Five years ago, Australian consultants the Allen Group were commissioned by the government to assess the future of doing business online in Jamaica.

Today their report, 'A Jamaican E-commerce Blueprint' is starting to be realised by a handful of local entrepreneurs who nonetheless complain of obstacles including growing but still low Internet access and computer ownership, prohibitive e-merchant banking costs, costly customs clearing and a lack of adequate credit card verification.

Clive Mullings (left), minister of Energy, Mining and Telecommunications chats with Peter Goldson. Last week, the ministry launched a public education programme for the e-Transaction Act. (Photo: Napthali Junior)

"It is still very, very early," believes Ingrid Riley, CEO of online marketing company Dutchpot Interactive, hosts of the 'Kingston Beta' networking event for information communication technology (ICT) professionals, who offered similar reasons.

No further encouragement is offered by statistics from the most recent 'Survey of Household Living Conditions', conducted quarterly by the Planning Institute of Jamaica (PIOJ). From a sample of 1,917 households the PIOJ reported that under 14 per cent owned a computer - under half of which were connected to the Internet.

The private sector remains lacking in enthusiasm, according to an informal survey of 150 small to medium-sized companies conducted by the Central Information Technology Office (CITO) this summer. CITO found that 27 of the businesses had a website but only four supported e-transactions or e-commerce.

Homepage of Jamaican auction website JamDeal.com (Photo: Contributed)

"Technology is a chicken and egg situation and part of our mandate is to increase our Internet access and computer ownership," said CITO Strategic Planning Officer Marie Wint-McKenzie. "When you go to a business and tell them about what they can offer their customers through e-commerce they say 'Who has computers and Internet access, so why should be bother?' That's the quandary that we are at
right now."

Meanwhile government has led the move to e-commerce, most recently passing the E-Transactions Act in April, and before that launching online payments for government services. Wint-McKenzie cited a presentation at the May annual CITO conference at which a representative of Visa revealed that Customs recorded more payments made on its local-issued credit cards than any other collector.

That PC suppliers Dell came in second might be welcome news for those concerned about low levels of computer ownership.

There is the incentive, for businesses considering e-commerce, of selling in an increasingly online global marketplace, especially given growing online sales in the United States. Online sales in the US, excluding travel, are set to rise by 18 per cent to $259.1 billion this year, according to the 'State of Retailing Online 2007' report produced by the National Retail Federation (NRF) and Shop.org.

Encouragingly for the future of local e-commerce, that projection will include goods and services bought online by Jamaicans who often use relatives or courier services like Mail Pac to import products.

Jamaicans are also increasingly accustomed to paying bills online, with GraceKennedy reporting approximately $30 million in monthly payments made via its Bill Express service.

"It has actually been increasing consistently since we started four years ago. We offer a mix of payments online and a lot of persons see it as quite a convenience and my expectation is that it will continue to grow online," said Bill Express Product Development Manager Michael McNaughton.

Jamaican businesses, or those selling Jamaican products, are already a part of those growing online sales, several of which have websites designed as well as their US competitors; others less so.

RedPepperMall.com, run by the husband and wife team of Debbie and Stephen Chin, ran their own e-commerce business selling baby supplies when living in the US. Now based at the University of Technology (UTech) Technology Innovation Centre (TIC) they sell mainly local food products to an international customer base.

A big challenge in setting up as a Jamaican e-commerce business comes from the cost and delays associated with clearing goods through customs, said Chin. The solution for RedPepperMall has been to establish a fulfilment centre in Florida; however, this creates other challenges since employment opportunities are diverted abroad where larger inventories will need to be kept.

Banyan Creations, which sells candles, oils and body products, has also had to establish a Florida-based fulfilment centre since like Red Pepper Mall their natural market is the Diaspora and those with a taste for Jamaican products. But for these e-merchants who sell in small quantities, shipping via customs can be unduly expensive.

"Well, there is J$600 fee plus $5 stamp for each export entry filed for customs. An export entry is required per customer receiving an exported item from Jamaica. Therefore, if someone were to order three candles from our website costing a total of US$20 ($1,400), we would have to pay J$605. This figure cannot be passed on to the consumer and therefore makes doing e-commerce business with the goods leaving directly from Jamaica a financial loss!" said Managing Director Cheryl Dunstan.

Secondly, says Stephen Chin, availability of e-commerce to local consumers is limited by high e-merchant banking costs and relatively inadequate credit card verification making the possibility of fraud higher; although in the case of e-government transactions fraudsters are unlikely to be so naive as to use someone else's credit card to pay their own parking tickets or taxes.

"Currently only the Jamaica Public Service Company (JPS), the National Water Commission (NWC), and others process local credit cards online, as they are the ones who can afford the packages that are offered by the banks. For Jamaican dollar ecommerce to truly become widespread in Jamaica, the banks merely have to decide to make it so," explains Gayle Cunningham, General Manager of JamDeal.com.

National Commercial Bank (NCB) has lowered the costs of their service. Scotiabank is yet to respond to questions from Business Observer.

"Research has revealed that e-commerce is costly to operate especially since many cardholders are still 'afraid' to transact purchases online. Once this fear is replaced by confidence and the demand increases, merchants will process significantly more transactions via this means. Once the volumes increase the costs will go down," said NCB Public Relations and Corporate Affairs Manager Belinda Williams.

However JamDeal, as an auction site, has managed to circumvent banking costs - revenue comes from charging users who want extra prominence on the site for their listings, which are otherwise free.

The site's 4,000 registered users simply list what they want to auction and when that is complete, arrange to meet their buyer offline to complete the transaction. Meanwhile payments between the site and customers are made either by online payment service PayPal.com or by cheque - local customers will need a dual currency credit card to use the service.

RedPepperMall and BanyanCreations also accept PayPal, but as Chin observes, this requires customers to take a further step from owning a credit card to registering with the payment service. E-merchants have to pay transaction costs to PayPal but their customers do not. PayPal does have the advantage of being a favoured and trusted online payment method, so much so that it was bought by leading online auction house Ebay.com five years ago.

Modelled closely on that site, from which Jamaicans have imported cars, amongst other goods, JamDeal listings include anything from the latest cellular phones to a $1.5-million dump truck. And like Ebay, which has seen persons attempting to auction 'items' such as their virginity or internal organs, JamDeal.com has already received one unusual request, which might also suggest growing local appreciation for the utility of e-commerce.

"Someone once asked if they could put up their cousin ... who needed to be married off! We expect stranger things to come," said Cunningham.

The Ministry of Energy, Mining and Telecommunications recently launched a public education programme for the e-Transaction Act, while an E-Commerce Expo is being organised by industry experts New Projects to be held on the open lot on Lady Musgrave Road in New Kingston on December 1.

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