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SMB

SMBs in developing countries surge online

This is a contributed piece by Laurent Gibb, CEO, BaseKit

Internet penetration around the world is rapidly gaining ground and is no longer the preserve of the developed world. A modest 40% of the global population has access to the internet today but in 1995 it was less than 1%.

Some developing countries already have relatively high levels of internet penetration and over the past few years India and China for instance, have experienced double-digit growth in terms of penetration, however enormous growth potential still remains.

In India for example, an estimated 500 million people will have internet access by 2017 and with a population that is over 1.2 billion there’s still plenty of headroom.

Internet-connected smartphones and other mobile devices are driving this growth and as more and more people become digitally connected opportunities for business and local entrepreneurship are burgeoning. 

The scene for a thriving online domestic marketplace has already been set by the likes of China’s Alibaba which dominates its home market and India’s Snapdeal, the nation’s largest online marketplace with 20 million users. Other regions have also cemented a digital way of doing things.

The Bangladeshi Dutch–Bangla Bank gained over a million mobile-payment subscribers in just ten months. While the Standard Bank of South Africa reduced its new customer acquisition costs by 80% through internet connected mobile devices.

For small businesses and entrepreneurs in developing economies this means the road for expansion and growth has already been chalked out. In turn this led to the steady development of localised ecommerce services.

However the brake effect until recently is the premium price for building a website.

This is similar to the situation that existed in the developed world some years ago, before the web hosting industry gained a foothold, but is changing and is driven by local telcos who are now offering website building and hosting alongside traditional services to SMBs.

For instance, Philippines-based Globe, the country’s leading mobile brand has a service called myBusiness marketplace for SMBs which offers a raft of services to boost its customer’s digital presence including broadband Internet access.

It has just recently incorporated the BaseKit site building service into its myBusiness platform allowing business customers who sign up to a new mobile subscription to receive a predesigned website.

The move reflects a surge in demand from business owners who need a web presence and whose communication needs have gone digital as internet connectivity penetrates the country even deeper.

The Philippines has approximately 45 million internet users, a year-on-year growth rate of 10% and about 40% penetration in terms of population. This is also leading to a greater demand for website hosting, a situation reflected across many emerging economies.

Clearly from the business owner’s perspective the move to online is a natural step. First of all the concept of using websites to buy and sell, if it hasn’t already gained traction, is certainly in the process of doing so as digital dealings become part of everyday life evident in growing internet usage populations.

The concept of an online ‘shop front’ is a no brainer; there is no rent to pay or salespeople to hire, and there are fewer logistics requirements. It’s hardly surprising there is a rush to DIY website builds in developing economies.

As the surge to internet usage gathers pace the early website adopters are carving out a strong position; the logistics of selling online are easier than opening a store, and local people know which products to offer, and how to market and price them.

It’s this knowledge that is driving the appeal of DIY website builds for local businesses and also this knowledge that is barring entry for larger cross-border businesses that ironically find it harder to compete at this local level.

Many localised ecommerce services or web-based businesses offer cash-on-delivery payments for instance. We may think of it as unusual but it reflects local ways of doing business and it acts as a barrier for larger organisations. All of which provides even greater drive for local businesses to go online – and of course they are doing so at a significant pace.

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