Better understanding e-commerce marketplaces: the Africa, Asia and Latin America Marketplace Explorers (ITC)

Arguments

Language barriers can hinder international trade.

Supporting facts:

• Several businesses may struggle to participate internationally due to language barriers.

• Weglot is a potential solution for businesses, it’s a translation software that is easy to implement on a website.

Topics: international trade, language barrier, translation software

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Promote the accessibility of data to small businesses

Supporting facts:

• Data sharing by Jesse has allowed it to be available on global platforms, benefiting many countries.

• Global Trade Helm Desk project aims to assist businesses in selling abroad on different platforms.

Topics: data accessibility, small enterprises, global trade

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Report

Language barriers can present a significant hindrance to international trade. Businesses may struggle to participate in the global market due to difficulties in effectively communicating with potential customers and partners. To address this issue, translation software such as Weglot offers a potential solution.

Weglot is an easy-to-implement translation software that allows businesses to translate their websites, enabling them to engage with a broader customer base. On the other hand, data accessibility plays a crucial role in empowering small businesses to benefit from global trade.

Companies like Jesse contribute to this by sharing data, making it available on global platforms. This accessibility of information benefits multiple countries and supports economic growth. Additionally, initiatives like the Global Trade Helm Desk project aim to assist businesses in selling their products and services abroad on various platforms.

These efforts promote data accessibility and facilitate international trade for small enterprises. However, a challenge faced by businesses is the limited openness of platforms to foreign sellers. Many platforms currently do not allow foreign sellers, restricting their ability to expand into new markets.

The reasons behind these restrictions are uncertain. One possibility is the issue of digital payment interoperability, which can pose challenges for transactions between different countries. Moreover, varying marketplace regulations and politics may also contribute to this limited openness. Consequently, there is a negative sentiment surrounding the accessibility of platforms for foreign sellers.

In conclusion, language barriers hinder international trade, but translation software like Weglot can help businesses overcome these barriers. Promoting data accessibility and providing platforms that support small businesses can empower them to engage in global trade and drive economic growth.

Nevertheless, the restricted access to foreign sellers on many platforms needs to be addressed through resolving issues of digital payment interoperability and rethinking marketplace regulations.

Arguments

Marketplaces play an important role in making e-commerce accessible to small and medium sized enterprises

Supporting facts:

• Marketplaces provide technological infrastructure, trust, visibility and inbuilt solutions for payment, fulfillment, and transport

• They are particularly beneficial for enterprises that don’t want to invest in their own e-commerce technology

Topics: E-commerce, Marketplaces, Small and medium sized enterprises

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Local and niche marketplaces are rising as valid alternatives to big international platforms

Supporting facts:

• Local marketplaces are more flexible and culturally specific

• They are less demanding in terms of compliance regulations and service conditions

• They offer different levels of competition

Topics: Local marketplaces, Niche marketplaces

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Micro-entrepreneurs can first set up their own e-commerce sites before transitioning to using marketplaces

Supporting facts:

• Recent innovations from Shopify, Wix, and WordPress WooCommerce have made setting up an e-commerce site much more manageable

• Micro-entrepreneurs can use their own site to gain e-commerce experience at relatively low cost before transitioning to a marketplace

Topics: Micro-entrepreneurs, E-commerce, Marketplaces, Shopify, Wix, WordPress WooCommerce

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Complexity and cost of compliance for Latin American firms to sell on marketplaces is high.

Supporting facts:

• From the regulatory and cost perspective, it is easier for companies from China and the United States to do business.

Topics: E-commerce, Regulations, Compliance Cost

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Report

Marketplaces, such as local and niche marketplaces, have a significant impact on the accessibility of e-commerce for small and medium-sized enterprises (SMEs). These marketplaces provide crucial technological infrastructure, trust, visibility, and built-in solutions for payment, fulfillment, and transport. This infrastructure allows SMEs to overcome the barriers they may face when trying to set up and operate their own e-commerce platforms.

