Potential of e-Commerce in Third World Countries

E-commerce sites aren’t the exclusive property of first-world nations—not anymore. Third world countries are joining in on the fun. But is the sandbox big enough? Can it sustain growth for everyone?

Sustainability

One of the most important issues that e-commerce companies face is sustainability. In many countries in the third world, particularly in Asia, this was an initial concern. After all, if the local economy is in a downturn, it might not be wise to build a business in that particular country, especially if projections for growth are in the negative and won’t, in all likelihood, be supported.

However, the recession in the US and Europe has made many companies opt for the outsourcing business model, wherein portions of the core business—or the core business itself—are transferred to third world countries. This was particularly ideal because costs were low, enabling and driving the growth of many Business Process Outsourcing (BPO) industries in many parts of the continent. These included call centers, along with marketing and content development departments. India and the Philippines are two of several third-world nations that have seen tremendous growth in this area, turning the issue of sustainability moot.

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The success of BPO companies garnered interest from investors and many found their way into many cities in the third world, where quality labor is much cheaper as compared to those offered in first and second world countries. The quick rise to the top of many e-commerce sites in Asia—shoe shopping sites like Lazada, restaurant review sites like FoodPanda, shopping sites like MetroDeal and Groupon that offer discounts and freebies—is a testament to the sustainability of e-commerce markets in the region. Other types of e-commerce websites and comparison portals that offer users the advantage of comparing financial products, allowing for swift resolutions to common problems like which credit card to pick or loan to apply for. Growth projections for comparison portals are expected to follow those of coupon sites like Groupon and Beeconomic.

E-commerce Sites, Startups, and Social  

The phenomenal growth rate of e-commerce in third world countries is mainly evidenced by the explosion of e-commerce sites. Many young entrepreneurs—local and not—are coming out of the woodwork, building their startups, and taking their ideas, their services, online. Since brick-and-mortar stores add to overhead costs, most of these startups only rely on e-commerce sites to bring their businesses forward.

The Internet, after all, offers a better way for them to communicate and sell products/ services. Online marketing efforts include optimising e-commerce sites—for search engines like Google, Yahoo, and in some parts of the world, Bing—to drive traffic to sites. The bigger the traffic, the higher the chances are for conversion. Everything comes down to the numbers.

Paid searches are also popular, with Pay-Per-Click ads and banners. However, the traffic achieved isn’t natural so it isn’t going to last long, as opposed to SEO efforts that have the potential—and power—to cultivate and retain loyal customers. So while paid results are attractive in the short-term, for companies looking to invest in, and encourage, long-term growth, SEO is the Holy Grail. Affiliate marketing programs, too, remain an option for many online e-commerce sites.

For most, taking their business online is free. Email marketing campaigns are still viable. Social media platforms, too, have made it easier to bring customers and sellers together. Real-time interaction happens and through channels like Facebook, Twitter or Skype and other forms of online messaging apps, it’s possible for both sides to update each other, free of cost. That’s not just convenient, it’s wonderfully cost-effective too.

The Talent Pool

One factor that makes e-commerce in third world countries possible is the level—and quality—of the workforce. While some companies merely plan to outsource their business for a year or two to cut corners and trim down on expenses, many of them end up staying and building local teams to answer the needs of the business. The skill set, primarily, is top notch. This is one reason why many companies choose to build and invest in businesses in these parts locally. So long as labor rates and resource pools remain competitive, companies looking to invest in outsourced businesses or grow with local teams to represent global brands, will thrive.

All in all, e-commerce is already a standard fixture in many business sectors in the third world. And unless the Internet disappears from the face of the earth, or online businesses become extinct if and when another medium that’s faster and better than the Internet appears, a steady growth for this market seems to be a completely spot-on assumption.

Article Written by Cristina Beltran – a blogger & writer at comparehero.my, Malaysia’s leading comparison portal. This portal helps individuals in making the best decision by comparing rates from different finance and insurance providers.