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Is e-commerce so different from "offline commerce"? What can be done to boost ecommerce and help countries leapfrog to a digital economy? This presentation was prepared for a workshop with the Chinese Ministry of Commerce in October 2007.
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O-Commerce vs. E-Commerce
Crucial Success factors for
Economic Growth & Development
Benjamin JoffeManaging Director | Plus Eight Star | www.plus8star.com
?
Sometimes the most direct route
to innovation is to look abroad
and translate what you find
Tom Kelley
Author of The Art of Innovation
他山之石，可以攻玉Chinese proverb
0. Introduction
1. O-commerce and E-commerce
2. Building online trust
3. Shift to a digital economy
4. Shift to a knowledge economy
Agenda
Introduction
e-Readiness Ranking
‘ICT infrastructure and the ability of its consumers, businesses
and governments to use ICT to their benefit’
TIER 1
#1 Denmark
#2 US
#16 South Korea
#18 Japan
TIER 2
#21 Ireland
#37 Malaysia
TIER 3
#57 China
#55 Egypt
Source: The Economist Intelligence Unit & IBM, 2007
E-commerce:
Germany
Non-US markets lead in many usage categories
Source: Morgan Stanley Research, 2007
Usage
Retailers
Macroscopic
C2C & B2C transactions amount
Penetration rate among Internet users
Retailers
Internet companies
Total ecosystem (incl. material & immaterial goods)
Investment
Payment infrastructure (Internet, mobile, other)
% of e-commerce in total commerce
Jobs / companies created
Innovation
Measuring the success of e-commerce
e-Commerce
Physical goods
Digital goods
Knowledge
Physical goods
Digital goods
Knowledge
e-Commerce
O-commerce and E-commerce
Offline commerce
and
Online commerce
Question #1
Do you use Internet regularly?
Question #2
Have you shopped online?
Offline transaction (o-commerce)
Display
product
Select
product
Contact
seller
‘Offline’
visit
Pay on site
Return product
Get replacement or refund
e-commerce transaction
Display
product
Select
product
Online
payment
Contact
seller
Deliver
product
Deliver
product
Pay on
delivery
Return product
Get replacement or refund
Return product
Get replacement or refund
Updating your words
Updating your thinking
e-commerce has obvious
advantagesover o-commerce
(Choice, speed, delivery, price…)
?
Building online trust
There is little assumed trust
and payment is a problem
Day 1
Day 2
Day 1
Day 2
Display
product
Select
product
Online
payment
Contact
seller
Deliver
product
Deliver
product
Pay on
delivery
Return product
Get replacement or refund
Return product
Get replacement or refund
Trust
Trust is a lubricant
for transactions
1. Trust in the seller
2. Trust in the payment system
3. Trust in the buyer
Story 1
Online shopping in China
<1 year since purchase but…
No refund
No replacement
(No repair?)
Net result
1. Loss of trust
2. I will not buy again from
Taobao shops
3. (Maybe you neither ^_^; )
Let’s compare to Germany
Story 2
Online shopping in Germany
LCD TV
2000 EUR
Delivery: free (over 40 EUR)
Free refund within 30 days
4.5 stars
187 reviews
Payment security and shopping
warranty certificates
[test] Test from a government magazine
Winner of 2006 for every test
(the best you can get)
[TUV] also from the government
Tests cars, elevators and… online shopping
[Safe and Easy] Mastercard certification
[EHI] no extra fees for online shopping
[e Trusted Shops Guarantee]
[Verisign] = Security certificates
Plasma TV
2000 EUR
Write positive review
about previous vendor
Net result
1. Higher trust in both vendors
2. Handling fees for first vendor but
virtuous circle of trust creation
Keys to this transaction
1. Certificates by trusted third parties
2. Money back guarantee
3. Seller rating
4. Secure payment system
(bank transfer or credit card)
5. Reliable logistics and limited costs
Shift to a digital economy
eBayB2C & C2C
> 200 million users
> 1 million make a living on eBay
> 800,000 US citizen
> 100,000 UK citizen
RakutenB2B2C
Results
59,305 companies
18,549,514 items
30 million members
2Q 2007
5 million unique buyers
16 million transactions
800 million EUR gross merchandise sales
Shift to a knowledge economy
E-commerce is not just
about physical goods!
Immaterial goods
1. Cultural goods
2. Information
3. Content industry
(music, movies, knowledge)
Example
Buying online in Korea
‘Digital Korea’(by Tomi Ahonen, August 2007)
1. Over 50% citizen use Internet banking
35% of transactions are online
2. 63% use mobile for payment
25% of all Visa cards are mobile
3. m-commerce transactions for
non-telecom goods exceeded $1bln in 2006
4. (Electronic Signature & E-Commerce Laws)
Naver | Portal
Pay via
1. Mobile phone
2. Credit card
3. Telco 1 (KT)
4. Telco 2 (Hanaro)
5. Bank account
1. Select product or information
2. Enter your mobile number and user ID
3. Receive an SMS
4. Enter the code on the website
5. Pay on your phone bill
Process
In China, numerous payment systems
(bank cards, Yeepay, UnionPay, 99bill, Alipay,
various escrow systems, …)
It takes 10 minutes to pay online with a bank card!
CTO of an Internet VOD service company in China
…but still cumbersome
The Mechanical Turk Chess-playing automaton
(Europe, 18th century)
Mechanical Turk is a
"crowdsourcing" system
1. Requesters post Human Intelligence Tasks
(HITs) along with the fee they will pay.
2. Turkers (the workers) choose their HITs, do
the jobs and submit the results.
40,622 tasks available
from 352 requester
Examples of HITs
1. Locating information on a document
2. Translating foreign languages
3. Transcribing speech
4. Comparing audio to written transcripts.
(most pay very little: 0.1-0.5 RMB)
Internet is a retail channel for
human intelligence
Internet research by English-speaking
University graduates (Masters, PhD)
Convenient.info
is based in Sri Lanka
Payment online or by invoice
in several currencies
Conclusion
Idea #1
E-commerce can create jobs and
enhance economic activity
Idea #2
e-commerce is not so different
from o-commerce
Idea #3
The keys for growth are
TRUST and PAYMENT
Idea #4
Mobile is a payment infrastructure
for goods and content(and not just mobile content)
Idea #5
With the right legal framework and
awareness, China is able to leapfrog
to the digital age
Key roles
1. Protect consumer rights
2. Clarify suppliers rights and
obligations
3. Simplify procedures
4. Support easier payment systems
5. Increase awareness
Closing remarksWest African regional workshop on e-commerce (June 15, 2007)
E-commerce is a catalyst for inclusion in world trade
and for enhancing competitiveness on the global market
Secretary General
Finance Ministry of Niger
We need to establish a legal framework for e-commerce
that will guarantee a secure environment for online
trading by simplifying processes and procedures,
Closing remarksWest African regional workshop on e-commerce (June 15, 2007)
37% of the surveyed enterprises still cited the lack of a
legal framework as one of the difficulties faced in rolling
out e-commerce in Egypt.
Dr Nagwa El-Shenawy
Economic Researcher
Egypt
Participants also stated the importance of using mobile
communication as a potential tool for trade.
They also required an awareness
campaign on the Egyptian e-signature law.