In particular, marketplaces are highly beneficial for enterprises that are unwilling or unable to invest in their own e-commerce technology. By utilizing established marketplaces, these businesses can leverage the existing infrastructure and resources, saving costs and streamlining their operations. This enables SMEs to focus on their core competencies and products while still benefiting from the reach and exposure that these marketplaces provide.

For micro-entrepreneurs looking to enter the e-commerce space, there are platforms like Shopify, Wix, and WordPress WooCommerce that have made setting up an e-commerce site more manageable. These platforms offer user-friendly interfaces and templates that make it easier for entrepreneurs to create and manage their own websites.

This allows micro-entrepreneurs to gain e-commerce experience at a relatively low cost before transitioning to using larger marketplaces. However, it is important to note that large international marketplaces like Amazon present challenges for SMEs. These marketplaces have demanding compliance processes, service conditions, and performance expectations.

Despite the potential benefits they offer, there is also a competitive emphasis on price, which can make it difficult for SMEs to stand out among their competitors. Furthermore, Latin American firms selling on marketplaces face complexities and high compliance costs.

Compared to companies from China or the United States, Latin American firms face regulatory and cost barriers that make it more difficult for them to engage in e-commerce. The compliance process for Latin American firms is more complex and costly, hindering their ability to compete on these platforms.

This discrepancy highlights a disparity in the ease of doing business for different regions. James Howe encourages small enterprises to embrace e-commerce and digital platforms to enhance their businesses. However, he also emphasizes the challenges associated with larger platforms like Amazon.

These challenges include demanding compliance processes, service conditions, performance expectations, and intense price competition. Despite these challenges, marketplaces also offer benefits such as customer service, user reviews, and branding. In conclusion, marketplaces play a vital role in bridging the gap between SMEs and e-commerce by providing the necessary infrastructure and support.

By using these marketplaces, SMEs can take advantage of existing resources, expand their reach, and focus on their core business. However, there are challenges and barriers that need to be addressed, including compliance complexities and costs for Latin American firms, as well as the competitive pressures on larger international marketplaces.

Arguments

The Marketplace Explorers project aims to understand the role of online marketplaces as they support local firms selling their goods and services.

Supporting facts:

• The project is focused on B2C (Business to consumer) marketplaces dealing with physical goods.

• It includes information from various data sources including university data, SimilarWeb, UN, ITU and World Bank

• It offers a benchmarking tool for comparing country-level marketplace performance.

• It gives detailed insights about individual marketplaces useful for entrepreneurs.

Topics: E-commerce, Online Marketplaces, Developing Economies

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The Marketplace Explorers project covers three continents – Africa, Asia and Latin America.

Supporting facts:

• The Africa Marketplace Explorer contains data on 55 African countries.

• The Asia Marketplace Explorer covers 11 countries in Asia.

• The Latin America Marketplace Explorer covers 33 countries in South America, Central America and the Caribbean.

Topics: E-commerce, Online Marketplaces, Developing Economies

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Specialized marketplaces are more numerous in Asia than in Latin America and Africa

Supporting facts:

• Specialized marketplaces focus on small selection of goods

• Asia is more advanced in this area

Topics: Specialized marketplaces, E-commerce, Regional comparison

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Asia leads over Latin America and Africa in transactional marketplaces

Supporting facts:

• Asia is more advanced when it comes to transactional marketplaces

Topics: Transactional marketplaces, E-commerce, Regional comparison

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Top marketplaces in Africa account for 36% total marketplace traffic

Supporting facts:

• Jumia, Utknees, and Take a lot are the biggest marketplaces in Africa

Topics: Marketplace traffic, E-commerce, Top marketplaces, Africa

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Asia’s top three marketplaces account for 43% of total traffic

Supporting facts:

• Shopee, Lazada, and Tokopedia are the top three marketplaces in Asia

Topics: Marketplace traffic, E-commerce, Top marketplaces, Asia

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47% of all marketplace traffic in Latin America comes from Mercado Libre, Amazon, and OLX

Supporting facts:

• Mercado Libre, Amazon.com, and OLX are the top three marketplaces in Latin America

Topics: Marketplace traffic, E-commerce, Top marketplaces, Latin America

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Certain regions in Africa lack advanced marketplace economy

Supporting facts:

• Countries between Nigeria and South Africa have a long way to go

Topics: E-commerce, Marketplace development, Africa

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Marketplaces need to localize strategies to effectively do business in specific countries

Supporting facts:

• This includes having everything in the local language, adapting to the culture, and collaborating with local logistics and payment providers.

