E-COMMERCE FOR THE UNREACHED COMMUNITY Ashir Ahmed Department of Advanced Information Technology, Kyushu University, Fukuoka, Japan Global Communication Center Project, Grameen Communications, Dhaka, Bangladesh Md. Asifur Rahman System LSI Research Center, Kyushu University, Fukuoka, Japan Takuzo Ohsugi E-JUST Center, Kyushu University, Fukuoka, Japan ABSTRACT Most people at the BOP (base of the economic pyramid, the largest but the poorest community in the world comprising 69% of world population) do not have access to e-commerce services. The way e-commerce is designed and practiced today does not enable their participation. The reasons are: their purchasing power is low, they do not have any means to make online payments, and there is no infrastructure to deliver the purchased items to their doors. To include these 4 billion people, we propose an e-commerce framework by engaging MFI resources and our recently developed ePassbook system. This paper shows how the BOP community can enjoy the benefits of the e-commerce service by using the proposed model. The advantages of making e-commerce available to the BOP are discussed, in addition to the challenges involved in implementing the model. KEYWORDS ICT, BOP, microfinance, e-commerce, social services, ePassbook 1. INTRODUCTION E-commerce over the Internet has been in practice for more than a decade. E-commerce enables people to purchase products from a remote place at any time of the day and get the desired products delivered to their doors. It saves time, money and labor. A product seller can upload the product information on the web and can breach the boundaries of the local market to reach the customers on a global scale. A customer, on the other hand, can search for the desired product in a much more extensive selection space, and find a suitable product. In this way, e-commerce brings benefits for both the buyers and sellers as indicated by the trend in e-sales. From 2002 to 2007, retail e-sales have increased at an average annual growth rate 23.1%, compared with 5.0% for the total retail sales in United States 1. In order to purchase a product through a web-based e-commerce service, a customer needs access to the Internet and an online payment mechanism, typically a credit card. Presently only 26.6% of world population has access to the Internet 2 and 16.42% hold a credit card (this figure is assumed from the fact that 3.3 billion cards were issued globally and on an average each individual holds 3 credit cards 3,4). How about the remaining majority of the population? Do they not have any interest in participating and enjoying the benefits of e-commerce? These unreached are the 4 billion people at the BOP 5, comprising 69% of the world population shown in Fig.1. Despite their low income and limited purchase capacity, they make frequent purchases within their limited spending power 6. According to 5, there is money at the BOP and their purchasing habits mean that they actually pay more for certain items than wealthier customers. This BoP penalty is the consequence of local monopolies, inadequate access, poor distribution and strong traditional intermediaries. In this article, we introduce e-commerce system to this unreached community. Our model utilizes the MFI resources to act as an intermediary between the supplier and the consumer. In Bangladesh, around 20 million people representing BOP have access to micro-finance institutions (MFI) 7. They carry out financial transactions in a regular basis with their associated MFIs. An MFI member not only borrows money from the MFI but also maintains a savings account. The accumulated savings of the 8 million Grameen Bank members is around 1.2 billion US dollars 8. An MFI officer meets 300-500 members (clients of MFI) once a week. A list of desired products from the members can be compiled by an MFI officer and a bulk purchase request can be handled on behalf of the members. It can be assumed that MFI officers have access to the Internet and know how to operate a computer. The members can withdraw their savings to purchase their daily needs such as soap, shampoo, rice, wheat, salt, and spices. They can receive the same product at a cheaper price through e-commerce. 8.3 million members in Grameen Bank alone have 30 million family members. If we consider soap as a product and one family consumes at least a piece of soap per month, 8 million pieces of soap per month will be the projected market size. An MFI like Grameen can make a business agreement with a soap producer ensuring 8 million soap purchases per month. The soap producer would find it viable to offer a different business plan for such a giant pre-paid customer. If we include other two MFIs in this service, 20 million soap bars can be sold in a month. In this way, MFI can offer an effective e-commerce service to its members. Introducing e-commerce to the BOP, may affect the present non-e-commerce based businesses. The current business ince