Tài liệu The Reality of E-commerce with Developing CountriesPrepared ppt

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Contents
Executive Summary i
Contents iii
Tables iv
Figures iv
Boxes iv
Acronyms v
1 Introduction 1
2 B2B E-commerce: Issues for Developing Countries 3
2.1 B2B e-commerce: expectations and assumptions 3
2.2 The limited evidence base for B2B e-commerce optimism 6
3 The Research Strategy 7
3.1 Diversity in B2B e-commerce 7
3.2 Distinguishing between types of B2B e-commerce 7
3.3 Mapping the attributes of B2B e-marketplaces 8
3.4 Developing country producer firms and key informants 9
4 The Reality of E-Marketplaces 11
4.1 E-marketplaces: transaction- or information-oriented? 11
4.2 Support services in e-marketplaces 12
4.3 Trust services in e-marketplaces 13
4.4 The operation of open e-marketplaces 14
5 The Experience of Firms in Developing Countries 17
5.1 Firm use of open e-marketplaces 17
5.2 Using the Web for information purposes 19
5.3 Supply chain integration: e-mail. 20
5.4 Extent of technological advance 21
5.5 The use of private, exclusive e-marketplaces 22
5.6 B2B e-commerce or ‘business as usual’? 23
6 Business Relationships and B2B E-commerce 25
6.1 B2B e-commerce and arm’s-length transactions 25
6.2 Inter-firm networks and supply chain integration 26
6.3 Learning, intermediaries and global networking 29
7 Conclusions and Policy Implications 31
7.1 B2B e-commerce: new opportunities or marginalisation 31
7.2 Implications for policy makers and practitioners 32
7.3 Commerce first, technology second 35
7.4 Next steps: what can be done? 35
Appendix 1: Research Methodology 38
Appendix 2: Characteristics of the Garments Sector Firms 41
Appendix 3: Characteristics of the Horticulture Sector Firms 43
References 45
iii
THE REALITY OF E-COMMERCE WITH DEVELOPING COUNTRIES
THE REALITY OF E-COMMERCE WITH DEVELOPING COUNTRIES
iv
Tables
Table 3.1: Number of interviews by country 9
Table 4.1: Types of B2B e-marketplaces 12
Table 4.2: Availability of on-line information about trading partners 13
Table 4.3: Availability of product information 14
Table 5.1: Registration with open e-marketplaces 17
Table 5.2: Registration at open e-marketplaces by size of firm 18
Table 5.3: Firms using the Internet to buy or sell products internationally 18
Table 5.4: Frequency of firm Web sites 20
Table 5.5: Use of e-mail to place or accept product orders 22
Table 7.1: Obstacles to B2B e-commerce and assessment 34
Figures
Figure 4.1: Payment arrangements for 184 e-marketplaces 12
Boxes
Box 2.1: Policy implications of the optimistic B2B e-commerce model 5
Box 4.1: Types of applications in B2B e-marketplaces 11
Box 4.2: Assurances to buyers and sellers from an e-marketplace provider 15
Box 5.1: Perceptions of open e-marketplaces 17
Box 5.2: Using e-marketplaces to find buyers for fruits and vegetables 19
Box 5.3: The on-line showroom 20
Box 5.4: Use of the Web for information purposes 21
Box 5.5: Random identification via a Web site 21
Box 5.6: E-mail in the South African horticulture sector 22
Box 5.7: E-mail in the Kenyan horticulture sector 23
Box 6.1: Global sourcing networks 28
THE REALITY OF E-COMMERCE WITH DEVELOPING COUNTRIES
v
Acronyms
AGOA Africa Growth and Opportunity Act
AISI Africa Information Society Initiative
B2B Business-to-Business
B2C Business-to-Consumer
DFID Department for International Development, UK
E-commerce Electronic Commerce
ICT Information and Communication Technology
ISO International Organisation for Standardisation
IDC Leading provider of data on providers and users of information technology
ITC International Trade Centre, UNCTAD/WTO
MRO Maintenance, Repair and Operations
PC Personal Computer
SA Social Accountability standard of Social Accountability International
SGS Société Générale de Surveillance
SME Small and Medium-sized Enterprise
UN United Nations
UNCTAD United Nations Conference on Trade and Development
UNIDO United Nations Industrial Development Organisation
USAID United States Agency for International Development
WTO World Trade Organisation
1
THE REALITY OF E-COMMERCE WITH DEVELOPING COUNTRIES
This report is about the potential offered by Internet-
based business-to-business (B2B) e-commerce for
improving access to global markets for firms in
developing countries. It addresses three questions:
• Is B2B e-commerce opening new and cheaper
access to global markets for developing country
producer firms or, conversely, is it strengthening
existing buyer – producer relationships and
reinforcing existing power relations?