• Amazon and eBay are examples of marketplaces that have adopted this strategy, creating national websites for specific countries.

Topics: eCommerce, International Business, Marketplace Strategies

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Asian marketplaces are more proactive when it comes to international expansion and competition

Supporting facts:

• Asian marketplaces have started to expand into other continents more than other regions.

• Asian marketplaces may have a larger customer base to facilitate expansion.

Topics: eCommerce, Asian Markets, Economic Globalization

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Report

The Marketplace Explorers project focuses on understanding the role of online marketplaces in supporting local firms in the B2C (Business to consumer) market for physical goods. It aims to provide detailed insights into individual marketplaces and offers a benchmarking tool for comparing the performance of marketplaces at the country level.

The project collects data from various sources, including university data, SimilarWeb, the United Nations (UN), the International Telecommunication Union (ITU), and the World Bank. One of the key arguments put forth by the project is the need to fill the knowledge gap in understanding the e-commerce landscape in developing countries, particularly in Africa, Latin America, and some Asian countries.

It is highlighted that there is a lack of e-commerce data available for these regions, making it challenging to assess the state of online marketplaces. The Marketplace Explorers project aims to address this gap by providing comprehensive data on marketplaces in these regions.

The analysis carried out by the project reveals significant differences in e-commerce marketplace development across continents. Latin America emerges as the frontrunner, having the largest marketplace traffic among the three regions studied – Africa, Asia, and Latin America. However, Africa lags behind in terms of marketplace traffic, which can be attributed to various factors such as the economic situation, infrastructure limitations, and internet access challenges.

Furthermore, the project highlights the prevalence of specialized and transactional marketplaces in Asia compared to Latin America and Africa. It is observed that Asia is more advanced in this regard. The top marketplaces in Africa account for 36% of the total marketplace traffic, while in Asia, the top three marketplaces make up 43% of the total traffic.

The project also emphasizes the importance of localizing strategies for marketplaces to effectively do business in specific countries. It is argued that by adapting to the local language, culture, and collaborating with local logistics and payment providers, marketplaces can generate significant traffic and expand their reach.

Examples such as Amazon and eBay creating region-specific websites for specific countries are cited as successful implementations of localized strategies. Notably, Asian marketplaces are identified as more proactive when it comes to international expansion and competition. It is suggested that Asian marketplaces have started to expand into other continents more than other regions.

This can be attributed to a potentially larger customer base and a proactive approach towards global expansion. On the other hand, breaking into the European and North American markets may pose challenges for emerging or regional marketplaces. These markets are already sophisticated and closed, with their own established marketplaces.

Asian marketplaces, offering competitive prices, may find more success in these markets. In conclusion, the Marketplace Explorers project provides valuable insights into the role of online marketplaces in supporting local firms and aims to address the knowledge gap in understanding the e-commerce landscape in developing countries.

The analysis reveals significant differences in marketplace development across continents, with Latin America leading in marketplace traffic. The project highlights the importance of localizing strategies for marketplaces and identifies Asian marketplaces as more proactive in international expansion. However, breaking into the European and North American markets may prove challenging for emerging or regional marketplaces.

