Editor's Note: This blog post by Tod Cohen, eBay Inc. deputy general counsel and vice president, government relations, was originally posted at MarketWatch.com.
On a typical day, Jean-Louis Beek can be found at his home office in Cape Town, South Africa, selling camera lenses and high-end optical equipment to a diverse base of customers in virtually every corner of the world. 14 years ago, when he started his business — called OpticXchange, which sources vintage and hard-to-find camera equipment from shops and individuals all over South Africa — he probably never would have guessed that the growth he would see would enable him to employ his wife, support his family and cater to the needs of customers on every continent, in more than 20 languages. Today, Jean-Louis — whether he would admit it or not — has become the poster-child of the new paradigm for global trade: enabled by technology, empowered by access and limited only by the number of hours he has on any given day.
Jean-Louis Beek is one of many small businesses owners and entrepreneurs in developing regions who are using the Internet to access the global marketplace and, ultimately, build and grow successful enterprises. Stretching beyond the geographical limits of their immediate surroundings, these businesses are able to increase revenue through technology-enabled commerce, which helps their small companies to better survive in the long term — and, in turn, has far reaching economic and social implications for their families and communities, as well as the entire economies of countries that enable this kind of economic participation. Ultimately, it helps small businesses, like Jean-Louis’, have better survival rates, which helps them to put money back into local, regional and national initiatives through job creation and spending.
At eBay Inc., we have seen the power of the Internet increase participation in the global economy both through our day-to-day business operations and by closely studying the impacts of technology on small businesses across developed and emerging markets. Our most recent research report, titled Commerce 3.0 for Development, is the first to analyze these types of entrepreneurs in emerging markets — specifically Chile, India, Indonesia, Jordan, Peru, South Africa, Thailand and Ukraine. Our report found that technology has not only reduced the barriers to cross-border trade, but is helping keep more small businesses afloat. In short, the Internet, and the services that exist because of it, has leveled the playing field for everyone. Now a start-up technology-enabled manufacturer or retailer, anywhere in the world, can actually survive for longer than its traditional brick-and-mortar offline counterparts down the street.
Specifically,our research demonstrates that engaging in global, technology-enabled commerce practically doubles the chance that a small business in the developing world will survive its first year. Only 30 to 50 percent of traditional local businesses in developing markets survive after their first year, but when they have access to technology-enabled commerce, that number rises to between 60 to 80 percent. This increase is due to the expanded opportunities for businesses to reach more customers in more markets, which helps drive increased revenue opportunity.
For instance, in Peru — one of the only countries from which offline data is even available — traditional, non-technology-enabled businesses only reach an average of three markets in close geographic range. Their online counterparts, however, reach an average of 25 foreign markets. And in Jean-Louis’ home country of South Africa, that number rises to 30. While these numbers seem large, it’s actually the norm — across the eight countries we analyzed, the average number of international markets that technology-enabled businesses reach is around 30 to 40 (which is consistent with our developed market findings). Due to policy shifts and investment in electronic payment methods, mobile technology and broadband Internet access, more small businesses are able to capitalize on this opportunity, and expand their customer base while simultaneously serving local markets. Technology-enabled commerce is helping to provide economic opportunity for small businesses and entrepreneurs by connecting them to customers anytime, anywhere, not just in their local city, region or country.
What’s more, there’s a strong appetite for foreign and global goods, especially in developed markets. A PayPal/Nielsen report earlier this year found that 90 million cross-border shoppers in six key markets — the United States, the United Kingdom, Germany, Australia, mainland China and Brazil — will spend over $100 billion on overseas websites this year alone. By 2018, this will increase nearly 200 percent to over $300 billion from 130 million cross-border shoppers. There is a tremendous opportunity for small businesses and entrepreneurs across the world — and especially in emerging regions — to tap into this demand.
We all have a role to play in realizing and cultivating a more enabling, inclusive and participatory future, and global Internet and trade policies play a crucial role. There are policy barriers in the arenas of customs, shipping, intermediary liability and electronic payments that threaten to hamper the continued growth of technology-enabled trade. If we work together now, we can all play a part in bringing the full power of technology to small businesses and local communities around the world, so that even more stories like Jean-Louis Beek’s can be told.
Chat live with Cohen on Twitter at 12 p.m. ET / 9 a.m. PT on Thursday, Dec. 19. Use the hashtag #MWChat.
eBay data is based on commercial sellers (annual sales of greater than or equal to USD $10,000) in 2012.