• Are developing country producers being
marginalised by the spread of B2B e-commerce
trading relationships that depend on sophisticated
information and communication technologies
(ICTs) and on efficient logistics systems, electronic
payment systems and new certification procedures?
• How can governments or technical assistance
agencies help producers in developing countries
to participate in B2B e-commerce developments
on an equitable basis?
These questions have been answered by a research
project which focused on how Internet-based
electronic marketplaces were actually working in
2001-2002 and how firms in developing countries
were using Internet applications to support and
enhance their business operations. This study does
not examine any aspects of business-to-consumer
(B2C) e-commerce.
The conclusions of this research call into question
many of the more optimistic views about the spread
of B2B e-commerce and its potential for integrating
developing country firms into the global economy.
In this respect, the findings reinforce some of the
more pessimistic assessments of the potential of B2B
e-commerce in both industrialised and developing
countries following the collapse of the dot.com boom.
However, the research also shows that firms are using
a variety of Internet applications in their businesses.
Even if there has been no massive shift to on-line
trading, the Internet is increasingly important for
firms doing business internationally. Recognition of
the excesses of the e-commerce bubble should not
blind policy makers to the increasing use of the
Internet in the management of inter-firm relationships
in the global economy.
At the end of the 1990s, many analysts and policy
makers believed that B2B e-commerce would lead
to a radical change in the way that enterprises trade
with one another. The extent of this change, it was
claimed, would pose stark choices for developing
country firms. If they did not change their way of
doing business and move into the digital age, they
could be marginalised from global markets. As
UNCTAD put it, ‘enterprises in developing countries
that are or plan to be involved in international trade
need to start incorporating ICT and the Internet into
their business models in order to stay competitive’
(UNCTAD 2001: 18). e-competitiveness would
become a condition for survival.
The optimistic view was fuelled by the expectation of
specific advantages that B2B e-commerce might bring
to firms in developing countries. Use of the Internet
was expected to reduce the effect of geographical
distance, providing better information on final markets
and lowering the costs of registering a presence in
global markets. Some observers even went so far as
to suggest that producer firms in developing countries
could ‘leap-frog’ earlier generations of ICTs and use
them to build stronger buyer-seller relationships. This
was expected to lead to substantial benefits in the
form of improved access to international markets and
strengthened competitiveness. The ability of Internet-
based B2B e-commerce systems to facilitate business
linkages across the world seemed to open up new
possibilities even for small and isolated rural enterprises
and communities.
The high levels of optimism about the potential benefits
of B2B e-commerce were not accompanied by any
substantial evidence on whether and how firms were
using it. The focus on the ‘electronic’ in e-commerce
– telecommunication infrastructure, Internet penetration
and new types of intermediaries – was not
accompanied by an equivalent focus on the realities
of conducting business. The trading practices of
producer firms in developing countries and their use
of B2B e-commerce have been largely undocumented.