Arguments

Disparity in the number of online marketplaces within Africa

Supporting facts:

• Marketplaces are concentrated in at least five countries

• More prevalent in North Africa and Southern Africa, mainly South Africa

Topics: Marketplaces, Digital trade

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Bang of cross-border data flows may hinder scaling up of marketplaces

Supporting facts:

• Most of online marketplaces operate at the national level

• Data localization laws might restrict growth of marketplaces

Topics: Cross-border e-commerce, Data governance

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The need for gender-aggregated data to have targeted policy recommendations

Supporting facts:

• SMEs who are involved in most of the trade within Africa are primarily women

Topics: Policy making, Gender issues

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The majority of the leading online marketplaces within the continent operate at the national level

Supporting facts:

• 64% of the top 50 online marketplaces in Africa operate at the national level

Topics: Marketplaces, National vs International operation

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Most online marketplaces in Africa are owned by third parties

Supporting facts:

• Intermediaries accounted for 87% of the online marketplaces within Africa

Topics: Marketplaces ownership, Digital taxation

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Fragmented regulatory landscape is a challenge for firms in Africa

Supporting facts:

• High compliance costs prevent firms from operating across different countries within the continent

• Example of a marketplace operating in Ethiopia facing difficulties to expand operations to another country due to compliance costs

Topics: Regulatory Framework, Cross-Border Operations, African Economy

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Report

The analysis of online marketplaces in Africa provides a comprehensive overview of the current landscape and highlights several key aspects. One notable finding is the significant disparity in the number of online marketplaces within the continent. Marketplaces are concentrated in at least five countries, with South Africa emerging as a leader in this regard.

This concentration raises concerns about limited opportunities for other African countries to fully participate in the digital trade ecosystem. Furthermore, the study reveals that a majority of online marketplaces in Africa operate at the national level. This finding suggests limited cross-border integration among marketplaces, which can potentially hinder the growth of digital trade.

Restrictions on cross-border data flows due to data localisation laws present additional challenges. These laws may impede the scaling up of marketplaces, hampering their ability to expand operations across borders. Interestingly, the analysis also highlights the important role that women-led small and medium-sized enterprises (SMEs) play in intra-African trade.

Women are primarily involved in SMEs, which are crucial drivers of economic growth and job creation. The need for gender-aggregated data is emphasised to enable targeted policy recommendations and interventions that can support and empower women in the marketplace. Regulatory compliance costs emerge as a significant obstacle for firms looking to expand their operations across different countries within Africa.

The fragmented regulatory landscape poses challenges and increases costs, preventing firms from operating seamlessly across borders. An example is provided, where a marketplace operating in Ethiopia faces difficulties in expanding to another country due to compliance costs. Harmonisation of regulations across African countries is identified as a necessary step to enhance market integration and promote smoother cross-border operations.

Another noteworthy observation is that the majority of online marketplaces in Africa are owned by intermediaries. These third-party entities account for 87% of the online marketplaces, indicating a reliance on external actors to facilitate digital trade. This observation raises questions about the extent of local ownership and control over online marketplaces in Africa.

In conclusion, the analysis sheds light on various aspects of online marketplaces in Africa, including the disparity in their distribution across countries, the predominance of national-level operations, the challenges associated with cross-border data flows and regulatory compliance costs, the significant role of women-led SMEs, the need for gender-aggregated data, and the reliance on intermediaries in marketplace ownership.

The findings underscore the importance of addressing these challenges and promoting regulatory harmonisation to support the growth and development of online marketplaces in Africa.

Arguments

E-commerce in Latin America is predominantly a domestic phenomenon

Supporting facts:

• Most of the e-commerce transactions are done within the same country with very little action with regard to cross-border e-commerce.

• Very few Latin American companies sell products on marketplaces outside their countries.

Topics: E-commerce, Cross-border commerce, Latin America

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Three marketplaces dominate the landscape in Latin America

Supporting facts:

• MercadoLibre is the most important player in the region with national marketplaces in 20 countries.

• Amazon operates in Brazil and Mexico with a national focus.

• OLX is one of the largest marketplaces in Latin America.

Topics: E-commerce, Latin America, MercadoLibre, Amazon, OLX

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Amazon and MercadoLibre have different policies for foreign sellers

Supporting facts:

• Amazon allows foreign sellers to buy or to sell on their marketplaces.

• Mercado Libre only allows sellers from both China and the United States to sell on their marketplaces.

Topics: E-commerce, Amazon, MercadoLibre, Foreign sellers

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The growth of e-commerce sales is outpacing the number of visits to marketplaces

Supporting facts:

• E-commerce sales have increased considerably.

