What makes e-commerce businesses more likely to succeed in developed countries & fail in developing countries?

E commerce businesses have undeniably succeeded in developed countries but :  

E Commerce is booming in developing countries and e commerce will unequivocally succeed in developing countries and will be a huge success in the next five years in developing countries.

It is just a matter of time and technology penetration.

The most popular ICT in developing countries and one which is progressing very rapidly in Africa and Asia, in particular India, is the mobile phone. Mobile phones are increasingly playing a larger role in the expansion of e-commerce in developing countries, especially among users without terminal connections.

In many developing countries, mobile phones are still mostly used for voice communication and texting. Recently, however, they are increasingly being used for data applications such as m-commerce and m-banking. In a number of African countries, notably Kenya, South Africa, Mauritius, Morocco, Nigeria, Tanzania and Zambia, mobile telephones are being vastly used to do personal banking services and e commerce is booming.

The future of e commerce and biggest market are undeniably the developing countries like India, China and Africa and the Arab world with more than1 billion new users expected in the coming years. 

The reasons for ecommerce to develop in Developed countries is very obvious and transparent reasons.There are few angles to look at from an enterprise point of view to enable monitise the opportunity for business,in terms of ecommerce.

• Wide range of alterations in standard of living.
• Change in Demographics / Income levels / Lifestyles.
• Change in Consumer aspirations.
• Change in consumption patterns and trends.

The balance of power continues to shift towards customers and away from companies. Yet companies have so much new avenues to improve differentiation and improve customer experiences.

•  Increasing Time poverty – A significant factor of emerging society

        I.   “Addinghours and minutes” into consumers daily schedule or “taking away” days in a                year are both challenges consumers face today. Resultant stress is impacting                              consumer habits.

        II.   People spending moretime in office , to & fro office, watching TV etc leading to limited                 time available for shopping and other activities.

      III.    Increasing EMPHASIS on reducing stress and time for routine activities and                     maximizing time   with families & friends.

• Convergence of Multiple Factors in life

v  Internet access via broadband.

v  High speed mobile networks.

v  Availability of mobile smart phones and tablets.

Creation of sizable “Consumption Class, ” who are short of time enabled by Internet may be the bottom line statement for developed countries to opt for consumption via the ecommerce route.

Having stated as described it is very obvious that ecommerce does not offer a differential in underdeveloped countries,where ecommerce is percived as a luxury beyond reach.The consumption in developing countries is not impacted by the time factor provoking a change of pattern in consumptio preferences of consumers in this respect .

The enerprenures in developing nations are also not impacted in this respect compelling them to invest in such differenciation.There is lesser scope or no scope for them to monitise through such initiatives.

Trust this note explains the question posted.

- Poor communications infrastructure

- limited access to the Internet due to limited access to computers

- Poor level of computer literacy among local populations

- Lack of tools for Intenet payments

- Ureliabl delivery system for the purchased goods

- Lack of supporting ligeslative system

1. The very 'need' to buy things online is less frequently felt in developing countries.
2. People generally splurge less on products since their per capita income is low, hence enjoy the shopping experience. They don't just want to buy a bag, they like the idea of saving up, going to a store and choosing the perfect bag.
3. The majority of people do not belong to the working class, hence there's more time to shop. In developing countries e-commerce does way better because of the lack of time. If I want to re-order a white shirt from Perry Ellis, I'll simply go online and order one.
4. Population in rural areas aren't tech savy.
5. The concept of online shopping is very new, hence it will take a while for people in developing countries to accept/like it.

Fact : e commerce is already big in developing countries.

1- IT culture

2- Commerce culture

3- Non reliable system

4- Bad services

Absence of good logistic services, online payment options and access to internet which is still in process in developing countries make difficult for online business to survive or offer.  Ecommerce business is not limited to just publishing products on website, it needs a complete set of online mediums to propogate such as social media and other ways as well.

The Evolution

E-commerce in developing countries is a hard to solve function of time!

