E-Commerce in Trinidad & Tobago 2016: Part 1- An Overview

There is renewed interest in E-Commerce in Trinidad & Tobago in significant contrast to the drop in website business this year, even after an optimistic start. There are also many enquiries; whether or not they will lead to actual online stores remains to be seen.

I’ve been inundated with calls and emails of late asking specific e-commerce questions and many have a common thread, mainly payment processing, PayPal and our local payment gateway. This article has been a long time in coming as an updated guide to starting a local online store.

I’m writing this article from scratch and not recycling old content; there may be some apparent repetition but I haven’t referred to any old articles at all, so this is brand new as of May 2016 and you may feel confident in the article’s ‘freshness’.

You want to know about E-Commerce because you know the market is ripe and juicy. It has been ripe and juicy for a long time except that the fruits have been a little out of reach. Now that ALL the moving parts for local E-Commerce are present and available, they are now low-hanging and within reach. Pickers are still scarce though but there are many standing around the tree, I don’t know, smelling it.

The Trini consumer on the other hand are shopping online and couldn’t be bothered, so much so that it’s created a huge headache for many stakeholders, namely:

• Local merchants who complain that Amazon is taking away their sales
• Local merchants who complain that they can’t compete with Amazon
• Local merchants who complain about US Dollars being hard to get to pay for imports
• Government complaining about foreign exchange ‘leakage’ from online shopping on US sites
• Government complaining about tax revenue ‘leakage’ from shopping on US sites

You’ll notice that there is a lot of complaining because ‘O gawd somebody taking mih monaay’. The only people not complaining are the Trini consumers who are very satisfied with the ease, comfort and affordability that online shopping brings.

This overview comprises the the key elements that combine to make the entire system work.

That Trinis are ready and willing to shop online is the colloquial ‘arksing answers’ because the $500M US Dollars a year being lost to foreign sites leaves no room for doubt, so much so that Government has decided to step in to ‘protect’ several interests: local, financial, political and self. I’m referring to the proposed online tax that has drawn heated debate, and which I’ll also address in this article.

The online shopper in Trinidad & Tobago comprises two distinct groups:

1. Trinis who embraced the internet- these are the thirty-somethings and over who bore witness from a front row seat to the biggest revolution in their lifetime, which literally changed life as they knew it. As a member of this group myself, I can attest that the vast majority of us fully embraced the digital age. We email, use mobile phones, text, What’s App, Skype, Facebook, Instagram, share files on Dropbox and of course shop online. Occasionally we call our kids to show us how to do something, but we’re here and here to stay.

2. Trinis who grew up with the internet- Known as Millennials, this generation, like my son for example, grew up not knowing life without the internet and for whom it’s as natural as breathing. If you’re thinking about an online store in T&T, this generation must be part of your strategy, short and long term.

As at 2016 to date the situation is the same:

• Trinis are shopping online, just not on local sites
• Trinis KNOW how to use an online store so don’t insult their intelligence
• Trinis are reluctant to buy from local online stores
• Trinis aren’t aware of how many local online stores exist

I’m on the pulse of local E-Commerce and there are no local sites I would buy from except those of my own clients. There are in fact, online stores by larger companies such as Courts and Excellent that were not designed locally however, but who I would be willing to buy from but unfortunately never felt compelled.

I’m also not compelled to buy from my own clients the way I’ll be compelled to buy from US sites and that’s not because there’s anything wrong to their sites (I built them after all), the problem is with their marketing to me.

I also know of many other stores from smaller companies and individuals as they pop up from time to time on Facebook ads but their sites are not well done and don’t inspire my confidence. There are also other bigger, well known sites who think they are big and who you think are big but they are not, and all the billboards and advertisements on the highway won’t change that.

The online seller in Trinidad & Tobago comprises two distinct groups:

Offline Sellers transitioning to Online Sellers- Trini companies who already have physical stores know that they have to get with the program, and are thinking about it, but not ready yet. Many are still doing their homework and I think a lot has to do with the perceived cost and logistics and the fact that they are not ready for the commitment of time and resources that such a move would make.

