Business-to-Consumer Electronic Commerce in Developing Countries

Business-to-Consumer Electronic Commerce in Developing Countries

Janet Toland (Victoria University of Wellington, New Zealand) and Robert Klepper (Victoria University of Wellington, New Zealand)
DOI: 10.4018/978-1-60566-026-4.ch081
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Abstract

Electronic commerce describes the process of buying, selling, transferring, or exchanging products, services, or information via computer networks including the Internet. In business-to-consumer electronic commerce, the sellers are organisations, and the buyers are individuals (Turban, Leidner, McLean, & Wetherbe, 2005). Business-to-consumer electronic commerce provides opportunities for less-developed countries to reduce transaction costs and bypass some of the intermediary linkages to connect to global supply chains (Molla & Licker, 2005). Though predictions vary, statistics seem to point to significant growth of the use of the Internet among businesses and consumers in developing countries in the next 10 years (Hawk, 2004). The focus here is to explore the potential for business-to-consumer electronic commerce in less-developed countries. The approach taken is to review the current worldwide usage of the Internet; to identify the factors necessary for e-readiness; to explore the barriers to business-to-consumer electronic commerce; and to identify strategies that can be adopted by both the public and private sectors to overcome these barriers. By the end of 2003, developing countries accounted for more than one third of new Internet users worldwide. Though Internet access is rapidly increasing, most residents of developing countries still have no access to the Internet. For example, Internet access in Africa is less than 2% in a population of over 900 million, the lowest rate of access in the world (Dunphy, 2000; UNCTAD, 2004). Businessto- consumer electronic commerce in less-developed countries will grow in the future, but progress will be slowed by technological, cultural, economic, political, and legal problems (Davis, 1999; Enns & Huff, 1999). Differences in e-readiness and related barriers to electronic commerce will sustain substantial differences between regions of the world, between countries within regions, between urban and rural areas within countries, and between the genders and age groups. Despite the difficulties, when the basic communications infrastructure is available, options do exist to undertake business-to-consumer electronic commerce in less-developed countries.
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Introduction

Electronic commerce describes the process of buying, selling, transferring, or exchanging products, services, or information via computer networks including the Internet. In business-to-consumer electronic commerce, the sellers are organisations, and the buyers are individuals (Turban, Leidner, McLean, & Wetherbe, 2005). Business-to-consumer electronic commerce provides opportunities for less-developed countries to reduce transaction costs and bypass some of the intermediary linkages to connect to global supply chains (Molla & Licker, 2005). Though predictions vary, statistics seem to point to significant growth of the use of the Internet among businesses and consumers in developing countries in the next 10 years (Hawk, 2004). The focus here is to explore the potential for business-to-consumer electronic commerce in less-developed countries. The approach taken is to review the current worldwide usage of the Internet; to identify the factors necessary for e-readiness; to explore the barriers to business-to-consumer electronic commerce; and to identify strategies that can be adopted by both the public and private sectors to overcome these barriers.

By the end of 2003, developing countries accounted for more than one third of new Internet users worldwide. Though Internet access is rapidly increasing, most residents of developing countries still have no access to the Internet. For example, Internet access in Africa is less than 2% in a population of over 900 million, the lowest rate of access in the world (Dunphy, 2000; UNCTAD, 2004). Business-to-consumer electronic commerce in less-developed countries will grow in the future, but progress will be slowed by technological, cultural, economic, political, and legal problems (Davis, 1999; Enns & Huff, 1999). Differences in e-readiness and related barriers to electronic commerce will sustain substantial differences between regions of the world, between countries within regions, between urban and rural areas within countries, and between the genders and age groups. Despite the difficulties, when the basic communications infrastructure is available, options do exist to undertake business-to-consumer electronic commerce in less-developed countries.

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Background

Table 1 shows the number of Internet users in the major regions of the world reflecting vast differences in e-readiness. Less than 10% of the population in the developing regions of Africa, Latin America and the Caribbean, and Asia were using the Internet in 2004 as compared to regions such as North America, Europe, and Australasia where 30% or more used the Internet.

Table 1.
Internet users per 10,000 people, by region, 2005 (Adapted from http://www.internetworldstats.com/stats.htm)
REGIONUSERS PER 10,000% IN REGION (approx)
Africa1441.4%
Latin America & Caribbean1,01110.1%
North America6,50166.5%
Asia7387.4%
Europe3,15931.6%
Australia & New Zealand4,73547.4%
World1,38512.7%

Key Terms in this Chapter

Less-Developed Countries (LDCs): Less-developed countries, commonly having a low standard of living, poor health, and inadequate education. Markets are less fully developed, and there is often a greater dependence on the primary sector of the economy.

Diaspora: Nationals of a country who have migrated and are scattered worldwide.

Text Messaging (SMS): Short message service. The sending and receiving of short typed messages using mobile telephones.

Tangible Goods: Goods and services that have a physical form and cannot be delivered directly over the Internet.

Digital Products: Goods or services that can be delivered directly over the Internet. Examples would be software, online travel, and financial services.

Business-to-Business Electronic Commerce (B2B): A business selling goods and/or services online to another business.

Business-to-Customer Electronic Commerce (B2C): A business selling goods and/or services online to private consumers.

Wireless Technologies: Technologies that communicate without landlines, that is, satellite, microwave, cellular radio, infrared. Common uses are pagers, cellular telephones, personal digital assistants, mobile data communications, and personal communications services.

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