How online marketplaces can help local economies, not hurt them
-
0:02 - 0:06In February 2013,
my wife and I moved to Singapore. -
0:07 - 0:08Exactly at the same time,
-
0:08 - 0:12Uber has announced
it started operations in the country. -
0:12 - 0:15Now, my wife and I
agree on a lot of things, -
0:15 - 0:19but using Uber was definitely
not one of them. -
0:20 - 0:22While I was excited about the technology
-
0:22 - 0:25and how maybe we don't need
to own cars anymore, -
0:25 - 0:31she felt that every Uber car
is here to steal jobs from taxi drivers. -
0:33 - 0:35And Sarah was not the only one.
-
0:36 - 0:39As the Ubers, Airbnbs
and Amazons of the world -- -
0:39 - 0:41what we call "online marketplaces" --
-
0:41 - 0:45as they started expanding their presence,
-
0:45 - 0:48we have heard, all of us,
countless policymakers -
0:48 - 0:51worried about how to deal
with these new risks -
0:51 - 0:55of job destruction, lower wages
and tax leakage. -
0:55 - 0:58We've also heard company leaders
-
0:58 - 1:01worried about aggressive competition
from global platforms -
1:01 - 1:03eating up their local businesses.
-
1:04 - 1:07And on the rational level,
of course I understand. -
1:08 - 1:11After all, this is basic
supply and demand economics. -
1:11 - 1:13If, in any market,
you dramatically increase supply, -
1:13 - 1:17you should expect prices, profitability
and growth to go down -
1:17 - 1:18for existing players.
-
1:19 - 1:21But in my personal experience,
-
1:21 - 1:25I've also seen
the other side of the story. -
1:25 - 1:26Where online marketplaces,
-
1:26 - 1:30like Gojek in Indonesia
or Jumia in Africa, -
1:30 - 1:34have helped their business ecosystems
and the communities around them. -
1:34 - 1:36The positive side I have seen
-
1:36 - 1:41demonstrated itself in a woman,
a taxi driver in Egypt, -
1:41 - 1:43that now had the opportunity to work
-
1:43 - 1:46without the harassment
she faced in the taxi business. -
1:46 - 1:51It demonstrated itself
through a village in Kenya -
1:51 - 1:52that got an economic boost,
-
1:52 - 1:56because the nearby beautiful
but completely unknown lake -
1:56 - 1:59is now becoming
a national ecotourism spot. -
2:00 - 2:03Online marketplaces will continue to grow.
-
2:03 - 2:05And they will transform the way we shop,
-
2:05 - 2:06the way we travel
-
2:07 - 2:09and the way we transact with each other.
-
2:09 - 2:11So we really need to understand
-
2:11 - 2:14where is the truth
between those two stories. -
2:15 - 2:18Should we expect more of the bright side
-
2:18 - 2:20or more of the dark and worrying side?
-
2:21 - 2:24And is there a way to get
the first without getting the second? -
2:25 - 2:26I believe there is.
-
2:27 - 2:30As a strategy consultant,
I study businesses for a living. -
2:30 - 2:32And as a mathematician at heart,
-
2:32 - 2:35I couldn't live with something
and its opposite being equally true. -
2:35 - 2:39So, I went back to fundamentals,
and I asked the question: -
2:39 - 2:43What do online marketplaces really do?
-
2:43 - 2:44What do they do?
-
2:45 - 2:47Well, at their core,
-
2:47 - 2:49they're doing something very simple.
-
2:50 - 2:52They match sellers and buyers.
-
2:52 - 2:53That's it.
-
2:54 - 2:56For drivers and passengers,
-
2:56 - 2:58you get Uber, Grab in Southeast Asia
-
2:58 - 3:00or DiDi in China.
-
3:01 - 3:03For matching merchants and consumers,
-
3:03 - 3:06you get Amazon, Alibaba
or Jumia in Africa. -
3:06 - 3:08And for housing, you get Airbnb;
-
3:08 - 3:10for fundraising, you get Kickstarter --
-
3:10 - 3:12the list goes on.
