Covid-19 triggered the digital and e-commerce turning point

Businesses and consumers that went digital helped mitigate the economic downturn caused by the pandemic

Kampala, Uganda | THE INDEPENDENT | Amid slowing economic activity, Covid-19 led to a surge in e-commerce and accelerated digital transformation.

As lockdowns became the new normal, businesses and consumers increasingly went digital, providing and purchasing more goods and services online, raising e-commerce’s share of global retail trade from 14% in 2019 to about 17% in 2020.

These and other findings are showcased in a new report, COVID-19 and E-Commerce: A Global Review, by UNCTAD and eTrade for all partners, reflecting on the powerful global and regional industry transformations recorded throughout 2020.

During release of the report, UN General Assembly President Volkan Bozkir said the trend towards e-commerce is likely to continue throughout the recovery from COVID-19.

“We need to recognize the challenges and take steps to support governments and citizens as they continue to embrace new ways of working,” he said.

UNCTAD acting secretary general Isabelle Durant said, “businesses and consumers that were able to go digital have helped mitigate the economic downturn caused by the pandemic. But they have also sped up a digital transition that will have lasting impacts on our societies and daily lives for which not everyone is prepared,” she said, adding: “developing countries should not only be consumers but also active players and thus producers of the digital economy.”

Some benefit, others fall behind. The findings show the strong uptake of e-commerce across regions, with consumers in emerging economies making the greatest shift to online shopping. But in many of the world’s least developed countries, consumers and businesses haven’t capitalized on pandemic-induced e-commerce opportunities due to persistent barriers.

These include costly broadband services, over reliance on cash, lack of consumers trust, poor digital skills among the population and governments limited attention to e-commerce.

“Countries that harness the potential of e-commerce will be better placed to benefit from global markets for their goods and services in this digitalizing economy, while those that fail to do so risk falling behind even further,” said Shamika N. Sirimanne, UNCTAD’s technology and logistics director.

One of the challenges the report says, is that the pandemic has mostly benefited the world’s leading digital platforms. Many solutions being used for e-commerce, teleworking and cloud computing are provided by a relatively small number of large companies based mainly in China and the United States.

“The risk is that the huge digital divides that already existed between and within countries will only worsen in the wake of the pandemic,” said Torbjörn Fredriksson, UNCTAD’s digital economy head.

“The result will be even deeper inequalities that would threaten to derail progress on the UN Sustainable Development Goals,” he added.

Most governments prioritized short-term responses to the pandemic, but some have also begun to address longer-term strategic requirements for recovery. Several governments in developing countries have intervened to protect businesses and individual incomes, action points for inclusive e-commerce.

The report maps out actions that should be taken by three stakeholder groups to ensure more inclusive benefits from e-commerce. It says governments need to prioritize national digital readiness so that more local businesses can become producers in the digital economy, not just consumers.

According to the report, building an enabling e-commerce ecosystem requires changes in public policy and business practices to improve the digital and trading infrastructure, facilitate digital payments and establish appropriate legal and regulatory frameworks for online transactions and security.

Countries also need better capabilities to capture and harness data, and stronger regulatory frameworks for creating and capturing value in the digital economy, the report says.

The international community needs to find new, bold and smart ways to work with governments and the private sector to leverage these opportunities. Better dialogue and collaboration are needed to identify new pathways for the digital economy.

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