Reforming international shipping is no small task, but lowering costs could provide an important economic boost during a time of crisis.
The disruptions and uncertainties due to the coronavirus pandemic are hitting the Moroccan economy at its core. The economy is shrinking, exports are falling, and unemployment is rising. Despite these depressing indicators, there is a source of untapped potential for the country to explore: E-commerce.
Morocco has a robust domestic e-commerce sector with a myriad of platforms and online marketplaces. Internet users in Morocco reached approximately 25 million in January 2020, and credit card payments are increasingly popular.
Expanding e-commerce overseas, however, stumbles at the high cost of international shipping services. These discourage small package exports from the country, the dominant trend in the e-commerce market.
It is no news that Chinese retailers are offering a large variety of products online at an affordable cost. But what makes them so competitive in the global market is their cheap international shipping services.
Chinese e-commerce benefits from an efficient shipping industry. This advantage keeps customers buying more from online Chinese stores at a lower cost. Many consumers are willing to wait several weeks to receive their goods, from thousands of miles from their homes, even if the same product is available in local stores.
The challenge facing Morocco’s e-commerce sector
Morocco has a dynamic e-commerce sector, growing, innovative, and adapted to the Moroccan consumer. However, the sector is mainly local. There are many exciting national products and original handicrafts which could sell like hotcakes, if only the overall cost were reduced. Morocco’s e-commerce industry could achieve this not by siphoning off artisans’ profit, but by offering different shipping options.
To illustrate the scale of the problem: If you want to sell a $10 authentic leather wallet online to a French customer, the shipping fee will significantly increase the total cost. If we assume that the client selects the cheapest shipping option, they would add no less than $24 to the total cost, for delivery alone.
To be fair regarding shipping services, the high delivery cost makes sense when it takes less than a week for the consumer to receive a product from abroad. Still, the client should have the option to select a slower shipping service at a reduced cost.
When the client faces a steep additional cost, the most likely reaction is to put the entire idea of buying to rest or, at best, to buy less.
Improving overseas shipping: A difficult but valuable undertaking
In practice, reducing the cost of shipping overseas is no simple task. China has invested heavily for a long time in infrastructure to keep the cost of transporting goods to a minimum. And it takes more than logistics: In 2011, China signed a deal with the US to grant small packages, called ePackets, at a lower rate than traditional international shipping.
Morocco bears many elements that would support a successful adaptation of delivery at the service of the e-commerce business. The kingdom is only 14 kilometers from Europe, and it has deep roots in Africa. The strategic geographic position of Morocco could significantly reduce the cost of shipping internationally.
Local and international shipping companies should conduct market research to assess problems and opportunities. Getting insights from both sellers and possible buyers about their experience in online shopping is essential, in order to reform procedures to meet their needs. Additionally, given today’s delicate circumstances, the government should play its part to support businesses in exporting more local products sold online.
Economic crisis as an opportunity for reform
Currently, while foreign tourism is at a standstill, tourists can still buy their favorite Moroccans products from their homes. The millions of people who have visited Morocco in the past can be potential customers. They could provide a much-needed source of income to keep small businesses afloat.
Reducing the cost of global shipping would benefit not only businesses but also Moroccan consumers longing to return damaged goods. With the high cost of shipping, it is nearly impossible for the buyer to send back an unwanted product to get a refund, especially when the price of the product’s value is lower than the fees to return it. Paying to return an item is a problem in itself.
E-commerce could represent a steady source of income for Morocco’s small businesses, including those selling traditional handicrafts. Online platforms are not new to the Moroccan market; They are available and easy to operate. The major problem is an expensive global delivery system, putting local retailers at a disadvantage. Emerging from the COVID-19 crisis, Morocco could focus on this issue and turn a plight into an opportunity.