E-Commerce as an Equalizer

E-commerce is now a common term in everyday conversations. We have seen the meteoric rise of giants like Amazon and Alibaba surpassing the $1 trillion mark in market capitalization.

I had the rare opportunity of spending almost a month at the Alibaba headquarters in Hangzhou China. It was an eye-opening experience in understanding the Alibaba business model and its different services including e-commerce, logistics, payments, cloud computing, New Retail among others.

This was part of a partnership between Alibaba Business School and UNCTAD as part of their global initiatives.

The last two years have seen a phenomenal growth of the sector occasioned by the covid 19 pandemic. Lockdowns in most parts of the world forced both clients and businesses to move online.

The graph below shows the Revenue growth for the Retail E-commerce space.

Why is E-commerce an equalizer for businesses?

Barriers to Entry

I am lucky to have studied Economics when I did my CPA (Certified Public Accountant) course. Barriers to entry is an economics and business term describing?factors that can prevent or impede newcomers into a market or industry sector, and so limit competition.

E-commerce is basically leveling the playing field for big players and small players by lowering barriers to entry. Small brands can now create their online presence for FREE via social media networks like Facebook, Instagram, WhatsApp, Telegram, Twitter, TikTok, Pinterest, Linkedin, and Google tools (Google My Business. Google Merchant Center, Google Sites, Google Seach Console).

This new phenomenon of selling on social media sites is called social commerce #socialcommerce which is part of the broader e-commerce strategy.

When was the last time you shopped at a social media site?

Social media sites offer businesses FREE client traffic who are possible buyers of their products or services.

For small-scale traders who have a bit more budget, they can build out their own e-commerce storefronts using FREE open source tools like WordPress, Magento, Shopify, etc., and get Web Hosting packages costing as low as $100 per year or less.

Compare this with opening a physical retail store. You need to register a business, get permits to operate the business, get a physical store, hire workers, fit out the shop with shelves, install CCTV, and so on. This might cost a new business anywhere from $500 to more than $1,000 depending on which country you are in.

Anyone can now play in the digital economy with little or No capital and build a global brand or business. Of course, there are many intricacies of running an online business at scale. Some of the key pillars for success in the retail e-commerce space are;

1. Efficient Payment Platforms - In Kenya Safaricom MPesa has risen up to the challenge. Old payment players include VISA, Mastercard, Paypal. New fintech players are emerging daily including Skrill, Stripe, Paystack, Flutterwave, and hundreds of new entrants.
2. Efficient Logistics Providers - In Kenya this includes Sendy, LORI Systems, Amitruck, and hundreds of others ensuring speedy, safe, and efficient package delivery.
3. Fast Internet - In Kenya providers include Safaricom, Liquid Telecom, Telekom Kenya, Airtel, Jamii Telecom, Wananchi Zuku internet among others.
4. Online Advertising - This can take many forms and shapes including SEO (Search Engine Optimization), SMM (Social Media Marketing), Pay per click ADS (using Google, Facebook, Linkedin), Email Marketing, SMS Marketing, and more.

I was also fortunate to work with the leading E-commerce platforms in Kenya like Jumia, Kilimall, Sky Garden, Masoko by Safaricom among others. I have also worked with upcoming players like www.bovic.co.ke and Buy Now Pay Later players like LipaLater and Dlight Kenya.

The ground is ripe for creating New Unicorns ($1 billion companies) in this space. The Digital Economy opens up more opportunities for the rapid scaling of businesses.

Need help with your E-commerce and online strategy? Feel free to reach out.

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