By Soumaya Hamzaoui, Co-Founder and COO of RedCloud
The face of global commerce has changed beyond recognition over the last decade. While large online retailers like Amazon and Facebook have profited from the switch to digital trading, they have also squeezed their smaller competitors in emerging markets and developing economies (EMDEs) out of the market altogether.
That has resulted in a hugely unfair playing field, where, in 2022, Amazon alone took up 37.8% of the retail ecommerce market, as per a report by Statista. By denying millions of retailers and distributors access to the goods they need and setting up their own distribution networks, these online giants are choking their supply lines and ability to trade.
Worse than that, though, they are preventing them from accessing the essential data needed to make a more efficient trading system. Without it, these small businesses can only speculate as to the best way to distribute their product.
As they can’t get access to ecommerce, these firms are having to resort to continuing to trade using cash only. That’s hugely inefficient and restrictive, for several reasons.
The first is that it’s extremely slow-moving and costly to handle. That’s a huge problem, particularly now, when companies are trying to reduce their expenses and keep going on ever-thinner margins in the midst of tough trading conditions.
Added to the requirement to use cash, because these enterprises are locked out of traditional banking and finance, and, therefore, have no trading profile, they can’t borrow the finance needed to invest in and grow their business. But there’s even worse to come.
With no access to digital trading, these businesses have no data or insight into their customers. They can’t keep track of which goods are being sold, who is buying them and even who their merchants are.
The only alternative is to carry on relying on inefficient and outdated supply chains that are manually-driven and disconnected. These clunky and cumbersome offline networks are also often subject to external shocks.
For those lucky few that can get access to ecommerce, then there’s the further problem of adopting the technology. It’s a steep learning curve for many who are reluctant to change and unsure about the new technology.
Open commerce is the answer
By technology and finance providers granting these traders access to an open commerce platform, the game can be changed. Being able to bank and trade online opens up a whole host of possibilities and opportunities for them.
Moving away from cash handling, which is fraught with risks such as fraud, financial loss and theft, they can harness the use of digital payments to gain far greater efficiencies in their trading operations. Real-time data also enables them to better forecast demand, thereby, being able to manage their inventory more effectively and design new digital marketing campaigns to win new customers.
Such insight will also help them to see how they are doing relative to their competitors and pick up on key emerging patterns and developments in the market that they can then capitalise on or mitigate against, depending on whether they are favourable or adverse. Thus, they can devise new products and strategies to meet these new trends.
By connecting manufacturers, distributors and merchants, open commerce improves overall supply chain efficiency too. It also enables them to trade whenever and wherever they are in the world and become more visible to a wider range of potential customers.
New way ahead for ecommerce
Moving forward, small businesses need to combine these digital trading capabilities with the long-standing trust and reputation they have earned with their customers over their years in business in order to find new opportunities and make the most of the sales that they are afforded. They must also use it to grow their business and extend their global reach.
Only then will they break the monopoly held by the online retail giants and ensure a global trading system that is fair for all, not just the select few. With retail ecommerce sales estimated to hit $8.1 trillion by 2026, that’s a huge opportunity and it’s, therefore, vital that EMDE businesses can access digital trade moving forward.
About the author
Soumaya Hamzaoui is the Co-Founder and COO of RedCloud Technology. Her role includes overseeing operations and product strategy, and heading the design, business development and customer engagement teams. Among her biggest achievements are working on the development of Orange Money in Africa and supporting industries such as banking, transport and telecommunication in their transformation towards new technologies. She has a 10-year background in software and telecommunications as well as extensive experience of product management in financial services.