Today, small businesses – even one-person “social sellers” – can run as global entities thanks to the growing availability of inexpensive digital tools that allow them to source, ship, deliver, pay, collect and virtualize other key aspects of their operations. The fast-developing e-commerce ecosystem, which includes marketplaces, payment gateways and online logistics, is helping to reduce barriers to trade across borders.
Export participation rates for traditional small businesses (those that typically do not sell online) range between 2-28% in most countries. In contrast, 97% of internet-enabled small businesses export, according to the World Trade Organization.
Why is this a big deal? Because firms participating in global value chains see the strongest gains in productivity, income and quality of employment. A report by the World Bank points out that in developing countries like Ethiopia, firms that are part of global value chains are twice as productive as other firms. And in a broad number of emerging markets, companies that take part in global trade are also more likely to employ more women than others with more traditional, male-dominated business models. Female participation in the labour market, in turn, correlates strongly to societal gains in health, education and overall prosperity.
Put simply, e-commerce is creating economic employment opportunities for new sets of players. Amazon claims that the 1 million small businesses selling on its platform have created 900,000 jobs in the process. Alibaba’s Taobao, one of the largest e-commerce platforms in China, has 3,200 “Taobao villages” in rural areas where a significant percentage of the village is engaged in e-commerce transactions. No wonder then, that some non-governmental organizations and think tanks are touting e-commerce as a model for developing rural Africa.