I think that their on the ground experience with running a physical operation gives them a better appreciation of the tough work ahead for the online version to be a success, which is giving them pause. They’re ready, but not quite.

Entrepreneurs- I believe young entrepreneurs have a better appreciation of the online potential and more willing to take the chance, partly because of a some naiveté but more because of belief (they’re entrepreneurs after all). Their main obstacle is the lack of experience and financing to get their online business off the ground. Many will find it difficult getting approved for a merchant account for our TTD payment gateway because of the inherent risk of a new account and no track record or prior relationship with the bank.

So I’ll summarize:

• Local companies/individuals want to establish online stores
• There are still doubts/questions about the process
• There are only a handful of online stores locally
• Most are obscure else I’ll know about them
• Larger stores seem to be indifferent to promoting their sites
• There is PLENTY of room for other players, small and large

There are other major elements that form part of this system and all have their role to play so I’ll touch on each of them.

What if I told you that the size doesn’t matter? I think it matters for reference but there is really more than enough to go around. An online store opens up a market to 1.3 million people of which around 600K are online. Physical businesses do a booming trade with a very thin slice of that, often limited to a few miles around their stores geographically.

I’ll give you a great example. There are four (4) stores/shops around my neighborhood where I buy the same household consumables- bread, eggs, milk etc. I patronize all of them depending on which is more convenient. All of them have thriving businesses, big houses, good cars etc., not living hand to mouth. What percent of the national market do they command, less than one percent? What if they had the opportunity to double, nay, triple, nay nay, quadruple their business for less money than it would take to open a second store?

Even if your market is a niche one, say, diabetics only, or the elderly, your online reach is unlimited compared with offline geographic reach.

You can easily DOUBLE your market reach by including a few of our Caribbean neighbors, and you can see the reach from adding just eight (8) islands. I deliberately excluded Jamaica for a better picture of the spread as that population is so huge that it would bring the reach to 1.7M. Also, notwithstanding the headlines these days of Jamaica calling for boycott of Trini goods, I chose a more cautious approach.

The above figures I pulled are obviously general as individual demographics, say for watches, or Indian wear will narrow the numbers considerably. But I stand by my comparison with the limitation of physical geographic reach of brick and mortar stores, a limitation that ceases to exist with a move to online.

The bulk of the products being bought online from US sites are consumer goods. Apart from the convenience of having orders shipped to our door, there are a few other reasons why Trinis are not patronizing local brick and mortar stores where they can get the same things:

• They can get the same things but not the same quality
• Many brand name items sold locally are cheap Chinese knock-offs deliberately sold as the real thing
• Local stores have legendary terrible customer service

What products can you sell online to Trinis? Literally everything they can buy offline. And don’t forget that commercial products are a market too.

Unfortunately your government wants to punish online shoppers. I say your government because I didn’t vote for them. Our engineer-come-finance minister is concerned about foreign exchange and tax revenue leakage and makes no mention of any other solution except to tax online shopping.

I’ve heard no talk about looking at the system to enable and nurture it and I don’t expect anything except lip service even if he does. I’ll address two government points here:

1. The 7% Proposed Online Shopping Tax- To recap, foreign exchange reserves are dwindling and not being replenished fast enough. We know the causes— falling oil and gas prices, economic downturn, heavy reliance on imports, PP government mismanagement (not a fan of them either).

Our goodly Finance Minister is convinced that a major contributor to US Dollar outflow is from online shopping we Trinis do on US sites like Amazon and Walmart etc. The question is, is online shopping on US sites depleting local USD reserves? Let’s see…

TRUE OR FALSE: There is an increase in foreign exchange outflows from online purchases

FALSE: The Minister seems to be ignorant of the fact that online shopping at US sites is NOT additional spending, but redirected spending away from local merchants. I can speak from my personal approach of not buying from local companies but I do all my shopping online, and yes from Amazon and Walmart. All the items I buy would have been imported and sold by local merchants anyway.