• The number of visits to the marketplaces has decreased in 2022 compared to 2021.

Topics: E-commerce, Sales growth, Website visits

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The profitability of domestic e-commerce is so large that marketplaces don’t want to get into the hassle of working with countries where the logistics and payments is still an issue

Supporting facts:

• The national markets are still growing very fast

Topics: E-commerce, Marketplace, Logistics, Payments, Domestic Market

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Nowadays, issues related to logistics and payments can be solved

Supporting facts:

• There are companies that provide logistics and payment solutions within Latin America at low costs

Topics: E-commerce, Marketplace, Logistics, Payments

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There is a large complexity for companies from Latin America to sell on the marketplaces

Supporting facts:

• Seems to be a cost issue for companies from the Latin America

• Regulatory and cost perspective makes it easier for companies from the US or China to do business

Topics: E-commerce, Marketplace, Latin America

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Report

The analysis of the e-commerce landscape in Latin America provides several key insights. Firstly, it reveals that e-commerce transactions in the region are mostly confined to domestic markets, with minimal cross-border activity. This suggests that Latin American consumers primarily purchase products from within their own countries, rather than from international sellers.

Latin American companies also show limited engagement in global e-commerce. Three major marketplaces dominate the e-commerce scene in Latin America – MercadoLibre, Amazon, and OLX. MercadoLibre, with national marketplaces in 20 countries, emerges as the most prominent player in the region.

Amazon, on the other hand, focuses on Brazil and Mexico, operating with a national scope. Meanwhile, OLX stands out as one of the largest marketplaces in Latin America. These marketplaces play a crucial role in facilitating e-commerce activities within the region.

The analysis also highlights the contrasting policies of Amazon and MercadoLibre towards foreign sellers. Amazon allows foreign sellers to buy and sell on their marketplaces. In contrast, MercadoLibre only allows sellers from China and the United States to sell on their platform.

This discrepancy in policies indicates that the two marketplaces have different approaches when it comes to international seller participation. Examining e-commerce sales and website visits, it becomes evident that while e-commerce sales in Latin America have experienced substantial growth, the number of visits to marketplaces has actually decreased in 2022 compared to the previous year.

This finding suggests that the growth of e-commerce sales is outpacing consumer engagement with marketplaces, potentially indicating a shift in shopping behavior towards mobile commerce or social media platforms. Another important observation from the analysis is that the profitability of domestic e-commerce in Latin America discourages marketplaces from expanding into countries with logistical and payment challenges.

The rapid growth of national markets in the region presents lucrative opportunities for marketplaces, which are often deterred by the complexities associated with cross-border operations. However, it is worth noting that cost-effective logistics and payment solutions provided by local companies within Latin America are available, offering potential avenues for marketplaces to overcome these obstacles.

Companies from Latin America face complexity when trying to sell on marketplaces due to regulatory and cost barriers. This complexity results in US and Chinese companies finding it easier to conduct business in the region. The analysis suggests that the regulatory and cost perspectives play a significant role in determining the feasibility of Latin American companies selling on marketplaces.

Finally, the analysis highlights support for pilot projects that allow foreign companies to sell on Latin American marketplaces. This finding suggests that there is a belief in the viability and potential benefits of fostering collaboration between foreign and Latin American companies in the e-commerce space.

In conclusion, the analysis of the e-commerce landscape in Latin America emphasizes that most e-commerce transactions occur within domestic markets, indicating limited cross-border activity. MercadoLibre, Amazon, and OLX dominate the market, each operating with unique policies and approaches. E-commerce sales have seen impressive growth, although consumer engagement with marketplaces has declined.

The profitability of domestic e-commerce, supported by affordable logistics and payment solutions, presents challenges and opportunities for marketplaces within the region. Latin American companies face regulatory and cost barriers, making it easier for US and Chinese companies to conduct business.

Despite these complexities, there is support for pilot projects that foster collaboration between foreign and Latin American companies in the e-commerce sector.

