With the ease of delivery of purchases made on Amazon and other online shopping websites to Caribbean countries, we discuss whether regional retail is dead.

 

Last week, on the Caribbean news platform, Caribbean 360, there was a discussion on whether Caribbean retail is dead. Three regional experts were asked to weigh in on the issue: Marla Dukharan, an Economist; Rawdon Adams, a Financier and the Chief Executive Office of the Barbados-based digital currency exchange, Bitt Inc.; and Greg Hoyos, a Marketer and Chairman of the marketing agency, Greg Hoyos Associates Inc. Their points of view ranged from an energetic “yes, its day is over”, to a firm “no”. Thanks to the absence of consensus, we are adding our own two cents to the conversation.

The elephant in the room: the unbanked and underbanked

Without a doubt, a wide cross-section of Caribbean citizens are enjoying the benefits of online shopping with Amazon being the most longstanding source of retail therapy. Further, mail forwarding services, such as Aeropost, that have delivery centres in the United States (US) and provide shoppers with a US mailing address, means that the variety of goods that can now be shipped from the US to the Caribbean is virtually limitless.

Having said this, a significant portion of the region’s population are either unbanked, underbanked, or do not have credit cards. As was noted in our article last year, A matter of trust? Why is the Caribbean still behind in conducting digital transactions online? 65% of the Caribbean population is unbanked. Asa  result, and to a considerable degree, these individuals are making their purchases locally, not online.

Basics versus premium purchases

Second, as much as we might be shopping online, and specifically making retail purchases outside the Caribbean region, generally, we are not buying the basics, such as food, toiletries and consumable household items. Instead, our focus tends to be more along the lines of what might be considered discretionary spending and premium purchases, which would include books, some clothes and shoes, and small consumer electronic goods.

Having said this, it must be highlighted that although the cost of a product from a US-based online store might be cheaper than what obtains for a similar product sold in the Caribbean, invariably, delivery costs into the region is not cheap, especially when the goods are being air freighted by a mail forwarding service. Depending on the product, the dimensions and weight of the package, and the extent to which Customs duties will be incurred, the landed price could be almost on par with what you would spend locally for the same (or similar) product.

However, frequently, what you are actually paying for is the choice of products available overseas, as opposed to locally. In buying a product online, you really cannot handle it beforehand – unless it is also available locally. And while the customer reviews can help give you a sense of what you might experience with that product, some of them might not be an honest review, but have been inserted to drum up sales.

The growing risk of buying remotely

As much as buying online can work out cheaper and is an attractive option for many, there are risks. One of the biggest, which is growing, is the risk of fraud, whereby the product received is considerably different from that which was advertised. Even on a reputable and popular platform, such as Amazon, you are not immune. There are multiple sellers, and it is easy to assume that all sellers have been properly, and are being continually vetted, but that is not necessarily the case. Hence the onus is on you, the buyer, to do be vigilant and do your homework.

This challenge with online shopping can generally be minimised when purchasing locally. Although fraud can still occur, in being able to inspect and handle the product, you are in a better position to confirm that the product description matches what is actually being offered. Further, there may be greater scope for redress, such as having the good exchanged, or a refund issued. In order to have those types of remedies available for an online purchase, the product may need to be returned to the seller, which means paying for it to be exported out of the region, which can be prohibitively expensive if timely delivery is needed.

Import tariffs a growing source of revenue

Finally, it should be noted that our growing love of shopping online is opening a revenue stream for many governments across the region: from the duties, taxes, etc., payable on those imports. Unlike the personal allowance typically established for the goods you carry in your luggage upon your return from a trip overseas, and outside of very specific and documented exceptions, all other imports are dutiable.

Further, through those taxes and charges, Government can influence your buying behaviour – such as encouraging you to buy local. For example, if the taxes and charges for a particular class of products is high, or the clearance process is more complicated, it can be a deterrent for you to purchase them overseas, when all factors are considered.

 

In summary, regional retail is not dead. However, the landscape has changed from what it was five, 10 or even 15 years ago, as most retailers no longer have a captive market. Today’s consumers many have options, especially for premium products, but local retailers can offer a tactile and sensory experience, which can be hard to beat.

 

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