The report that over $1 Billion was spent on foreign e-Commerce, over the last 2 years, will hold the attention of many in 2015. This may result in more decisive action to establish the foundation for a local e-Commerce industry. With an annual market size of over $500 Million no one can argue that e-Commerce in Trinidad and Tobago is not big business.
The $1 Billion spent on e-Commerce does not represent consumer purchases only. Trinidad and Tobago has a large distribution industry that imports goods for retail. Also, businesses purchase goods and services online for their consumption. Hence, it stands to reason that this figure is a combination of consumer purchases and purchases by businesses. That is, P2B and B2B transactions.
Many businesses use credit cards to purchase from foreign suppliers. Credits card payments are faster and cheaper than wire transfer payments. In addition, many B2B transactions are conducted online.
E-Commerce sales to foreign sites in 2013 and as at November 30, 2014 were $530 Million and $570 Million, respectively. This increase is expected to continue in 2015, especially as delivery charges fall. Skybox couriers are expected to eliminate the fuel surcharge in the wake of falling oil prices.
The $1 Billion has caused many sleeping giants to stir. Over the Christmas season one major local retailer was advertising lower prices, compared to buying online and paying shipping charges. This could have been the first open admission of what has been taking place for a long time. Local retailers are losing sales to foreign competitors. Now the situation is becoming more acute. For example, many persons are now buying all their Christmas gifts online. In the past, that money would have been spent at the local stores.
Over the past few years, there has been a slow recognition to the impact of online sales in the form of price adjustments. When the barrier to purchasing from abroad was high there was a big difference between the local and foreign cost of the same good. Now that the barrier has fallen with online purchasing, the difference has dropped significantly for some goods. In some instances, the local prices are comparable when one considers shipping charges and the convenience of getting it now. Personally, I know of one item that is cheaper to buy locally than on the internet.
The stark reality of this propensity to shop online is that retailers will have to change their business models in order to compete. Notably, will be lower markups, better service and greater efficiency. To boost sales, many may have to offer online shopping as an additional revenue segment. At least two major retailers have done so already.
If large retailers fail to command the online shopping space then the smaller retailers may seize the opportunity. As suitcase traders had once undermined the market of many large retailers, small retailers that sell online may do likewise. Many small retailers already have an online customer base, for example, on Facebook and on their websites. Many do brisk business using these channels and only sell online. In this way, they have first mover advantage online over many brick and mortar retailers.
As businesses look with gapping mouths and wide eyes at the $1 Billion many are wondering how can they get a slice of the pie. As they begin to see e-Commerce as the way of the future, 2015 could certainly be the tipping point for local e-Commerce in Trinidad and Tobago.
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