Asia's Development Sector Pans the Internet for E-Commerce Revenue

Vivien CHIAM <>
Maria NG <>
International Development Research Centre

CHIN Saik Yoon <>
Southbound Sendirian Berhad



Development research agencies, civic groups, and nongovernmental organizations (NGOs) in Asia play an important role in the social and economic development of vast numbers of communities in the region. In some countries their reach and services rival, and sometimes even exceed, that of government agencies. The size of these groups spans the entire gamut: from a handful of volunteers caring for a small village, to thousands of full-time staff.

Asia's development sector organizations have been active participants and users of the Internet from the early days, deploying it originally to network among themselves, exchange experiences, mobilize around common causes, and advocate on behalf of Asia's disadvantaged groups. This paper describes how they are participating on the Internet by going one step further--with e-commerce.

The development sector's commercial activities aim to raise funds to sustain their programs and to generate income for the poor communities they serve. An important commodity offered for sale by the sector is publications. These range from technical monographs and scientific journals to greeting cards and gift wrap. Linked to publications are videocassette recordings of various development subjects and educational programs, photographs, and CD-ROMs. Another important category of items for sale includes tools and implements as diverse as water hand-pumps, farming tools, and food-processing machines. Products manufactured or grown by villagers, as initiatives of income-generating projects, are often marketed collectively on their behalf by NGOs. Examples of such products include handspun and woven fabric, handicraft, vegetable seeds, furniture, and toys.

The development sector in Asia has found that many obstacles lay in their way toward setting up for e-commerce. Some of these are:

Pan Asia Networking (PAN)

Internet market analysts1 have predicted enormous growth in e-commerce. Government and NGOs in the developing countries are watching this phenomenal prospect with much trepidation and anticipation, and they are acutely aware that should they not ride on the crest of the wave, their client communities, the have-nots, will again be left behind as the marginalized victims of globalization.

Pan Asia Networking (PAN)2, a research program initiative of the International Development Research Centre (IDRC) of Canada3, began monitoring these trends as early as 1997. PAN is a unique program that aims to promote collaboration in research and development through use of Internet technologies. It has played an active role in developing the basic Internet infrastructure in the developing countries of Bhutan, Bangladesh, Cambodia, Laos, Mongolia, Nepal, Sri Lanka, Vietnam and, more recently, Tibet. With funds from a Singapore government S-ONE grant, PAN has been shaping and developing an e-commerce platform in consultation with the development communities.

The PAN E-Mall, operating from the PAN multimedia website located in Singapore, is now serving Asia's development organizations wishing to engage in e-commerce, among other things, as a new channel to generate additional income.

Figure1 The PAN Home Page
Figure 1. The PAN Home Page:

Figure 2 The PAN E-Mall
Figure 2. The PAN E-Mall:

Conceptual design of the PAN E-Mall

PAN's E-Mall is designed to serve organizations and merchants selling a variety of goods. The high costs and daunting logistics of running a centralized order fulfillment depot led to an early decision to decentralize order fulfillment for all physical products to the respective merchants. The E-mall would present an online catalog of goods for customers to browse, take their orders, process credit card transactions, and then automatically communicate the orders to the respective merchants for fulfillment.

It was decided at the same time that the opposite would apply to digitized products: orders for products in electronic form would be delivered centrally from PAN since it is more technologically and economically feasible to do so.

A survey among the prospective merchants revealed the following clusters of goods, which would form the core commercial offerings at the E-Mall and therefore required prime consideration in its design and construction: books, journals, photographs, CD-ROMs, videos and films, handicraft, and digitized texts. Given the development intent of PAN, and the appreciation that significant numbers of people living in developing countries do not have access to credit card facilities, it was also decided that the E-Mall would accept bank drafts.

The above specifications served as the basis for the design and customization of four application systems to run on the Informix Database and Web Datablade software:

PAN's e-commerce site runs on Sun and NT servers, while the e-commerce server is a dual-CPU E3000 Sun Enterprise server. Access speed is at 100 Mbps.

Virtual Bookshelf System (VBS)

VBS went into full service in December 1998. Merchants are able to manage their VBS shops through a Web browser. After clearing security screening, they can establish their virtual shop fronts, set up a display of the digitized books, journals, and types of text. This display includes basic bibliographic information, abstracts or sample blocks of text, and price for each title available. At the same time the merchants upload the full text of the titles intended for sale in HTML or PDF formats.

Visitors to the E-Mall are permitted free access to all the shops, where they are free to carry out keyword searches of all the abstracts or samples of text. They may decide to subscribe to selected titles based on their reading of abstracts, sample text, and bibliographic information provided. They may select titles from different shops or merchants in one visit and make one payment at the end of their visit. The subscribers who have completed their credit card payments are then permitted immediate access to the digitized publications that they have purchased. As access is enabled through a password, subscribers may access these publications on the Web from anywhere in the world.