TRUE OR FALSE: The government suffers ‘revenue leakage’ from online shopping on US sites

TRUE: When our online orders are shipped to Trinidad, either via the various skybox services or through local ports of entry, we are charged both customs duty and VAT. There is no leakage here. Leakage comes from the additional revenue stream via the Business Levy generated from local sales that don’t materialize because the US merchants get the sales instead.

TRUE OR FALSE: Local manufacturers and service companies are unfairly affected because they cannot compete with overseas retailers

FALSE: What local manufacturers do we have that produce the consumer items Trinis are buying online? The bulk of the purchases- clothes, household items, technology items, school and office supplies are not being manufactured locally, or of lower quality.

Bottom line there has been no talk about the local online framework and government’s or Ministry’s role in its development.

2. The Electronic Transaction Act (2011) Here we are five years later and this bill still isn’t fully law. The section that deals with consumer protection hasn’t been proclaimed. Read my analysis about this Act here: An Overview of the Electronic Transaction Act (2011).

This however, is not a material obstacle to local e-commerce and hasn’t been anyway; it would just be great if the entire Act comes into effect and I mention it for completeness.

3. Implementation of our postal code system In notice by the Ministry of Public Utilities and TT Post yesterday’s Newsday (Wednesday 4th May 2016), TT Post is mailing out what they call ‘S-42 Address Cards’ to citizens which advises of the new official postal address containing their 6 digit postal code. This is obviously welcome though it’s been a long time in coming, and will come in handy to take advantage of shipping features available on e-commerce website platforms which work better with postal codes.

I haven’t written an article about this yet, but I have made a post on my Facebook page. Read what I said about it here.

There was a big hue and cry at the start of 2015 over the loss of sales to US online stores during the 2014 that rightfully brought the issue to the fore. We had leaders of local business associations quickly jump in to weigh in on the situation. I don’t know if it was their ignorance or idiocy speaking but my opinion is that they don’t know there ass from their elbow.

Anyway, one suggestion from the Chaguanas Chamber of Commerce was to make Chaguanas a ‘tech-savvy city within the next year’, which would have been last year, and of course that hasn’t materialized and probably never will.

These organizations need to delve a little deeper to understand the workings of E-Commerce, and use their size and reach the way they should for the benefit of their members. They have the ear of the Government, financial institutions, business leaders and other stakeholders to influence policy and action. Unfortunately it seems that they just like to dress up for cocktails and provide sound bites for the news.

Local banks are now all on board and offer the First Atlantic Commerce (FAC) payment gateway via their own structure. FAC is the only game in town but I’m not complaining as before there was only one bank, then two now four, namely, and in order of coming on board:

1. Scotiabank
2. First Citizens Bank
3. Republic Bank
4. RBC Royal Bank

I’ll be explaining this in great detail when I get to the Payment Processing part of this series.

The courier industry is abound with players both big and small, delivering US purchases throughout Trinidad & Tobago. They are in a good position to redirect their expertise to delivering local orders and perhaps offer a similar service here, i.e. amalgamating and delivering orders from multiple vendors to a single address.

Also to be seen is TT Post’s part in a growing e-commerce industry and I have clients who already have arrangements with them and they have been efficient and reliable with their present service. TT Post will have to up their game in the coming years to allow their shipping system to be integrated with the shipping modules of E-Commerce platforms, namely Magento, WordPress, Joomla etc., Such integration will allow automatic calculation of shipping when shoppers choose among options- like next day, 3 day, overnight delivery etc.

There you have it, the overview from my perspective, very detailed for an ‘overview’ right? This was meant to be a single article, not a series, and in the first iteration I actually had a divider at this point and then the heading ‘The Platform’. When I previewed the article and saw how much I wrote, I realized it would be just too long an article, and now you’ve got the series, yay for you!