-
3:12 - 3:15What all these examples have in common
-
3:15 - 3:17is that they transition
this basic functionality -
3:17 - 3:19of matching sellers and buyers
-
3:19 - 3:22from the physical world
to the digital world. -
3:22 - 3:24And by doing so,
-
3:24 - 3:26they can find better matches,
-
3:26 - 3:27do it faster
-
3:27 - 3:30and ultimately, unlock
more value for everyone. -
3:32 - 3:35In fact, online marketplaces' core benefit
-
3:35 - 3:39is that they get us more
from the same amount of effort. -
3:40 - 3:42For example,
-
3:42 - 3:44if you're a taxi driver in San Francisco
-
3:44 - 3:47and you decide to work 10 hours per day,
-
3:48 - 3:51then you're actually having
a paying passenger in your car -
3:51 - 3:53for four hours out of the 10.
-
3:53 - 3:57If you take the same car
and put it on a platform like Uber, -
3:57 - 3:59you can have paying passengers
-
3:59 - 4:01for an additional one and a half hours.
-
4:01 - 4:06This is the same car
becoming 40 percent more productive. -
4:06 - 4:10And the same has been proven true
for other online marketplaces. -
4:10 - 4:14By design, they create
more value for the economy. -
4:16 - 4:20Now, we need to figure out
who gets this additional value. -
4:21 - 4:23You can give it to the drivers --
-
4:23 - 4:25more passengers, more income.
-
4:25 - 4:28You can give it to consumers,
if you reduce prices. -
4:28 - 4:31Or you can decide that the platform
gets to keep all of it. -
4:32 - 4:34What usually happens
is that all three of them -
4:34 - 4:36would somehow split it.
-
4:37 - 4:39But what about the rest of us?
-
4:40 - 4:42We can also be impacted
-
4:42 - 4:44without being on either sides
of this business. -
4:44 - 4:47If my neighbor decides
to rent his apartment on Airbnb, -
4:47 - 4:50and we have more people
coming in and out of the building, -
4:50 - 4:52more noise than usual,
-
4:52 - 4:56then I'm getting an unpleasant side effect
of this productivity magic. -
4:57 - 5:01This is what economists would call
a "negative externality." -
5:01 - 5:05The negative externality
of Uber cars becoming more productive -
5:05 - 5:08is taxi drivers seeing the value
of their licenses drop -
5:08 - 5:11by as much as 30 percent
in New York, for example. -
5:12 - 5:14This is the dark side.
-
5:14 - 5:17And this is what sparks
street demonstrations -
5:17 - 5:20and sometimes,
sometimes, even violence. -
5:21 - 5:24I profoundly believe this is avoidable.
-
5:24 - 5:25And it became clearer to me
-
5:25 - 5:28the more I have spent time
in emerging markets. -
5:29 - 5:30In fact, during my time in Singapore,
-
5:30 - 5:34I spent half of any given week
traveling in the region, -
5:34 - 5:36between Malaysia, Thailand, Indonesia,
-
5:36 - 5:38and I became a user --
-
5:38 - 5:39actually, more of a fan --
-
5:39 - 5:43of online marketplaces
that were not that well-known back then. -
5:44 - 5:48But some of them made
interesting strategic trade-offs -
5:48 - 5:50that dramatically reduced
their side effects, -
5:50 - 5:52their externalities.
-
5:53 - 5:55Take Gojek, for example.
-
5:55 - 5:58They're basically Uber for motor bikes.
