Women and E-Commerce: The $300 Billion Opportunity
Closing the gender gap on online platforms means being able to put billions of dollars into the wallets of women entrepreneurs and exponentially grow global e-commerce markets. This blog is authored by Stephanie von Friedeburg, senior vice president of operations at the International Finance Corporation (IFC).
The COVID-19 pandemic has shone a spotlight on the potential, and the limitations, of the digital economy. For companies large and small, success in business increasingly depends upon leveraging online sales.
But technological advances do not always decode into advances in equality for women, who persistently lag behind men when it comes to access and use of the digital marketplace. At IFC, our goal is to ensure that disruptive technologies drive economic development for everyone and unsettle existing practices. One sector that has long been overlooked as a stimulus for development is e-commerce.
The future of e-commerce is in emerging markets. Africa’s e-commerce market value is projected to quadruple between 2020 and 2030. In Southeast Asia, sales on e-commerce platforms tripled between 2015 and 2020 and are expected to triple again by 2025.
Our new research looks at e-commerce across three countries in Africa (Kenya, Nigeria, and Ivory Coast) and two in Southeast Asia (Indonesia and the Philippines) and finds that this growth could be, unsurprisingly, even higher if women entrepreneurs participated at rates equal to men on these platforms. This potential makes it all the more important for economies to close gender gaps.
Women and e-commerce in Africa and Southeast Asia: Current trends
The newly published reports, Women and E-commerce in Africa, and Women and E-commerce in Southeast Asia, leverage data from Jumia and Lazada, two of the largest e-commerce platforms in Africa and Southeast Asia, respectively. The reports are the first to demonstrate the extent of women’s participation in e-commerce and how online platforms can benefit women business owners. One key finding is that closing the earnings gap between male and female vendors by 2025 would yield $14.5 billion in additional market value in Africa and $280 billion in Southeast Asia by 2030—or a gain of almost $300 billion between the two regions, equivalent to giving everyone on the planet approximately one month of internet.
There are two ways to accomplish this:
First, increase the number of women selling online. Some markets, such as Indonesia and Ivory Coast, show low levels of female business ownership, both online and offline. One key pathway would be to recruit women who use informal social commerce tools, such as WhatsApp or Facebook Messenger, and help them transition to formal e-commerce platforms where they can access wider markets.
Second, increase the sales of women-owned businesses. Even when women are active sellers on e-commerce, they are more likely to have smaller firms and fewer employees, and their average sales are lower than those of men. COVID-19 has worsened this disparity. For instance, the report finds that, in Africa, women’s sales dropped seven percentage points, while men’s sales rose by the same amount. Unfortunately, this finding is consistent with a growing body of literature showing that women-owned businesses, both online and brick-and-mortar, have been disproportionately impacted by the pandemic. We cannot afford for this to become the norm.
Four actions e-commerce platforms can take to close the gender gap
Increasing the number of female entrepreneurs on e-commerce platforms, as well as their sales on these platforms, will require actions such as inclusive connectivity policies, designing financial services for women, and building women’s digital skills. IFC’s research also finds that e-commerce companies can lead the way. The reports identify four key actions for e-commerce platforms to recruit female vendors and to boost their sales and profits:
- Target female entrepreneurs for training: Women across markets were more likely than men to report that they valued the business training provided by e-commerce platforms, even though women and men reported similar ratings for the platforms’ ease-of-use.
- Design financial technology offerings for women: Female entrepreneurs face a global financing gap of nearly $1.5 trillion. Many platforms are rolling out financial technology offerings for loans and payments, but these do not always reach women. Our research found that just 7 percent of women in Africa have leveraged e-commerce-platform financing. Platforms can use vendor sales histories to provide services to entrepreneurs who might otherwise not qualify for loans due to lack of collateral or formal credit histories.
- Incentivize uptake of value-added services: In Africa, we found that women were less likely than men to use paid platform services and advertising. Training women entrepreneurs on how these services influence product ranking and sales, and encouraging targeted uptake, can help equalize sales.
- Collect sex-disaggregated data: IFC’s research benefited from unique access to data from Jumia and Lazada as well as independent surveys of female and male vendors. Implementing the recommendations will require regular monitoring of key sex-disaggregated indicators on seller recruitment, preferences, and performance.
COVID-19 has largely reversed women’s early successes in e-commerce, with women experiencing more losses than men in every market studied. E-commerce platforms have a major role to play in accelerating the growth of all businesses, while also mitigating the disproportionately negative impacts of the pandemic on female entrepreneurs. As the research also shows, the nearly $300 billion that can be added to the e-commerce market in just five years could conversely mean just under $50 billion lost for each year gender gaps go unaddressed.
Watershed moments to transform women’s economic status globally are few and far between, but COVID-19 and the post-pandemic recovery offer one of these rare and critical junctures. We cannot afford to miss this opportunity for development and an equitable future for all.