ANNEX A. TAPPING INTO NEW DATA SOURCES
Measuring e-commerce, and digital transformation more broadly, is complex. While national statistics provide evidence on some broad trends, new tools are needed to better understand e-commerce dynamics at the micro level. One such tool is the Future of Business Survey, which provides monthly data on enterprises with a Facebook page. This Annex analyses e-commerce using data from businesses in 42 countries to shed new light on various dimensions of e-commerce, including with respect to firm size, gender and export dynamics.
Measuring e-commerce, and digital transformation more broadly, is complex. While national statistics provide evidence on trends and other developments, new tools are needed to better understand e-commerce dynamics. One such tool is the Future of Business Survey, which studies enterprises with a Facebook page monthly. It is an online survey tool designed by Facebook in co-operation with the OECD and the World Bank (Facebook/OECD/World Bank, 2019[1]).
The survey currently covers 42 countries at different levels of development, resulting in a wider geographic reach than most official statistics on e-commerce.1 The data presented in this Annex rely on thirteen waves of the survey (March 2017 to April 2018) for a total of 205 619 firms, of which 188 077 had fewer than 50 employees (small firms), 5 351 were medium-sized (50-249 employees) and 3 630 had more than 250 employees (large firms).2
The data identify firms that “use online tools or platforms (e.g. websites/apps, social networks like Facebook or Google+, etc.) to sell products and services to customers” either in their country or abroad. In this Annex, firms that indicate the use of online tools for sales at home or abroad are referred to as online sellers.3 Later on, the Annex considers firms that participate in international trade as exporters. Exporters that use online tools or online platforms for selling products and services to customers abroad are referred to as online exporters.
However, firms that use online tools or platforms to sell products and services to customers might potentially use these tools for activities not related to the ordering process. Such activities would not constitute e-commerce as defined for the purpose of this report (see Chapter 1). As a result, the data cannot be directly compared with the data presented in Chapter 2. At the same time, not all firms with a Facebook page use online tools to sell products and services. For example, large manufacturers in the car industry are likely to have a Facebook page that allows them to advertise to potential customers, yet will not use this channel for the direct sales of their products.
E-commerce is prevalent among firms with a Facebook page, but varies by sector
About 61% of surveyed firms use online tools or online platforms to sell products domestically (Figure A.1). This is considerably higher than the share of OECD e-commerce firms (23%) shown in Figure 2.4. The difference is potentially explained by a combination of three effects:
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The group of online sellers in the Facebook data contains firms that are not actually participating in e-commerce transactions as defined in this report (see above),
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The group of firms with an online Facebook presence is more likely to be participating in e-commerce than the average firm in the population, and
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Emerging economies tend to participate more in e-commerce, where the sample of firms with an online presence is likely to represent a more selected sub-sample of the total firm population.
The latter effect would explain why most OECD countries cluster towards the right side of the figure, while many emerging countries have higher shares of firms using online tools to sell products and services on average.
With 77% of all firms surveyed indicating that they have used online tools to sell products to customers either domestically or abroad, Ecuador and the Philippines had the highest share of online sellers among all countries. They were followed by Colombia (76%), Malaysia (76%) and Peru (75%). According to these data, the countries with the lowest share of online sellers in total firms (below 45%) were France, Germany, Japan and Korea. The industry breakdown depicted in Figure A.2 shows that online tools were most frequently used for sales of products or services in the retail and wholesale sector (72%), followed by real estate (69%), accommodation (65%) and manufacturing (64%).
Note: See Chapter notes.1
← 1. Figure A.1: Based on a sample of 205 619 firms with a Facebook page, surveyed over the period March 2017 to April 2018. Online sellers are firms that use online tools or platforms (e.g. websites/apps, social networks like Facebook or Google+, etc.) to sell products/services to customers in their country or abroad.
Source: OECD calculations based on Facebook/OECD/World Bank[1], Future of Business Survey (database), http://www.oecd.org/sdd/business-stats/the-future-of-business-survey.htm (accessed March 2019).
Note: See Chapter notes.1
← 1. Figure A.2: Based on the sample of 205 619 firms with a Facebook Page, surveyed over the period March 2017 to April 2018. Online sellers are firms that use online tools or platforms (e.g. websites/apps, social networks like Facebook or Google+, etc.) to sell products/services to customers in their country or abroad.
Source: OECD calculations based on Facebook/OECD/World Bank[1], Future of Business Survey (database), http://www.oecd.org/sdd/business-stats/the-future-of-business-survey.htm (accessed March 2019).
