It was thus interesting that a recent article in the Jamaica Observer was on the subject of e-commerce and its impact on local businesses in Jamaica.
Essentially, the article sought to highlight the fact that thanks to e-commerce, the Jamaican business landscape, and particularly retail, has changed – to the point where business owners are struggling to remain viable. In an example highlighted in the article, a longstanding and popular jewellery store recently closed its doors, due to poor sales, and in its place, the owners opened a restaurant.
Another contributor to the change in the landscape has been increased online activity by local shoppers. Consumers do not want to be limited by geographic boundaries, and are eager to access the wider variety and more cost-effective options available internationally, which can still work out cheaper than buying locally – even after importation costs are factored in.
The scenario outlined above is not unique to Jamaica. Across the Caribbean, many businesses have been having similar experiences, which not only has been damaging to their bottom line, but also threatens their continued survival. Having said this, is e-commerce really to blame? Below are some points to consider.
E-commerce is not an overnight phenomenon
First, it is important to acknowledge that e-commerce did not emerge overnight. Currently, it is over 20 years old. Hence Caribbean business owners and consumers have had more than enough time to get used to it, and to appreciate its impact on commerce generally, and its the implications for their own individual markets.
Caribbean business models have not evolved
Following from the previous point, and to an appreciable degree Caribbean businesses have not evolved from how they operated five, 10, or even 20 years ago. Although they might have introduced technology into their operations, at the core, the business model with which the business was started, is the very same one that is still being used today. Frequently, it means that they are not aligned with the attitudes and behaviour of today’s consumers, or other important trends in the marketplace, which are much broader than just e-commerce.
For example, should any business today automatically limit itself to serving its local market? One of the consequences of today’s technology is the collapsing of borders and the fact that, thanks to the Internet, any business can serve the global market – if it so chooses. However, it does mean that the business model that one would implement to serve a local market is vastly different from that needed when thinking globally.
Caribbean businesses have been handicapped
Unfortunately, the underdevelopment of e-commerce framework in the region means that Caribbean businesses are at a distinct disadvantage when compared with similar businesses in more developed countries. Although elaborate and modern websites can be developed, in the region, it is still tedious and expensive to secure online merchant accounts to facilitate payment, and ultimately, many ventures never truly achieve their full potential.
This difficulty in completing electronic transactions in turn limits Caribbean businesses to their local markets, especially when goods are involved. It also means that businesses that have been conceptualised to operate solely online, effectively, cannot be the norm in the region, and if they do exist, their transactions are managed outside the region.
More importantly, the diversity and sophistication of the Caribbean marketplace is limited. This narrow ecosystem is likely to remain unless, or until, the requisite frameworks, such as to support e-commerce, are implemented to move the region more fully into the 21st century.
Image credit: Robbert Noordzij (flickr)
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Online merchant provisioning is an important component of commerce today. I feel it is government’s role to ensure that this is in place and providing the services to the business community.
While I would agree that government has a role, exactly who is “government”? Most of these big business finance the ascension of political parties into office and so should ensure their lobbying is for strategic purposes than individualistic tax breaks/avoidance. I think it is short-sightedness all around. While the original entrepreneurs may have started with one dulcimina and a bolt of cloth, what have successive generations done as it relates to positioning their business within the global space other than import the latest luxuries and power instruments from these developed countries?
Both responses are correct in identifying the role of Government in creating the environment for businesses to thrive and in this instance systems to enable e-commerce in the region. Individual companies have been at the mercy of the developing countries that have ignored the needs of small LDC in participating in the e-commerce evolution. Specifically, Governments in the region have not utilized their unified strength to resolve what is a transaction problem for SME’s in the region. SME’s themselves also need to act through their associations and advocate to their MPs in Govt to take action. Many however are reluctant to change the way they do business and eventually may get left behind much like Big Box retailers did to mom and pop store in the developed countries.