Talking About E-Commerce (and How It Impact ASEAN)

John Maxwell once said that change is unavoidable, but growth is optional. Nowadays, e-commerce does drive change, especially in the business world. It becomes part of the crucial step for the company's growth. 

Here are some of its positive effects. First, e-commerce saves energy. E-commerce is fit for the environment because of (at least) three reasons. It saves fuel by paperless billing, minimized infrastructure, and costumers do not need for driving. Second, e-commerce reduces costs. The company possibly does not require a physical store and other personnel expenses, such as document and mail preparation, telephone calls, reconciliation, over time, data entry, and supervision expenses.

The company which has not taken this step commonly is a traditional company. Perhaps, they do not brave enough to innovate and use new technology. However, no matter how potential e-commerce is, there is no doubt that it also has adverse effects. 

Despite its increased popularity, e-commerce faces significant security threats. After buying, customers leave their purchase information, such as the credit card number, making it easier for hackers to exploit and lead to cybercriminals. Information of e-commerce's customers is vulnerable to making fraudulent purchases or being stolen and sold on the dark web.

Furthermore, during this pandemic, e-commerce's expansion is accelerated towards new customers, firms, and types of products. It has equipped customers with access to various products from the safety and convenience of their homes. It also has enabled companies to continue operation despite contact restrictions and other quarantine measures. Hence, in my judgment, e-commerce allows businesses to grow, yet there are still some risks to be aware of. 

Nonetheless, technology disruption in e-commerce might have replaced human capital. Rationally, the number of unemployment might grow up. Due to the World Bank data, less than 20 percent of jobs are predicted to disappear. McKinsey Global Institute's recent study also estimated that in about 60 percent of occupations, at least one-third of constituent activities could be automated by 2030.

However, technological change does not look to have led to a massive rise in joblessness in the aggregate. Global employment continues to expand and the labor force, causing global unemployment rates down to 5.6 percent. Although there will be sufficient job creation to compensate for technological unemployment, realizing these opportunities depends on ensuring that workers are competent in moving to newly created jobs. In short, a more significant challenge is how to handle this transition.

Smaller companies, such as small and mid-size enterprises (SME) and micro, small, and medium enterprises (MSME), can benefit disproportionately from e-commerce opportunities. It is understandable that the electronic markets' dynamics could create conditions that might impede SMEs' and MSMEs' involvement, relating to network accessibility, connectivity, technical standards, institutional arrangements, and the market power of well-known brands that might have anti-competitive impacts or pose obstacles to entry. 

Nonetheless, the Internet can make size irrelevant. The Internet can level the competitive playing field by enabling SMEs and MSMEs to extend their geographical reach and secure new buyers in ways formerly restricted to much larger firms.

Still, the government is needed to encourage and assist SMEs and MSMEs in adopting e-commerce. Although business usually leads the Internet and e-commerce while the government only plays a minimalist role, government agencies unquestionably are a well-established factor for organizational innovativeness. 

Besides, the government has a responsibility to pursue broad societal goals and a critical role in developing technology for e-commerce. The past three decades have shown that most significant ICT innovations result from government-funded research or government programs. Government procurement and demonstration projects also play an essential part. 

While governments should not excessively intervene in this area, neither should they be spectators. Governments need to work closely with the business to maximize the potential of e-commerce and help SMEs and MSMEs to digitalize and innovate.

In ASEAN, e-commerce has expanded its value almost six times in just four years, rising from US$9.5 billion in 2016 to US$54.2 billion in 2020. As Covid-19 affects consumers' behaviors and accelerates the transition to online shopping, e-commerce has become an effective channel.

This potential should not be wasted by preparing a strategy to maximize the prospects. At the regional level, ASEAN leaders have signed the e-ASEAN Framework Agreement and announced the strategic goal to promote a productive ASEAN's e-space. It would be achieved by enhancing e-commerce competitiveness, reducing the digital divide within and amongst individual AMS, promoting partnerships between the private and the public sectors, and liberalizing trade and investment in e-commerce goods and services.

With the support of the government, such as the ASEAN leaders, and the spirit of the SMEs and MSMEs to get ready and adopt e-commerce, hopefully, e-commerce will be beneficial for everyone and can chart a path toward economic recovery during this pandemic.

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Notes: This is my second-week commentary paper for AYIEP 2021 and got selected to be presented.