E-commerce for exporting garments from South Africa: "digital dividend" or leap of faith?

From:: Department for International Development
Published: 1 January 2003

Country:: South Africa
Document Type:: Working Paper
Theme:: Social Change
Authors:: Moodley, S., Morris, M., Velia, M.

Abstract

Despite the \"optimists\" vigorous support of e-commerce for developing country producers, there remains a gap in our current knowledge of the relationship between e-commerce and global market access. The paper seeks to address two broad, albeit related, research questions, viz.: are leading export-oriented garment producers in South Africa using B2B e-commerce to: (1) expand their reach into new markets, and (2) prepare and complete transactions with overseas buyers? The empirical research undertaken for this study was based on 28 firm-level interviews, and nine personal interviews with industry experts. No attempt was made to achieve a statistically random sample of firms in this exploratory study. However, every effort was made to capture the full range of characteristics of the top exporting firms. The results of this study appear to contradict the key propositions of the standard model of e-commerce. There was no evidence to support the view that e-commerce is: (1) being used for completing inter-firm commercial transactions; (2) allowing firms to bypass \"middlemen\" in the value chain; (3) enabling/facilitating international trade by reducing coordination costs; and (4) transforming firms' business models. Nor is there any evidence to support the view that transaction-oriented B2B e-marketplaces are being used to any great extent by the firms. The empirical evidence suggests that e-commerce is not having a significant impact on the business models of the largest South African exporting garment firms. If garment exporting firms were to adopt e-commerce for fully integrated transactions, this would entail a leap of faith. The market is not demanding it, and the payoffs of transaction-oriented e-commerce and e-marketplaces are regarded as being uncertain. Moreover, without active encouragement from buyers, many suppliers are likely to choose to wait.

Citation

Moodley, S.; Morris, M.; Velia, M. E-commerce for exporting garments from South Africa: "digital dividend" or leap of faith? (2003) 58 pp.