This report addresses this gap. It focuses specifically
on the use of Internet-based B2B e-commerce by
developing country exporters. Electronic trading using
closed, dedicated systems has been developing for
several decades. The Internet, however, offers the
potential for establishing low-cost, open, ‘many-to-
many’ trading systems. By the end of the 1990s,
international agencies were encouraging the
governments of developing countries to formulate ICT
Strategies in which Internet-based B2B e-commerce
would have a central role. The private sector was
investing heavily in infrastructure and electronic services
to cash in on the expected B2B e-commerce bonanza.
This study provides empirical evidence about how
Internet-based B2B e-commerce operates in practice.
It examines how B2B e-commerce enables, or fails to
enable, firms in developing countries to do business.
It provides a detailed examination of B2B e-commerce
activities in two sectors – garments and horticulture.
Both are important for employment and export-led
growth in developing countries.
1. Introduction
2
THE REALITY OF E-COMMERCE WITH DEVELOPING COUNTRIES
This study focuses on Internet-based ‘e-marketplaces’
and on the ways in which firms may use the
opportunities opened up by the Internet to do
business. Many analyses of B2B e-commerce mainly
examine technology impacts. In contrast, we examine
the features and services that were being provided
at B2B e-marketplaces on the World Wide Web in
2001-2002. We assess how these trading forums
were operating and how firms in developing countries
might be able to conduct business using them.
The examination of e-marketplaces is supported by
research in three developing countries – Bangladesh,
Kenya and South Africa. Garments and horticulture
firm managers were interviewed about their use of
B2B e-marketplaces and about their use of the
Internet in their businesses. How were they making
use of the Internet to buy or sell products? How were
the new opportunities for communication being used
to change the way they were doing business with
buyers and suppliers in their global supply chains? In
spite of the limited empirical reach of this study, the
results throw considerable light on the prospects for
B2B e-commerce in developing countries.
Our results confirm the crucial importance of empirical
investigations of how B2B e-commerce is actually being
developed and used. As of 2002, very little B2B
e-commerce using ‘many-to-many’ e-marketplaces was
found in our sample of firms. This finding is consistent
with OECD country experience which indicates that
‘ the leading reason cited by businesses for not
conducting transactions electronically was a view that
electronic commerce was not suited to the nature of
their business’ (OECD 2002: 70).
However, this negative picture is not the only one.
Some forms of B2B e-commerce are opening up
opportunities for some types of firms. The Internet
is having an impact on the ways that firms do
business – particularly on the way firms handle
relationships with their existing trading partners.
The main effect of the use of the Internet is to make
communication with existing trading partners cheaper
and quicker. It was not being widely used to forge
relationships with new trading partners.
These conclusions have substantial implications for
policy makers who are seeking to maximise the
benefits of B2B e-commerce for firms in developing
countries. The emphasis of most ‘e-readiness’
strategies is on sophisticated technology, legal
infrastructures, and awareness and training. Most of
these strategies presume that B2B e-commerce occurs
in ‘many-to-many’ e-marketplaces and that exporting
firms are constantly searching for new international
trading partners.
Our results show that firms in developing countries
are using some types of B2B e-commerce
applications, but their primary uses are to strengthen
existing business relationships and to deepen
integration between suppliers and buyers. This has
very important implications for the policy framework
needed to realise some of the expected benefits
of B2B e-commerce for developing country firms.
In section 2, we set out why the vision of B2B
e-commerce is creating issues for producer firms in
developing countries and highlight the weakness of
the evidence based in this area. The research strategy
for the project is set out in section 3. Sections 4
and 5 provide the empirical evidence, first, on the
characteristics of B2B e-marketplaces and, second,
on the views of respondents from the firms and key
informants about the impact of these e-marketplaces
and B2B e-commerce. In section 6, our analysis of this
evidence emphasises the main features of the nature
of B2B e-commerce and the business relationships
of firms that are operating within global value chains.
Section 7 provides the answers to our three main
research questions and emphasises the urgency of
changing policy priorities for B2B e-commerce. The
objective must be to support producer firms in
developing countries to achieve more equitable
access to global markets.