-
5:58 - 6:02They are one of the most liked
online marketplaces in Indonesia, -
6:03 - 6:07and this has a lot to do
with the role they chose to play. -
6:08 - 6:09Instead of picking a fight
-
6:09 - 6:12with every other transportation
option out there, -
6:12 - 6:16they choose to gradually integrate them
within their own platform, -
6:16 - 6:19so that without leaving the Gojek app,
-
6:19 - 6:21you can check the public
transportation schedule -
6:21 - 6:24and choose to take a bus
for a long distance. -
6:24 - 6:27Then, maybe, a motorbike
or a traditional taxi -
6:27 - 6:32that you can order and pay for
from within the same app. -
6:33 - 6:35If you look at Gojek today,
-
6:35 - 6:38nine out of 10 previous motor taxi drivers
-
6:38 - 6:43believe their quality of life has improved
after joining the platform. -
6:43 - 6:45And nine out of 10 consumers --
-
6:45 - 6:46nine out of 10 --
-
6:46 - 6:52believe that Gojek has a positive impact
on society in general. -
6:52 - 6:57Now, this level of trust
is what allowed Gojek to grow -
6:57 - 7:00into what is today a super
online marketplace for everything -
7:00 - 7:03from food to grocery
-
7:03 - 7:05even massages and laundry pickups.
-
7:06 - 7:10It all came from a deliberate trade-off
-
7:10 - 7:13to be an orchestrator
of a bigger ecosystem -
7:13 - 7:15where others also have their role to play,
-
7:15 - 7:18instead of a single winner, a hero,
-
7:18 - 7:22that takes for himself what would,
at the end, be a smaller pie. -
7:23 - 7:25Another interesting example is Jumia.
-
7:26 - 7:29Jumia is the equivalent
of Amazon in Africa. -
7:29 - 7:32But they don't generate
the same level of fear -
7:32 - 7:34in the small-business community.
-
7:34 - 7:36And one of the reasons for that
-
7:36 - 7:40is because they have decided
to actively invest -
7:40 - 7:42in African entrepreneurs,
-
7:42 - 7:44to grow them into the digital age.
-
7:44 - 7:45Now keep in mind,
-
7:46 - 7:50Jumia is operating in countries
with some of the lowest digital literacy -
7:50 - 7:52and digital connectivity
scores in the world. -
7:53 - 7:55Now they could have dealt with that
-
7:55 - 7:58the usual way, through
lobbying for reforms -- -
7:58 - 7:59and they probably do that --
-
7:59 - 8:03but they have also built Jumia University,
-
8:03 - 8:04an e-learning platform
-
8:04 - 8:08where merchants can come and learn
basic digital and business skills. -
8:09 - 8:13We have studied online marketplaces
in Africa last year. -
8:13 - 8:17And during that study,
we have met one of Jumia's merchants. -
8:17 - 8:18His name is Jomo.
-
8:18 - 8:22He was fired from his job in 2014,
-
8:22 - 8:25and at that time, he decided
he wanted to become his own boss. -
8:25 - 8:27He wanted to be independent.
-
8:27 - 8:30He also wanted to never be fired again.
-
8:31 - 8:33So at that time,
-
8:33 - 8:35Jomo had no clue what a business is.
-
8:35 - 8:38So he needed to go through
a series of trainings -
8:38 - 8:41to learn how to select products,
how to price them -
8:41 - 8:43and how to promote them online.
-
8:44 - 8:47Today, Jomo has a 10-employee
online business. -
8:48 - 8:50And as of a few months ago,
-
8:50 - 8:53he just opened his very first
brick-and-mortar shop -
8:53 - 8:55in the suburbs of Nairobi.
-
8:55 - 8:57Now, through its university,
-
8:57 - 9:01Jumia has the potential
of helping a huge number of Jomos. -
9:01 - 9:05And we have estimated that together
with other online marketplaces -
9:05 - 9:06on the continent,
-
9:06 - 9:11they can generate three million
additional jobs by 2025. -
9:12 - 9:14And they would do that either directly,
-
9:14 - 9:17or through their impact
on the wider community. -
9:17 - 9:18And sometimes,
-
9:18 - 9:21taking that wider impact
into consideration -
9:21 - 9:22or forgetting about it
-
9:22 - 9:24can make or break a platform.
-
9:25 - 9:28To illustrate that,
let's go back to Singapore. -
9:28 - 9:33So, when we decided with my wife
to leave the country last year, -
9:33 - 9:35Uber decided to do the same.
