By Teresa Moreira, Head of Competition and Consumer Policies, UNCTAD
© leungchopan
Singles’ Day, also known as “Double 11”, marked on 11 November, is a Chinese unofficial holiday that is the highest spending e-commerce day in the world. This celebration was started by e-commerce giant Alibaba in China in 2009, offering significant discounts to consumers.
Since then, it has spread to other e-commerce platforms such as JD.com and Pinduoduo Inc. and become a multibillion-dollar annual shopping day in a little more than a decade. Last year, around 800 million consumers participated in the day, while Alibaba and JD.com recorded around $115 billion in sales, setting new records for both companies.
Alibaba doubled the value of the orders it registered in the 2019 edition of Singles’ Day, reaching more than $75 billion. JD.com recorded a more than 25% jump in its transaction volume over the same period in 2019. Singles’ Day is expected to set a new sales record in 2021 due to an early start.
The rapid growth of Singles’ Day is indicative of the speed of e-commerce growth around the world, which has only accelerated since the onset of the COVID-19 pandemic, as lockdowns and quarantine measures propelled consumers towards digital markets. UNCTAD’s global review on COVID-19 and e-commerce shows that the market share of online retail against offline grew from 14% to 17% in 2020.
Consumer mistrust is also on the rise
Business-to-consumer disputes are also on the rise, testing consumer confidence in the digital economy. Before the 2020 e-commerce boom, a 2017 global UNCTAD survey already revealed that 49% of internet users identified lack of trust as the main reason for not shopping online. This trend was confirmed in 2019.
A new UNCTAD research paper entitled “Consumer trust in the digital economy: The case for online dispute resolution” shows that despite the continual growth of e-commerce, consumer trust in it is not necessarily growing. Consumer dissatisfaction across different sectors and industries has been identified as a key challenge for government officials.
Building trust through mechanisms for dispute resolution
Building consumer confidence is essential to reaping the development benefits that e-commerce and the digital economy promise.
UN guidelines on consumer protection recommend that “member states should work towards enhancing consumer confidence in electronic commerce by the continued development of transparent and effective consumer protection policies, ensuring a level of protection that is not less than that afforded in other forms of commerce.” So, what can practically be done to build consumer confidence?
UNCTAD’s research shows that an effective consumer dispute resolution system is a key instrument for fostering trust between businesses and consumers. The speed and quality of the resolution of consumer disputes and complaints can significantly impact customer loyalty and increase consumer trust.
Businesses should realize that online dispute resolution (ODR) systems are essential for building consumer loyalty and use this tool as part of their strategy. UNCTAD’s new research paper highlights that ODR can be especially useful for small and medium-sized enterprises that can benefit from gaining new customers and saving costs.
Consumers’ perception of justice matters
The consumer’s perception of justice is also a catalyst that reinforces loyalty. If the consumer feels well-treated during the dispute resolution process, there’s a higher likelihood of repeat purchase. In e-commerce, this requires consumer disputes and complaints to be settled as quickly as digital consumers shop online.
UNCTAD’s research paper on consumer trust in the digital economy will be launched on 13 December and followed by a roundtable discussion to seek the common ground needed for joint actions by public, private and civil society actors to enhance consumer trust and bring about inclusive and sustainable development.
This research is conducted in the framework of UNCTAD’s technical cooperation project, “Delivering digital trading infrastructure and online dispute resolution for consumers as means to improve international trade and electronic commerce”, a pilot initiative to help implement online dispute resolution systems for consumers in Indonesia and Thailand, with the support of the China Silk Road Group.
These efforts seek to fulfill the Bridgetown Covenant adopted at UNCTAD’s 15th ministerial conference in October 2021, which reaffirms that “Multilateral dialogue and cooperation are crucial in areas such as the governance of new and emerging technologies, including those related to data management, competition and consumer protection. Special attention should also be paid to the challenges of electronic commerce and the digital economy through an integrated approach to many strategic areas.”