Why Equal-Opportunity Trading Is Important

Our world’s increasingly digital approach to commerce has often been heralded as a way to level the playing field for businesses and consumers alike. But the reality is often far from this ideal. This is especially true in large swaths of Africa, Asia and Latin America, where cash transactions continue to dominate due to a lower use rate of traditional banking systems — even though many people have smartphones.

For many commerce brands, trying to reconcile these challenges can be a major struggle, particularly when big tech companies have a tendency to compete with sellers by offering their own products on their platforms.

Here’s a closer look at why and how equal opportunity trading matters in today’s economy.

The Challenges Of Unbalanced Trade Models

While big tech has helped level the playing field to an extent by allowing more small businesses to sell their goods online, this hasn’t always played out as desired. An analysis by The Markup found that an item being an Amazon brand or a product exclusive to Amazon was significantly more likely to influence the item’s ranking in Amazon search results than its number of reviews or star rating.

A similar report from ProPublica found that Amazon branded products dominated the coveted top left placement in search results — a move that some attest allow the company to boost prices for its own products, while still requiring other brands to pay 10% to 30% of their sales revenue for their products to appear in a sponsored slot.

As consultant Tim Hughes explained, “Since customers are more likely to buy products listed at the top of the search results, Amazon is boosting sales for its products — and increasing, by the same token, their rating in the eyes of the algorithm. So even if Amazon ultimately cedes the top left, its products will end up in a better position relative to competitors than before.”

Though selling its own products can prove more profitable for Amazon than selling additional advertising space, this adversarial approach hardly puts small companies on a level playing field.

Having to pay to compete with big tech company’s own products (which will always get preferential treatment) makes it harder for small businesses to break through the noise. And as smaller companies raise prices to account for marketing costs, their products become less accessible to emerging markets.

Then, of course, there’s the fact that many big tech companies largely neglect emerging markets, with limited services that further reduce access to the opportunities they could be facilitating. Big tech has created a largely unequal playing field for domestic sellers, but with an even greater gap for sellers in emerging markets.

How Equal Opportunity Trading Lowers Barriers

On the other side of the coin are open commerce platforms that are designed to link sellers with distributors and consumers, with a focus on emerging markets. For example, in Sub-Saharan Africa, it is estimated that there will be over 688 million smartphone subscriptions by 2028, driving the use of digital marketplaces that don’t depend on traditional banking systems.

As Justin Floyd, CEO of RedCloud Technology explained in a recent conversation, “The trend of increasing digital and smart phone adoption in emerging markets presents a significant opportunity for digitally connected open commerce marketplaces where funds can be cleared quickly and easily, while companies can better track and sell inventory. Embracing digitization allows businesses to reduce costs and increase sales by being able to reach more people and get access to incredibly valuable data and decision support tools, which they have never had in the past.”

Floyd continued, “This is especially important for smaller retailers, who don’t have the financial capability to compete with big tech on their own platforms. Truly leveling the playing field means removing barriers like a lengthy trading history or a large enough budget to gain visibility elsewhere.”

Indeed, with open commerce platforms, sellers in emerging markets can simply use their smartphone to get a jump start in selling their products digitally. When it is estimated that 1.7 billion adults worldwide remain unbanked (including many who own smartphones), open commerce platforms that eliminate traditional barriers to entry can prove vital for allowing these businesses to enter the digital space.

Going digital offers benefits beyond the potential to reach a broader audience. Digital systems reduce administration needs by more easily reconciling payments. Access to data-driven insights through an open commerce platform can give businesses in emerging markets crucial information to guide decision-making in production planning, stock management and other important tasks.

A Truly Level Future

As more equal opportunity trade platforms enter the picture, the potential outcomes can snowball dramatically. Brands, distributors and local merchants can become better connected and empowered, with stronger capabilities for reaching audiences in existing and emerging markets. This in turn creates better support for local communities in these emerging markets, who have easier (and often more affordable) access to goods and services.

Clearly, big tech as a whole has significant room for improvement in being an equitable trading partner and generating win-wins for all involved. But as new technology creates additional avenues for trade, exciting new opportunities will present themselves for small businesses and their customers. As platforms arise to shift consumer preferences away from big tech, particularly in emerging markets, there will be more win-wins.