Caribbean Ecommerce Is Valued At US$5 Billion, But Online Payments Is Still A Problem

by Franz Weathers

Ecommerce, also known as electronic commerce or internet commerce, refers to the buying and selling of goods or services using the internet, and the transfer of money and data to execute these transactions.

According to research based on data gathered from Statista, the Caribbean B2C e-commerce market is valued at US$5 billion annually and is growing at approximately 25% a year. Although this market is huge and growing, not all businesses can participate because of the cumbersome nature of online payment integrations in the region, in layman’s terms; businesses can’t accept payments online.

“..businesses can’t accept payments online.”

BRICK & MORTAR VS E-COMMERCE

Running a brick and mortar retail store has always been hard, it comes with;

1. Inventory: Storing items for sale.

2. Full-time salaries: Paying full-time staff regardless of sales.

3. Rent: Usually high rent payments and other bills for prime locations.

Among other constraints, but e-commerce businesses (online stores) on the other hand may find it much easier with advantages like:

1. Remote staff: Hiring remote staff to manage their stores, these workers are usually contracted based and have flexible working hours.

2. No Rent: Pay little or no rent as these businesses in most cases can be fully managed from home or shared workspaces.

3. No Inventory: many regional/local e-commerce companies operate as freight forwarders or drop shippers, so they’re facilitating the importing of goods from other US-based retail e-commerce companies like Amazon.

According to data provided by the Jamaica Customs Agency, the change in buying habits — while small — has already begun to impact the island, with several entrepreneurs capitalizing on the trend.

In 2015, the number of courier companies using the agency to facilitate international delivery, such as MailPac and ShipMe, stood at seven. But that number has nearly increased by three times to 20 companies at the end of May. These figures were reported by the Jamaica Observer in 2017 and has significantly increased since then.

THE DEATH OF CARIBBEAN RETAIL

Death is a strong and ominous word but have you seen what’s happening in the United States?

Brick and mortar retailers are dropping like flies in the US and they’re not even facing some the basic problems that some regional businesses are experiencing like accepting payments online. So the largest US based retailers are flooding the region with their products, while regional businesses can’t even accept payments online.

ONLINE PAYMENTS

In writing this article, I am choosing to not state all the ways payments don’t work in this region, I will say that the best online service providers like PayPal and Stripe apparently don’t yet support the major regional banks. So, if a business chooses to do the fast and cheap way by integrating PayPal for example in their online store to accept payments, then they will have a very hard time repatriating those monies to their local business account.

One option would be to open a bank account in the US to send money from one’s Paypal/Stripe account, but then that Caribbean business would have to be registered in the US to legally operate in that way. So my question is: why not just register your online business in the US (we can do this as a C-Corp which was designed for non-citizens) where we would have first world payment services which then allows us to compete? There are tons of services that help with US incorporation for international businesses, like LegalZoom, Clerky (Y Combinator backed) or Atlas by stripe (see video below).

My first funded startup WanderSafe is incorporated (registered) in the US, I’m not a citizen of the US and I’m still a shareholder. So it can be done.

COMMUNITY FEEDBACK

Now, I know there should be much easier ways for regional small businesses to sell online instead of registering in another country. There have also been many recent entrants in the regional payments services space, but none that I’ve seen that matches the ease of use and integration like PayPal/Stripe.

So, instead of me trying to research them all, I’m hoping that this article will drive conversations around the best way(s) for regional businesses to exploit this US$5B industry. Please feel free to let me know in the comments section below.

Oh and by the way, the other major problem regional retailers are facing is the lack of an efficient logistics infrastructure. This is actually the problem my team and I have chosen to tackle and we’re hoping to close our first round of funding soon! #SmartLogistics