The gap between the big online retail giants and the rest is growing. It has reached a saturation point where a select few large firms like Amazon have sewn up the market and now completely dominate ecommerce.
That’s evidenced by the fact that Amazon made up 37.8% of the retail ecommerce market in 2022, according to Statista. Amazon and its ilk have seized control of the global supply chain and have built their own vast distribution networks as they continue to ramp up their sales machine.
The net result is that millions of small retailers and distributors in emerging markets and developing economies (EMDEs) are frozen out of the market altogether and denied access to the goods they need to grow and thrive as a business. On top of that, they are starved of data - their very lifeblood needed to survive, which is controlled by the big online retailers.
Effectively, these independent traders are being shut out of a massive market, where retail ecommerce sales are expected to peak at $8.1 trillion by 2026. If left to continue unchecked, this could be the death knell for millions of small firms.
The largest stumbling block for these enterprises in achieving ecommerce parity is that they are unbanked and don’t have access to the traditional banking system. It’s a perpetual vicious circle, where, because they don’t have a bank account, they are forced to continue using cash to trade. This also means that they can set up a trading profile, which, in turn, prevents them from borrowing the vital funds required to grow their business.
These businesses also have no idea who is buying their goods, what is being sold and who their merchants are, because they are barred from trading online. Rather, they have to rely on manually-driven supply chains that are inefficient, outdated and disconnected, as well as wholly susceptible to outside shocks and pressures.
Using cash is also a hindrance because it’s expensive to handle and slow-moving, making it yet another of the many costs that firms have to contend with. When they mount up, these not inconsiderable expenses can be the difference between a business staying afloat or not.
Even where small companies can get access to the right technology, it can be a struggle to fully adopt it. That’s because the market is relatively new in terms of ecommerce development, and there’s often a scepticism and reluctance to implement it, particularly when they have been used to doing everything manually offline in the past, meaning that take-up is slow.
Artificial intelligence (AI) has a key role to play in improving the outcome for small businesses. Used in the form of conversational commerce, it can enable distributors to optimise their margins based on stock availability and demand. It can also help make merchants’ experiences more relevant.
How open commerce can help
Above all, an open commerce platform is the key to overcoming these barriers. By affording access to such a channel, these firms can more easily bank and trade their goods online.
There are a host of different services that they can potentially access. These include real-time data that can be used to manage their inventory by predicting demand, as well as running digital marketing campaigns to drum up business.
Businesses can also look for new trends and developments that may affect them, in addition to monitoring how they are doing versus their rivals. As a result, they can respond by scaling up, exploiting new markets, and producing relevant and timely products and services to suit their customers’ needs.
Another key service that they can access is digitised payments. These do away with the risks involved in cash handling, including fraud, theft and financial loss.
The bottom line is that the current state of affairs in global commerce can’t go on any longer. To change all that, EMDE businesses must be given access to the trading and finance tools needed to continue to grow and prosper.