This week, Hanne Melin of eBay’s Public Policy Lab spoke at an Internet Governance Forum workshop examining the technical, legal and social factors that are interconnected in building trust for online trade - and the specificities of this challenge for developing countries.  The workshop, titled, “Trust and Trade Across Borders: Shaping Future International E-commerce From Developing Countries,” also reviewed the barriers to the adoption of e-commerce, and how insufficient trust acts as a significant barrier in both developed and developing countries.  Representatives of the International Trade Centre, World Economic Forum, and Ivory Coast Postal System also presented at the workshop.    

Hanne explained how the online commerce platform is for small firms the most cost efficient way of building the trust necessary to grow sales in international markets. Larger merchants have the option to expand through omnichannel commerce, leveraging the physical store as an asset and arguably the most effective way of building trust. Expanding through physical facilities is not an option for small firms, which is why online commerce is so revolutionary as it affords international reach to firms previously confined to local markets. The online commerce platform then turns that reach into sales by enabling buyers to place trust in the seller through feedback systems and in the platform itself. This makes the (geographical, cultural and legal) distance between buyers and sellers less of an issue. Research shows that the cost of distances is at least 65% lower for international transactions over eBay compared to traditional trade. This translates into small businesses, almost irrespective of where they are located, expanding internationally and serving customers in on average around 30 different countries in a year. Nevertheless, the cost of trust is higher for online commerce than local commerce. This means that remote firms face higher costs, such as lower convenience and higher risk, compared to local merchants when marketing to the same customers – explaining large merchants’ omnichannel strategy. To support small, remote, global and independent firms and drive online commerce from developing countries, we therefore need to avoid placing additional costs on these firms, such as sales and consumption taxes in the destination market.

The Internet Governance Forum serves to bring people together from various stakeholder groups as equals, in discussions on public policy issues relating to the Internet. While there is no negotiated outcome, the IGF informs and inspires those with policy-making power in both the public and private sectors.  At their annual meeting delegates discuss, exchange information and share good practices with each other. The IGF facilitates a common understanding of how to maximize Internet opportunities and address risks and challenges that arise.