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Journal Article

E‐commerce for Developing Countries: Expectations and Reality

Published on 1 January 2004

Business-to-business (B2B) e-commerce has been heralded as a radical change in the way that firms trade with one another.

In the late 1990s, B2B e-commerce applications were being promoted as tools that would facilitate the access of producer firms in developing countries to globalmarkets. This vision of B2B e-commerce was driven by the idea that the internet provides an opportunity for firms to trade directly with each other, buying and selling products online, bypassing intermediaries, and gaining much easier access to global markets. The internet would enable firms in developing countries, including small and medium-sized enterprises (SMEs), to find new customers quickly and cheaply: ‘the next vendor is only a mouse-click away’ (UNCTAD 2000: 18).

These expectations were not based on hard evidence of B2B e-commerce use in either developed or developing countries. An analysis of B2B e-commerce in practice, based on a study of internet-based “e-marketplaces” and the use of the internet for business purposes by garments and horticultural firms in three developing countries – Bangladesh, Kenya and South Africa – leads to a very different conclusion.

Expectations prevalent in e-commerce-related business and in development agencies during and even after the dot.com boom have been open to question. There is little evidence that firms are using the internet to find new customers and suppliers, or to buy and sell goods through e-marketplaces. Nevertheless, the internet is becoming an important business tool. It is becoming an important means of managing and coordinating business between firms with established business relationships. It is the existing customer who is a “mouse-click away”.

This use of the internet is not the result of business technophobia or the inadequacies of the supporting business environment for B2B e-commerce. The pattern of business use of internetbased applicationsis created by the communications advantages of the internet and its enormous disadvantages in creating trust between firms. E-marketplaces have not been able to develop trust mechanisms, and the costs of transacting business online remain very high.

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This article comes from the IDS Bulletin 35.1 (2004) E‐commerce for Developing Countries: Expectations and Reality

Cite this publication

Humphrey, J., Mansell, R., Paré, D. and Schmitz, H. (2004) E-commerce for Developing Countries: Expectations and Reality. IDS Bulletin 35(1): 31-39

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Authors

Image of John Humphrey
John Humphrey

Professorial Fellow

Image of Hubert Schmitz
Hubert Schmitz

Emeritus Fellow

Robin Mansell
Daniel Paré

Publication details

published by
IDS
journal
IDS Bulletin, volume 35, issue 1
doi
10.1111/j.1759-5436.2004.tb00106.x

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