3
THE REALITY OF E-COMMERCE WITH DEVELOPING COUNTRIES
Optimism about the potential of B2B e-commerce
depends upon the idea that the major obstacle to
increased sales is the cost of making products known
to potential buyers in industrialised countries. What
is particularly relevant for developing countries is the
fact that the transfer of information over the Internet
operates largely irrespective of physical location and
that the basic hardware and software are widely
available and relatively cheap. According to this view,
therefore, Internet-based B2B e-commerce should offer
particular advantages for firms in developing countries.
Before the dot.com shake out in 2000, this vision
of the benefits of this new form of transacting was
accompanied by the expectation that firms in
developing countries would achieve widespread
access to ICTs. Growing use of digital technologies
as a result of actions to tackle the ‘digital divide’ was
expected to enable much greater access to global
markets for smaller and larger firms in developing
countries. The spread of the Internet and growing
use of the World Wide Web were expected to
generate new economic activity through the use
of open networks and e-marketplaces.
This section makes explicit some of the expectations
and assumptions surrounding the optimistic views
of the potential of B2B e-commerce for firms in
developing countries. It considers the policy
implications that arise from these expectations and
assumptions. It also examines the strength of the
evidence supporting projections of rapid growth
in B2B e-commerce transactions.
2.1 B2B e-commerce: expectations
and assumptions
The idea that B2B e-commerce would radically
transform the way firms do business can be summed
up in four propositions about how this form of
e-commerce is expected to work. These are taken from
the publications of just two UN organisations concerned
with trade and development, UNCTAD and ITC.
However, they broadly reflect the general state of the
expectations for B2B e-commerce in 2000 and 2001.
Proposition 1: e-commerce works through
‘many-to-many’ e-marketplaces
B2B e-commerce marketplaces are on-line spaces
where many buyers and sellers can come together
in one trading community and obtain sufficient
information to make decisions about whether to
buy or sell. UNCTAD’s 2001 E-commerce and
Development Report suggested that ‘many-to-many’
e-marketplaces would become the dominant
component of e-commerce activity and argued that:
‘E-markets involve a large number of buyers and
sellers that engage in many-to-many transactions
and relationships. They create a trading community
in which buyers’ orders are matched with sellers’
offers and the trading partners benefit from other
forms of collaboration’ (UNCTAD 2001: 65).
Proposition 2: ‘Many-to-many’ e-markets will be
supported by complementary business functions
If buyers and sellers are to make decisions to transact
on-line, then sufficient information must be provided
on-line for the transaction to be completed and the
systems must be in place to arrange binding contracts
and payment:
‘B2B e-marketplaces and the implementation of
their business models rely to a very large extent on
technology infrastructure. The market maker must
possess or have access to a technology that is capable
of handling the full range of commercial processes
from ordering to order fulfilment and settlement. The
technology must support transactions involving large
numbers of users over the Internet and be capable of
handling complex business practices, user relationships
and integration with third-party commercial
applications’ (UNCTAD 2001: 74).
Further, effective on-line business also needs the
complementary services required to complete
transactions. The types of services that may be
offered by the marketplaces include:
‘[The] ability to process payments, credit financing,
credit validation, tax laws, trade restrictions,
integrated business management accounting, on-line
exchange of information and transaction-supporting
documents, such as invoices and shipping documents;
import/export compliance; providing on-line linkage
to transportation and logistics and other third-party
services linked to purchases, support for multi-
currency and multi-language transactions; tariffs and
tax data collection and management; automated
landed cost calculations, customs compliance and
documentation’ (UNCTAD 2001: 73).