(I will share my opinion below to keep the discussion alive. Please feel free to contribute your counter-arguments.)

While Mr. Dawood’s answer is very refreshing, optimistic & positive in future forecasting sense, it does not correspond with the present tense to which the question applies. Being sober in examining the status-quo, albeit somewhat negative, does not imply discouragement or absolute despair. It may rather entice proper identification of the problems at stake in order to bring about fast-paced change & foresee bottle-necks ahead of time.

Everyone speaks out of his/her in-country knowledge (nationallyor regionally), but developing countries vary in size, purchase power, technology adoption & most importantly in purchase psychology. By taking the majority of developing countries into consideration when addressing this, we are more able to provide a better picture. (In my analysis below, I exclude the GCC area for obvious reasons related to purchase power per capita & technological & postal delivery infrastructure)

1. Yes, I do think that e-commerce CAN be booming in developing countries in the coming years, but not in all of them; as a matter of fact, not in most of them.
2. And yes, I think that e-commerce CAN flourish in some countries, but it will not be before10-20 years, corresponding to other economic prognoses of GDP per capita growths & purchase power increases.
3. It will take much more than economic growth & population size, for developing countries to catch up with the penetration levels e-commerce achieved across the majority of populations of developed countries such as in North America, Western, Europe, Australia & Japan, now!
4. Spread of increased purchase-power in developed countries is far more equal (covering the majority of population figures) than in countries such as India, Brazil or China where the majority still is poor, and is more likely to have no PC or laptop or mobile (certainly not one for purchasing online). So population size, herein may be a relative or bluntly a trivial factor.
5. The buying-culture related & purchase-behavioural patterns (or “barriers” to e-commerce) are much more difficult to break than technology barriers. Westerners for instance are fully-accustomed to fixed-prices, which e-commerce all is about, even before the advent of e-commerce, but are Indian, Chinese & Africans willing to abandon their long-standing tradition of informal price bargaining behaviour when buying goods that quickly or easily? Maybe yes but not now!
6. E-commerce is home or office delivery related. Most developing countries have no (sound) postal system for letters, let alone parcels or sensitive cargo!
7. E-commerce followed the full-adoption of internet banking which is still in its womb, lagging behind, not widely used or even known in the majority of developed countries’ populations.
8. Mobile based ecommerce is still viewed with scrutiny & distrust in developed countries, let alone developing countries. For Example: Internet banking through internet only became greatly trusted in the Netherlands (a pioneer) after3 years of intensive testing & pilotting! People trust viewing their accounts online but not yet making transactions that easily. So, mobile-internet penetration is NOT a qualified vehicle for e-commerce yet, or at least not a strong benchmark or a criterion for evaluating e-commerce penetration!
9. E-commerce is a home-based activity associated with (and dependant on) safety, in the comfort of home (or office) land network, enjoying the largeness of images of product displays & the clarity of product descriptions in their wide-screens, before making a purchase.I have never considered buying through the phone for this simple reason!

In conclusion, I liked Mr. Fazal’s notion of “time and technology penetration” as key factors in facilitating the advent of e-commerce in the less developed world. But when speaking in developing countries’ terms & contexts, achieving great advancement in e-commerce-related technology, penetration & awareness is not a smooth function of time. It’s a hard (to solve) function of time!

Not all developing countries have the matching resources, the proper policy for allocation of such resources or the outstanding vision to invest in most important economy-enhancing infrastructural developments. I am a great believer in e-commerce success, but my belief stems from my acknowledgement of the barriers to it & my interest in understanding how the best on-time-remedy can be made without negligence of powerful economic, political, cultural, infrastructural & behavioral aspects that go beyond my optimistic views, and put serious question marks on the question: when will ecommerce flourish in developing counties?

Thank you for indulging my lengthy answer. Please share your views & counter-arguments.

E Commerce is booming in developing countries and e commerce will unequivocally succeed in developing countries and will be a huge success in the next five years in developing countries.

It is just a matter of time and technology penetration.