Even the smallest firms often participate in online sales, and many are managed by women
Small firms make slightly more use of online tools for product sales. With respect to the size of the firms, Figure A.3 reveals that for the sample of firms with an online presence, small firms more frequently participate in online sales than large firms on average (61% vs. 54%). This seems to contradict the statistics presented earlier, suggesting that small firms participate less often in e-commerce transactions overall (see Figure 2.4).
It should be highlighted, however, that the selective nature of the Facebook sample might partly be responsible for this result. By setting up a Facebook page, all firms in the sample have passed a certain threshold in terms of digital maturity. Thus, while larger firms tend to be faster in adopting digital technologies overall, small firms that have passed a certain threshold might be faster in adopting online tools and platforms for the sale of products.
Note: See Chapter notes.1
← 1. Figure A.3: Based on the sample of 205 619 firms with a Facebook page, surveyed over the period March 2017 to April 2018. Online sellers are firms that use online tools or platforms (e.g. websites/apps, social networks like Facebook or Google+, etc.) to sell products/services to customers in their country or abroad.
Source: OECD calculations based on Facebook/OECD/World Bank[1], Future of Business Survey (database), http://www.oecd.org/sdd/business-stats/the-future-of-business-survey.htm (accessed March 2019).
Interestingly, there is relatively little variation in online sales within the group of small firms. Firms with 2 to 4 employees used online tools or platforms most frequently to sell goods or services (63%). The corresponding number was 58% for firms with 20 to 49 employees. Sole traders had a participation rate of 60%, highlighting how online tools and online platforms have helped even the smallest firms to sell online (see Chapter 3). The data further reveal some interesting differences with respect to the percentage of female members in the top management of online and offline sellers (excluding sole traders). At about 43%, this percentage was higher for online sellers than for offline sellers (40%).
Firms using online tools are more likely to export, export to more countries and obtain larger shares of turnover from exports
The Future of Business Survey also provides information on cross-border e-commerce that is unavailable from official sources. First, the share of exporters among online sellers (14%) is significantly higher than the share of exporters among offline sellers (8%). Second, comparing exporters that use online tools to sell products and services to customers abroad (online exporters) with exporters that do not use online tools to sell to customers abroad (offline exporters), it becomes apparent that online exporters on average attribute a higher proportion of their revenue to exports than their offline counterparts (Figure A.4, Panel A).4 While exports represented more than 25% of revenue for 35% of all offline exporters, roughly 42% of online exporters generated over 25% of revenue from exports. For 14% of online exporters, exports represented more than 75% of revenue, whereas the corresponding number was only 10% for offline exporters.
Note: See Chapter notes.1
← 1. Figure A.4: Based on the subsample of exporters with a Facebook page. Subsample for the left panel: 23 501 firms that engage in international trade as exporters, surveyed between March 2017 and April 2018. Subsample for right panel: 5 416 firms that engage in international trade as exporters, surveyed between March 2017 and May 2017 (responses not available for later waves). Online exporters use online tools or platforms (e.g. websites/apps, social networks like Facebook or Google+, etc.) to sell to customers abroad. Offline exporters do not use online tools to sell to customers abroad.
Source: OECD calculations based on Facebook/OECD/World Bank[1], Future of Business Survey (database), http://www.oecd.org/sdd/business-stats/the-future-of-business-survey.htm (accessed March 2019).
Furthermore, online exporters on average exported to more countries than offline exporters (Figure A.4, Panel B). Specifically, 23% of offline exporters exported to one country only, while the corresponding share was 16% among online exporters. And while only 24% of offline exporters exported to six or more countries, the number was significantly higher for online exporters (32%).
Finally, the Future of Business Survey provides some insights into the challenges that firms face with regard to sales in other countries and allows for an interesting comparison between firms that use online tools or platforms to sell to customers abroad and those that do not. This comparison is not available in most official statistics and provides a perspective on the specific export challenges faced by firms using online tools to sell abroad. Figure A.5 lists several potential challenges that survey respondents were able to select from and shows the frequency of their selection among offline and online sellers. The challenges are ordered according to their importance to online sellers.
The first important finding from Figure A.5 is that online sellers tend to mention virtually all challenges more frequently than their offline counterparts do. This partly reflects that online sellers export more frequently, more intensively and to more destinations on average, implying that the propensity of facing a certain challenge is higher for these firms.
Second, classical export challenges related to finding business partners or overcoming market access restrictions are the most important challenges to both groups of firms. Language and culture are the third largest challenges for firms that do not use online tools to sell to customers abroad. Online sellers on the other hand face differences in customs regulation and domestic regulation relatively more often. This could reflect that many online sellers make use of third party services, such as online platforms, that provide standardised tools for exports to multiple countries that are readily available in several languages. These online platforms are likely to be relatively less effective in helping firms to overcome differences in regulation, in particular because they often handle a large variety of products, each of which can face different rules in different countries.