2. B2B E-commerce: Issues for Developing Countries
4
THE REALITY OF E-COMMERCE WITH DEVELOPING COUNTRIES
Proposition 3: B2B e-commerce offers greater
returns to firms in developing countries than
other trading channels
B2B e-commerce offers two important advantages for
developing country firms. First, e-commerce related
transaction costs are less sensitive to distance than
traditional marketing channels, so access to global
markets is made easier. Second, by simplifying and
making market channels more efficient, B2B
e-commerce should enable developing country firms
to retain a larger share of the final consumer price
of products. The process is not necessarily one of
disintermediation, but rather one of more efficient,
Internet-based intermediation:
‘Traditional marketing and export channels [for
primary products] tend to be inefficient and
dominated by multiple intermediaries … Developing
countries, using existing local commodity exchanges
and commodity export associations as a foundation,
can use B2B on-line trading as a means of
transforming existing commodity marketing systems
to great advantage’ (UNCTAD 2001: XXII).
Proposition 4: B2B e-commerce particularly helps
smaller firms to enter global markets
Reductions in the costs of accessing global markets
are particularly important for SMEs:
‘E-trade opens new commercial opportunities to the
export-oriented enterprise. In particular, it empowers
the small and medium-sized enterprise (SME), allowing
it to participate in international markets where
previously market entry and promotion costs were
prohibitive. It enables the firm to source production
inputs more expeditiously, to streamline (ie. eliminate
intermediaries) its own supply- and export-distribution
chains and to reduce business transaction costs’
(International Trade Centre 2000: 8).
‘E-commerce gives small and medium-sized
enterprises (SMEs) the ability to access international
markets that used to be difficult to enter due to high
transaction costs and other market access barriers’
(UNCTAD 2002: 4).
Not all analysts and policy makers held the
expectations reflected in these propositions. Indeed,
even in the publications from which these
propositions are taken there are more nuanced views
on the different forms that B2B e-commerce might
take and the obstacles that might limit its growth.
1
Nevertheless, these nuances were largely submerged
in the wave of optimism about the impact of B2B
e-commerce. Both analytical and business forces
drove this optimism.
Analytically, the surge of enthusiasm for B2B
e-commerce reflected a tendency to focus inordinately
on the impact of technology. Alternatively, the focus
was on the ways that the uses of technology might
impact on transaction costs and the role of
intermediaries within industry value chains.
The complexity of industrial sectors was treated as
an issue subsidiary to the technical solutions and to
the measurement of transaction costs.
Transaction cost analysis suggests that if ICT use
provides a basis for reducing transaction costs, then
firms will benefit from reduced barriers to
international trade (Wigand 1997). Many of these
transaction costs are associated with the need to
co-ordinate relationships between distant buyers and
sellers – searching for products, services, sellers, and
buyers; negotiating and fulfilling contracts; ensuring
that contract terms are met; and adapting contracts
to changes in circumstances (Milgrom and Roberts
1992). The use of ICTs is also expected to alleviate
information asymmetries between buyers and sellers
by making it easier to monitor the performance of
firms in the value chain.
Towards the end of the 1990s, there were high
expectations that B2B e-commerce would encourage
substantial changes in the way firms buy and sell
products and that this would be associated with
major reductions in the costs of transacting on the
international market. It was suggested that:
2
• buyers and sellers could eliminate the ‘middlemen’
or intermediaries, establish one-to-one on-line
trading and rationalise marketing channels;
• electronic trading would create opportunities for
developing country producer firms to enter new
markets and to strengthen their position in
international trade.
E-marketplaces hosted on World Wide Web were
expected to offer advantages to these firms as a
result of:
• the rapid, low cost, distance-insensitive transfer
of information, reducing the costs of trading across
geographical boundaries;
• the spread of open types of Internet-based
e-marketplaces; and
• the availability of digital technologies and
software applications.
1. See, for example, Mansell (2001) for a review of the many factors that influence B2B e-commerce developments.
2. See, for example, Benjamin and Wigand (1995), Xie (2000), and Goldstein and O’Connor (2000).
5
THE REALITY OF E-COMMERCE WITH DEVELOPING COUNTRIES
The force of this analytical vision was reinforced by
business trends. At the end of the 1990s, investments
in the Internet and its underlying infrastructure were
increasing rapidly and considerable investments
were also being made in e-marketplaces as a form
of B2B e-commerce. In a scramble for critical mass,
first-movers were soon followed by imitators. The
competing firms invested heavily in pursuit of the
goal of being the leading global or regional provider
of e-marketplaces in particular lines of business.