VBS was built using Informix SQL and SPL languages, Excalibur Text Search Datablade Module (to provide subscribers with full-text searching directly within the database engine), and Perl. SSL (Secure Sockets Layer) end-to-end encryption is used to encrypt information flowing between the subscribers' browsers and VBS. VBS has an accounting module that generates online invoices and receipts for the customers and takes care of internal transaction tracking for PAN and the merchants.

Figure 3 A Publication on the PAN Virtual Bookshelf System
Figure 3. A Digitized Publication on the PAN Virtual Bookshelf System:

Mail Order System (MOS)

MOS was launched in June 1999. It serves visitors to the PAN E-Mall in search of physical products such as books and publications, handicraft, videocassettes, and CD-ROMs. Merchants are permitted access via a Web browser to set up shops and upload product information, including graphics illustrating products. After customers have paid for their purchases, MOS automatically sends out e-mail copies of the orders to the relevant merchants for fulfillment. To cater to the needs of developing country customers, MOS customers may choose to pay for their orders via bank drafts.

One of the biggest challenges in designing MOS was to allow for the numerous delivery options (and corresponding shipping costs). The shipping costs varied not only according to the mode of delivery (air or surface mail, courier, etc.), but also the distance from the customer's address to the merchant's. Added to this was the merchants' own discount system for preferred customers, and varying ways of grouping countries into zones for geographically based pricing.

MOS was written using Informix SQL, PERL, UNIX shell commands, and HTML.

Figure 4 PAN Mail Order System
Figure 4. PAN Mail Order System:

Video-on-Demand Library (VOD)

VOD aims at testing the selling of development content in video-on-demand format. The test market lies largely within users who have broad bandwidth access to the Internet.

VOD was launched in November 1999 with an initial offering of 10 videos produced by PAN's merchants. These range from a documentary about the coconut tree produced by the Asia Pacific Coconut Community based in Indonesia, to another on community forestry produced by the International Center for Integrated Mountain Development in Nepal. Subscribers to VOD are charged a nominal fee of US$30 per year for unlimited viewing of all the productions offered at the VOD Library.

In setting up VOD, high-quality full-length MPEG-4 videos were encoded at 25 frames per second (fps) with an image size of 176x144 (QCIF format). Microsoft Windows Media Player was selected as the client software required for viewing the videos. Tests conducted demonstrated that the videos streams are smooth when the average frame rate is around 20 fps. The VOD server employs multiple bit rate video to enhance the delivery of videos. Using this type of encoding enables the Windows Media Player to continue rendering content when network bandwidth is reduced. When the VOD server detects such a reduction it automatically switches to a delivery mode using a lower bandwidth video stream. The subscriber will experience a slightly lower quality video image during this period, but the stream is not interrupted and there is no need for buffering to recover from the loss of bandwidth. The audio for the videos is encoded in mono instead of the stereo format to reduce the bandwidth required. To improve the performance of the VOD server, it is co-located at the local ISP's facility to take advantage of their 100BaseT connection to the Internet backbone.

Figure 5 PAN Video-on-Demand Library
Figure 5. PAN Video-on-Demand Library:

Grameen checks order system

The world-renowned Grameen Bank of Bangladesh runs a highly effective microcredit program for the poor communities in the country that do not have access to conventional bank financing. Villagers who borrow from the Grameen Bank use their loans to start small businesses in order to generate employment and income for themselves. Among the many types of activities is the hand-weaving of fabric in a large variety of checkered designs. Over the years, these villagers have created thousands of check-designs, which are sold by Grameen Uddog on behalf of the weavers in villages scattered across Bangladesh. In working with the Grameen Uddog as a development partner, PAN designed this customized e-commerce system, which showcases more than 400 designs of cotton checks.

The Informix Image Datablade allows potential buyers to search for similar check-designs based on the selected predominant colors.

The main challenge to the operation of this order system is posed by the production constraints of the rural producers, who require a minimum order for 1,371 meters (1,500 yards) of a fabric design before they start production. As such, this part of the E-Mall is targeted more at textile merchants and wholesale businesses rather than individual buyers.

Figure 6 Grameen Checks Order System
Figure 6. Grameen Checks Order System:

Order fulfillment

The PAN E-Mall deals with two types of products. The first category, comprising digitized content such as electronic publications and images, and video-on-demand titles, is fulfilled directly from PAN's base in Singapore. The digital nature of these products permits their delivery to customers to be automated using PAN's database.