Arguments

Focus on countries where information is needed the most for e-commerce

Supporting facts:

• They chose the 11 countries out of 53 member states because they needed the information the most

• List of 11 countries includes ones with small size

Topics: E-commerce, S-CAP, ITC, Asia-Pacific

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Need for a comprehensive database for meaningful strategies

Supporting facts:

• Database interpreted to clients which are Asia-Pacific governments

• Businesses can draw information from the database

Topics: E-commerce, Data collection

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Increasing competition from global sites in the Asian marketplace

Supporting facts:

• Shares of global presence marketplace getting higher over time

• Domestic sellers have the opportunity to showcase their products online to a global audience

Topics: E-commerce, Global competition, Asian market

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Varied e-commerce readiness and accessibility among Asian countries

Supporting facts:

• In Korea, almost 100% population have internet access while in Laos, only 62% have internet access

• High traffic websites noted in more developed countries like Korea and Singapore versus smaller countries like Laos and Cambodia

Topics: E-commerce, Digital divide, Asia

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Foreign companies owning national marketplaces

Supporting facts:

• Share of national marketplaces owned by foreign companies in Asian countries discussed

• Can be influenced by regulations and laws in specific countries

Topics: E-commerce, Foreign investment, National marketplace

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Major e-commerce platforms dominating the market

Supporting facts:

• Shopee, Lazada, and Tokopedia capture nearly 50% of the overall marketplace in 11 countries

• These top three platforms are gaining larger market shares over time

Topics: E-commerce, Market dominance, Shopee, Lazada, Tokopedia

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Report

The analysis reveals several important findings regarding e-commerce in Asia-Pacific countries. Firstly, it is evident that there is a need to focus on countries where information on e-commerce is needed the most. Out of the 53 member states, the study chose 11 countries that needed this information the most.

These 11 countries were specifically selected because of their smaller size, indicating the importance of providing necessary information and support to smaller nations in the e-commerce domain. Furthermore, the analysis emphasizes the need for a comprehensive database to facilitate meaningful strategies in the field of e-commerce.

This database is primarily interpreted for clients, which are Asia-Pacific governments. It enables businesses to draw essential insights and information from the database, assisting them in making informed decisions and implementing effective e-commerce strategies. The presence of such a database is crucial for advancing e-commerce and achieving sustainable economic growth.

In terms of market competition, the study reveals that global websites are increasingly competing in the Asian marketplace. The shares of global presence marketplaces are consistently growing over time. This poses a challenge for domestic sellers as they face rising competition from international players.

However, it also presents an opportunity for domestic sellers to showcase their products to a global audience, potentially expanding their market reach. Another key finding is the varied level of e-commerce readiness and accessibility among Asian countries. For example, in Korea, almost 100% of the population has internet access, while in Laos, only 62% have access to the internet.

This digital divide is also reflected in the difference in website traffic between more developed countries like Korea and Singapore and smaller countries like Laos and Cambodia. These variations in e-commerce readiness and accessibility signify the importance of addressing inequalities in digital infrastructure to promote inclusive economic growth.

The analysis also explores the involvement of foreign companies in the ownership of national marketplaces in Asian countries. The extent to which foreign companies own national marketplaces can be influenced by specific regulations and laws existing in different countries. This highlights the need to carefully evaluate foreign investment in the e-commerce sector to ensure a fair and balanced market environment.

Lastly, the study highlights the dominance of major e-commerce platforms such as Shopee, Lazada, and Tokopedia. These platforms collectively capture nearly 50% of the overall marketplace in the 11 countries investigated. Furthermore, these top three platforms continue to gain larger market shares over time.

This market dominance raises questions about the concentration of power and its potential impact on competition within the e-commerce industry. In conclusion, the analysis of e-commerce in Asia-Pacific countries provides valuable insights. These include the need for information in countries where it is most needed, the requirement for a comprehensive database to drive meaningful strategies, increasing competition from global websites, varied e-commerce readiness and accessibility, foreign companies owning national marketplaces, and the dominance of major e-commerce platforms.

These findings are crucial for policymakers, businesses, and other stakeholders to understand the current state of e-commerce in the region and formulate effective measures for its growth and development.