As part of the process of attracting a client base,
these firms had a vested interest in exaggerating
the potential size of the market, playing down the
obstacles to trading on-line and over-estimating
the growth of their businesses.
At many conferences about B2B e-commerce during
this period, multiple presentations by representatives
of firms building e-commerce businesses would each
claim that they were aiming to be the number one
portal or e-marketplace in a particular business area.
The firms building e-marketplaces themselves were
supported by firms developing support services and
by specialist financial investors seeking to build up
B2B e-commerce portfolios.
The hype around B2B e-commerce spread to
developing countries. The message was that
significant parts of global trade would switch to
e-commerce and those firms and countries that did
not jump on the bandwagon would be marginalised.
An article published in the journal of the Fresh
Produce Exporters Association of Kenya offers one
example of the message being given to the
businesses in Africa:
‘As the world switches over to e-commerce as the
modern way of transacting businesses [sic], Africa
has been urged to join the fray or risk losing out
The solution for Africa to take part in the global
market lies in developing “E-markets”, electronic
meeting places for buyers and sellers with defined rules
for e-purchasing, e-bidding and e-selling A wider
global reach opens new markets for African products
globally, while elimination of trading inefficiencies will
result in better prices “For Africa to get a slice of this
business it will have to commence on-line trading
exchanges which create tremendous efficiencies such
as reducing processing costs by up to 90%, reducing
cycle time by up to 80% and improving staff
productivity between 20% and 300%”, the Managing
Director of Electrade said’ (Fresh Produce Exporters
Association of Kenya 2000: 14).
The expectations and assumptions about B2B
e-commerce seemed to lead to a clear set of policy
implications. If B2B e-commerce involves complex
on-line transactions requiring sophisticated forms of
transaction support, and if these capabilities become
a requirement for trading successfully in global
markets, then certain policy consequences must
follow. The consequences are shown in Box 2.1 and
they appeared to be relatively straightforward.
3
The
next section examines the very limited evidence base
upon which these assertions rested.
Box 2.1: Policy implications of the optimistic B2B e-commerce model
1. B2B e-commerce is essential for market access and export growth. Developing country governments
must give priority to ensuring that the conditions for the participation of their businesses are met.
2. B2B e-commerce transactions are complex and information-intensive. The ICT infrastructure must be
sophisticated enough to handle the data required. A quantum leap in telecommunications capabilities
may be required.
3. Governments should ensure that telecommunication services are modern and efficient in order to lower
the prices of network usage through effective competition and market liberalisation. Governments
should also reduce tariffs to support trade in ICT hardware and software.
4. A legal framework to support electronic transactions has to be in place in order for firms to buy and sell
on-line. This framework must include effective authentication and certification mechanisms (ie. digital
signatures, secure settlement procedures) and a means of protecting against on-line fraud as well as
achieving redress in cases where disputes arise.
5. Significant amounts of business will migrate to B2B e-marketplaces with complex requirements.
Governments should support investment in human resources.
6. Governments must ensure that national regimes for taxation, security and privacy protection are
compatible with international governance regimes.
3. Policy statements can be found in various places. In addition to the documents cited above, see, for example, UNIDO (2000)
and McConnell International (2000).
6
THE REALITY OF E-COMMERCE WITH DEVELOPING COUNTRIES
2.2 The limited evidence base for
B2B e-commerce optimism
The evidence base for the prevailing assessment of B2B
e-commerce and the consequent policy priorities was
limited. Three types of evidence were marshalled to
support the idea that on-line trading was developing
rapidly across a diverse range of business sectors:
1. Anecdotes about the development of B2B
e-marketplaces. These stories were subject to bias
because the providers of e-marketplaces had an
interest in talking up their successes as part of the
process of attracting new business. Furthermore,
the success of one type of e-marketplace would not
necessarily indicate that other types of business could
be successfully transacted on-line. At the most basic
level, data on the development of B2C e-commerce
(such as the sale of books, music and airline tickets)
were cited as an indication of the potential for
B2B e-commerce.