Third, in relative terms online sellers are 21% more likely than offline sellers to cite differences in regulations as an export challenge (19% for customs regulation) whereas the corresponding value is significantly lower for language and culture (12%) (Figure A.5, right axis). The largest difference between online and offline sellers unsurprisingly occurs with respect to challenges related to the online nature of sales. Accordingly, online sellers mention export challenges related to Internet connectivity about 61% more often than firms not using online tools to sell abroad and challenges related to online payment methods about 45% more often.
Note: See Chapter notes.1
← 1. Figure A.5: Based on the subsample of 37 769 firms with a Facebook page, surveyed over the period March 2017 to April 2018, that regard “selling to foreign markets” a challenge to their business. The sample can include non-exporters. Online sellers (abroad) are firms that use online tools or platforms (e.g. websites/apps, social networks like Facebook or Google+, etc.) to sell to customers abroad. Offline sellers (abroad) are firms that do not use online tools or platforms to sell to customers abroad. Due to data availability, responses on tax regulation in other countries are based on a smaller sample (25 574 firms, surveyed after June 2017).
Source: OECD calculations based on Facebook/OECD/World Bank[1], Future of Business Survey (database), http://www.oecd.org/sdd/business-stats/the-future-of-business-survey.htm (accessed March 2019).
Surprisingly, however, even among offline sellers, a non-trivial number of firms indicated that they face export challenges explicitly related to online sales (15% for connectivity and 25% for online payments). One possible explanation could be that offline sellers stumble upon these challenges when deciding whether to use online tools or online platforms to sell abroad, i.e. the extensive margin of exporting. If this is indeed the case, policy interventions focused on connectivity can help to foster exports by enabling firms to take advantage of online tools for sales to other countries.
Geographical distance between the domestic and the export market also appears to pose a relatively high burden on online sellers. Accordingly, while 32% of firms using online tools to sell abroad mention distance as a challenge, the corresponding number is only 25% for offline sellers, i.e. distance is mentioned 31% more often by online sellers. This could be a reflection of the importance of small parcel trade for e-commerce, where transport costs make up a relatively large share of the total transaction value. Finally, online sellers are 27% more likely than offline sellers to mention tax regulation in other countries as a challenge for selling to foreign markets. This compares to 21% for differences in regulation more broadly and 19% for customs regulation and indicates the relatively high relevance of regulatory challenges in the area of taxation.
Notes
The statistical data for Israel are supplied by and under the responsibility of the relevant Israeli authorities. The use of such data by the OECD is without prejudice to the status of the Golan Heights, East Jerusalem and Israeli settlements in the West Bank under the terms of international law.
References
Facebook/OECD/World Bank (2019), The Future of Business Survey, http://www.oecd.org/sdd/business-stats/the-future-of-business-survey.htm (accessed on 29 March 2019). [1]
Notes
← 1. The 42 countries surveyed include: Argentina, Australia, Bangladesh, Belgium, Brazil, Canada, Chile, Chinese Taipei, Colombia, the Czech Republic, Ecuador, Egypt, France, Germany, Greece, Hungary, India, Indonesia, Ireland, Israel, Italy, Japan, Korea, Malaysia, Mexico, the Netherlands, Nigeria, Pakistan, Peru, the Philippines, Poland, Portugal, Romania, the Russian Federation, South Africa, Spain, Sweden, Thailand, Turkey, the United Kingdom, the United States and Viet Nam.
← 2. The remaining 8 561 firms either did not know or preferred not to reveal information about their size. The country samples are not stratified with respect to enterprise size, age and economic activity of enterprises. The figures presented in this Annex depict unweighted averages. Cross-country variation may reflect that SMEs with a Facebook presence tend to be more representative of the total firm population in advanced economies.
← 3. Aside from selling products or services to customers, firms can also indicate the use of online tools or platforms to “provide information”, “show products/services”, “communicate with customers or suppliers”, “advertise to potential new customers” or “manage internal business processes.” Firms using online tools merely for advertising or the provision of information are therefore less likely to conflate the sub-sample of online sellers.
← 4. According to the survey responses, “using online tools to sell products or services to customers abroad” often does not involve participation in international trade as an exporter. Specifically, only 28% of all firms using online tools to sell to customers abroad indicated participation in international trade as an exporter. Unfortunately, the survey design does not show the nature and relevance of alternative channels for sales to customers in other countries.