Reference no: EM132740794

Overcoming the Limitations of Electronic Commerce in the Developing World China

Residents in China's big cities have been gravitating toward natural or traditionally grown food after some recent food safety scandals. This has been a boon to small farms, including one operated by Li Chengcai (83 years old) and Cheng You-fang (76 years old). Although the couple can't read or write and speak only their local dialect, they sell their produce, including radishes, via electronic commerce to urban customers who are willing to pay extra for tasty, safe food. Here is how they became engaged in e-commerce. Zhang Yu, a 26-year-old woman whose official title is "young village official," opened an account with other young village officials on Sina Weibo (https://english.sina.com/weibo), a Chinese microblogging website. They blogged about the traditionally grown produce of their region. They then opened an e-commerce store, called the Young Village Officials' Farm, through Alibaba Group's Taobao (www.engtaobao.com) website to connect customers with local farmers. The service has customers in Beijing, Shanghai, and other cities, and about 10,000 followers on Weibo. After a customer makes a purchase online, Zhang visits the local farmers to verbally let them know. Zhang handles the logistics, shipping, and quality control of the produce. The Young Village Officials' Farm has been a success because of increasing interest in traditional farming, which Zhang blogs about with photos, and also because strict quality control ensures fresh goods. The online grocery benefits farmers, as well, because they can boost their income, which is an average of 600 yuan (US$99) a month, by about one third.

Nigeria Lagos, the biggest city in Nigeria, is known for its thousands of aggressive street vendors hawking everything from food to furniture. In fact, an old saying is that "You can outfit your entire home in a single drive across Lagos." Unfortunately, this situation has meant higher prices, less selection, and often traffic gridlock that can take hours to get through. Today, however, Nigerians can begin their shopping from home: the online marketplace Jumia (www.jumia.com.ng). But unlike most online retailers in the developed world, Jumia offers a hybrid system adapted to Nigeria and the customs of its 160+ million residents. Many people are wary of paying online, so Jumia allows shoppers to pay cash on delivery and it offers free returns. The model is so successful that it has spawned a rival, Konga (www.konga.com), which also delivers goods to people's doors and takes cash on delivery.

Jumia still has its work cut out for it, because it still needs to educate consumers on the safety of its service. Jumia has about 200 employees who travel to major cities, dropping in to public buildings such as businesses and churches, showing people on tablet computers how to place an order. Jumia is rolling out its own delivery fleet, about three quarters of which are motorbikes that can quickly cut through traffic congestion. The last scheduled deliveries are at 7 p.m., to help reduce the risk of robberies. Delivery is guaranteed within Lagos within just one day, while delivery to anywhere in Nigeria is guaranteed within five days. Items are delivered from its 8,300-square-metre warehouse in Lagos. After a year, Jumia had 1,500 employees. In addition to Nigeria, the company operates in several other African countries, including Kenya, Ivory Coast, Uganda, Egypt, Morocco, and South Africa. Although it has yet to make money, Jumia claims "a couple of million" dollars in monthly sales, which it says is growing quickly every month.

Questions

Describe how the Young Village Officials' Farm and Jumia are trying to overcome the limitations of electronic commerce. Provide specific examples to support your answer.

What are the advantages of electronic commerce to rural farmers in China (above and beyond increased income)?

What are the advantages of electronic commerce to the people of Nigeria?

How would the proliferation of mobile phones and tablets affect businesses in the rural areas in developing countries. (www.Inovatian.com is rolling out internet access to rural areas in a new form of 6G).