4
2. Many discussions of the potential of B2B
e-commerce for developing countries quoted
predictions of its likely growth that were circulating
in various reports. Companies such as eMarketer,
Forrester Research, ActivMedia and IDC frequently
projected growth rates of B2B e-commerce of 100
per cent per annum.
5
Different bodies projected
different numbers, but they all projected rapid
growth and the increasing importance of B2B
e-commerce relative to B2C e-commerce.
3. In the absence of evidence about B2B e-commerce,
data on the spread of telecommunication services
and Internet hosts and users were used as proxies
for the growth of Internet-based B2B e-commerce.
Many reports also relied on indicators of B2C
growth or on the availability of Internet Web sites
offering products as an indicator of B2B growth
prospects (see, for example, UNIDO 2000: 34-35).
By 2002 the optimistic predictions for the growth
of B2B e-commerce were giving way to
acknowledgements that growth had been much
slower than anticipated. The new forms of trading
should be expected to have different impacts
depending on the business sector and the specific
form of B2B e-commerce that is introduced
(Standifird and Sandvig 2002; OECD 2002).
Independent empirical evidence for the OECD
countries was becoming available on the growth
of B2B e-commerce, but it was based on aggregate
indicators (OECD 2002).
In 2001 when this project started, development
programmes and technical assistance agencies were
strongly promoting the potential of B2B e-commerce
for producer firms in developing countries, but they
were doing so in the absence of systematic empirical
evidence. More recently, in-depth analysis of B2B
e-commerce use by firms in a number of sectors in
OECD countries has shown that B2B e-commerce use
is limited (OECD 2002). Quite apart from the lack of
reliable quantitative data, there is limited understanding
of the interaction between B2B e-commerce and the
buyer-supplier relationships that are forged between
firms in a given industrial sector value chain.
The development of various types of B2B e-commerce
is likely to differ depending on the existing structure
of an industrial sector and its value chain. Earlier
studies of the development of electronic trading
networks suggest that there is scope for the
elimination of some types of intermediaries, but that
there are often new roles for existing and new
intermediaries in the value chain. The costs of
transacting may increase or decrease depending on
how B2B e-commerce is introduced and whether
it is developed in open or restricted electronic
environments (Kraut et al. 1998; Hawkins et al. 1999;
Mansell et al. 1991; Mansell and Jenkins 1992).
Studies that provide empirical evidence on the
development of B2B e-commerce suggest that
a cautious approach to assessing its benefits and
opportunities for firms in developing countries is
important.
6
By providing information about how
B2B e-marketplaces actually operate and about how
firms are using Internet applications to support their
business activities, this report helps to fill a major gap
in the evidence base.
4. See, for example, Coppel (2000) and some of the papers in O’Connor and Goldstein (2002).
5. See, for example, UNCTAD (2000: 7), UNCTAD (2001: 71) and Coppel (2000: 7).
6. See, for example, Moodley, Morris and Velia (2002), Tregurtha and Vink (2002), Kinyanjui and McCormick (2002), Moodley, Morris
and Barnes (2001) and Maitland (2001) who have undertaken studies that reveal the relationships between B2B e-commerce and
commercial practice.
7
THE REALITY OF E-COMMERCE WITH DEVELOPING COUNTRIES
This study focuses on the commercial aspects of trade
between buyers and sellers in their value chains. It
examines the issues that developing country producer
firms, governments and technical assistance agencies
need to consider when promoting B2B e-commerce.
Our research strategy differs from that used in many
studies of B2B e-commerce which focus on
connectivity, network access and security, ICT skills,
and e-commerce legislation.