-
9:35 - 9:37At the same time,
-
9:37 - 9:41again, we started to see that pattern,
-
9:41 - 9:43but maybe it's a coincidence.
-
9:44 - 9:49In reality, Uber lost
the ride-hailing battle -
9:49 - 9:52to a Malaysian-born start-up called Grab.
-
9:53 - 9:54Now, interestingly,
-
9:54 - 9:58my wife didn't have the same
level of concerns with Grab, -
9:58 - 10:01because when Grab started,
it had a different name. -
10:01 - 10:03It was called MyTeksi,
-
10:03 - 10:09and as the name suggests,
it started as a platform for taxis. -
10:10 - 10:14So when Grab started expanding
the driver pool beyond taxis, -
10:14 - 10:16it was seen as gradual and reasonable.
-
10:17 - 10:20They were also very careful
while doing so. -
10:20 - 10:23They thought of what kind
of social safety net -
10:23 - 10:25they should bring to all drivers.
-
10:25 - 10:28So they put in place
special insurance packages -
10:28 - 10:31and even financial education programs.
-
10:31 - 10:36Now, compare that
with what happened in London, -
10:36 - 10:38in New York, in Paris,
-
10:38 - 10:42where taxi drivers didn't feel
that the platforms understood -
10:42 - 10:45they had to pay 200,000 euros
for their license -- -
10:45 - 10:47and mostly in loans.
-
10:47 - 10:51When you don't take that kind
of social environmental information -
10:51 - 10:53into account,
-
10:53 - 10:54you get strong reactions.
-
10:57 - 11:01I'm not trying to argue
that the trade-offs -
11:01 - 11:04by either Grab or Jumia
or Gojek are risk-free. -
11:05 - 11:08Did they slow down growth
at some point, temporarily? -
11:08 - 11:09Maybe.
-
11:09 - 11:11But look at them today.
-
11:11 - 11:13Gojek is worth 10 billion dollars.
-
11:15 - 11:19Jumia is one of only three unicorns
in the whole of Africa. -
11:20 - 11:23And Grab, well, they pushed out Uber
-
11:23 - 11:26out of the whole region of Southeast Asia.
-
11:27 - 11:31And I also think these trade-offs
have nothing specific to emerging markets. -
11:32 - 11:35Amazon or Uber or others
can learn from them -
11:35 - 11:38and adapt them to their own realities.
-
11:38 - 11:40In the long run,
-
11:40 - 11:42this doesn't need to be a zero-sum game.
-
11:43 - 11:44In the long run --
-
11:44 - 11:47and this is maybe the Asian
side of me speaking -- -
11:47 - 11:49it pays to be patient.
-
11:49 - 11:53It pays to reconsider
your goal and your priorities -
11:53 - 11:55in the light of a much bigger equation
-
11:55 - 11:58that includes you
and your users, of course, -
11:58 - 12:01but also it includes regulators,
-
12:01 - 12:04policymakers, your communities.
-
12:04 - 12:06And I would argue, above all,
-
12:06 - 12:09it includes the very businesses
you are meant to disrupt. -
12:10 - 12:11Thank you.
-
12:11 - 12:15(Applause)
- Title:
- How online marketplaces can help local economies, not hurt them
- Speaker:
- Amane Dannouni
- Description:
-
The growth of online marketplaces like Uber, Airbnb and Amazon can sometimes threaten local businesses such as taxis, hotels and retail shops by taking away jobs or reducing income to the community. But it doesn't have to be this way, says strategy consultant Amane Dannouni. Pointing to examples like Gojek (Indonesia's Uber for motorbikes) and Jumia (Africa's version of Amazon), he explains how some online marketplaces make deliberate trade-offs to include, rather than replace, existing players in local economies -- benefiting everyone in the long run.
- Video Language:
- English
- Team:
- closed TED
- Project:
- TEDTalks
- Duration:
- 12:27
Erin Gregory edited English subtitles for How online marketplaces can help local economies, not hurt them | ||
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