7
The study was designed to investigate relationships
between enterprises and their actual and potential
customers and suppliers and the potential for changes
when the Internet is used to support B2B e-commerce.
The study draws on industrial sector expertise that has
been developed through ongoing research initiatives
in the United Kingdom and in Bangladesh, Kenya and
South Africa (see acknowledgements). This study
focuses mainly on the ‘commerce’ aspects of B2B
e-commerce rather than on the ‘e’ or technology
aspect. We focus particularly on the operation of
e-marketplaces and on the way firms are using the
Internet to support their business activities.
3.1 Diversity in B2B e-commerce
What is e-commerce? Much of the debate on
definitions is concerned with quantification – what
transactions to include or not to include. This gives
rise to broad and narrow definitions, distinguished
by whether they focus solely on Internet-generated
transactions, or include computer networks
more generally:
‘An electronic transaction is the sale or purchase
of goods or services, whether between businesses,
households, individuals, governments, and other
public or private organisations, conducted over
computer mediated networks. The goods and services
are ordered over those networks, but the payment
and the ultimate delivery of the goods or service may
be conducted on or off-line’ [broad definition].
‘An Internet transaction is the sale or purchase
of goods or services, whether between businesses,
households, individuals, governments, and other
public or private organisations, conducted over the
Internet. The goods and services are ordered over
those networks, but the payment and the ultimate
delivery of the good or service may be conducted on
or off-line’ [narrow definition] (OECD 2002: 89).
However, one OECD report on e-commerce offers a
broader approach, focusing on the use of the Internet
and related applications to support business. It
emphasises that e-commerce ‘is more than a
technology or application’ and that it has implications
for the entire value chain of business processes
(OECD 2000: 10). In this study we follow this broader
approach, focusing on the use of the Internet to
support inter-firm business dealings.
3.2 Distinguishing between types
of B2B e-commerce
One consequence of focusing on the business
dimensions of B2B e-commerce from the point of
view of the users rather than of the service providers
or policy makers, is that it is important to distinguish
between the different types of Internet applications
that are being used. The Internet is a set of protocols
that enables communication between computers and
a physical infrastructure linking computers across the
world.
8
E-commerce involves the use of applications
that run on the Internet and these applications
influence the commercial relationships between firms.
The different types of applications are often conflated
into the general category of B2B e-commerce. The
variety of ways that firms do business with each other
on-line tends to be grouped under the generic term
‘e-marketplace’, concealing the diversity of ways firms
relate to each other through Internet-based
applications. Most attention focuses on whether or
not transactions take place on the Internet or through
dedicated channels. The research strategy in this
study involved an effort to distinguish between the
different kinds of B2B e-commerce applications that
might be supported by e-marketplaces.
E-marketplaces based on the Web may include
on-line auctions, trade leads, requests-for-quotes
and on-line catalogues. Some Web sites offer multiple
e-marketplaces, each organised around a particular
trading system such as a request for quotes. The
companies that host one or more of these trading
systems at their Web sites have been called ‘e-hubs’,
‘portals’, or ‘market makers’ (Kaplan and Sawhney
1999). The term ‘e-marketplace’, applied
indiscriminately to all of these types of applications,
implies that they all support on-line buying and
selling. Frequently they do no such thing. The term
‘e-marketplace’ is misleading because:
3. The Research Strategy
7. These issues are the focus of most studies of developing country ‘e-readiness’, see Bhatnagar (1999), Braga (2000), Hossain (2000),
Mann (2000), McConnell International (2000; 2001), World Information Technology and Services Alliance (2000).
8. ‘The Internet, like many networks, has a layered architecture. That is to say, all the tasks necessary to communicating via network are
divided among several functional layers, and the programs residing on these layers co-operate in standardised ways. Applications and
their associated protocols occupy a layer above the basic Internet protocols that supervise basic data transmission’ (Wu 1999: 1164).