The second category of products comprises physical items: books, handicraft, videocassette tapes, etc. Given that PAN's objective is not to participate in the partners' business itself, but rather to provide the facility to the partners, PAN has designed the system so that fulfillment of orders is carried out by the respective merchants from their own premises. In opting for this approach PAN recognized that it is the realistic, though not necessarily ideal, solution. Customers who purchase products from the offerings of a single merchant during any one transaction will be efficiently served this way. Slight confusion may arise when a customer makes purchases from several merchants during a single transaction, in which case the customer will have goods delivered from several locations, and at different times. From the merchants' perspective, this method of fulfillment will not reap economies of scale in transportation costs since items will be shipped individually at a higher tariff, rather than at a lower cost per item by consolidating all items for a single order into one package. However, the decentralized method of order fulfillment remains, for the immediate future, the most viable option. A pattern of customer orders may emerge in the future that may help PAN devise an alternative approach.

One option that has been discussed involves selected merchants (perhaps one in each country) being appointed to manage PAN depots where merchants' goods are stocked, and orders sent to the depot nearest their point of origin for fulfillment. This important aspect of managing an e-commerce operation will be the subject of regular discussion and monitoring among PAN's merchants.


E-commerce transactions are conducted in a secure environment (note that the URL begins with "https" instead of the normal "http"). Credit card information sent by the customer to the PAN e-commerce server and to the payment processing service provider (in this case, National Computer Systems of Singapore) is encrypted via SSL. The IP address of the PAN e-commerce server and a unique server identifier number are used for authentication when connecting to the service provider. The PAN server does not keep credit card information of customers. The credit card details are transmitted immediately to the service provider and are not stored on the PAN server.

Innovative electronic products

PAN has developed two digitized, "custom-built" information products for online distribution. They are described below:

The Pan Asia Networking Yearbook (PANY): This is a comprehensive guide to the Asia Pacific region's current state of Internet development. It covers 22 countries and was compiled with the assistance of leading Internet experts, policymakers, researchers, and members of the industry in each country. Subscribers may purchase access to either the entire yearbook or individual country chapters. Access may also be purchased for a single subscriber or for an institutional subscriber, which allows multiple access via recognized IP addresses (e.g. Libraries or Universities).

Pan Asia Networking Yearbook sold on the Web
Figure 7. Pan Asia Networking Yearbook sold on the Web:

Enhanced Vocalization Engine (EVE): This is a unique, interactive Web-based product that teaches correct English word pronunciations. EVE allows subscribers to select words from a dictionary containing articulatory information, which is then presented to the subscribers in the form of animated graphics, accompanied by audio and textual descriptions. The functions of each of the major speech organs: tongue, teeth, and lips are illustrated separately in this product.

EVE is an example of an innovative product that has great potential for development in the online learning and distance education field. The model shown on the PAN website is a proof-of-concept model only. Much more investment needs to be made into the program in order to put the product on the E-Mall. PAN hopes to seek out potential investors and collaborators for this project.

Figure 8 EVE - Learning English Pronunciation over the Internet
Figure 8. EVE - Learning English Pronunciation over the Internet:

Promotional strategies

PAN believes that motivating merchants whose products collectively stock the E-Mall is just as important as advertising the presence of the E-Mall to potential customers. Both merchants and customers are crucial to the success of the PAN E-Mall. In advertising the E-Mall to customers, PAN uses a combination of conventional and new media approaches.

Competitive advantage: IDRC's long-standing reputation as a trusted, reputable, international development agency, with 30 years' history in Asia, has proven to be an invaluable asset in attracting quality development partners. The Pan Asia Networking program initiative of IDRC has enjoyed much publicity in development and ICT communities since its launch some six years ago and the "PAN" brand name is already well-known. Similarly, visitors to the E-Mall are assured of a bona fide site comprising merchants who have been screened and approved by PAN.

PAN's systems are SSL-compliant, which is another assurance for customers. PAN applied for and received the right to apply the "Verisign" logo to the E-Mall's homepage as an endorsement of the reliability and credibility of the E-Mall operator for potential customers who require such an assurance to shop online.

Mobilization of merchants: Twenty-seven merchants from the Asia-Pacific region were invited to Singapore in August 1999 for a four-day workshop when they were trained in the "shop-management" features of VBS and MOS. The workshop also focused the attention of the merchants on issues relating to the promotion of the E-Mall and the products of individual merchants, pricing of products, order fulfillment, and legal contracts. The merchants also took part in a survey designed to help at map out their needs and readiness to take part in e-commerce. The survey results helped in the compilation of a profile of the merchants and will serve as a tool to design business and operational strategies for the E-Mall. The workshop also served the important purpose of enabling merchants to meet face-to-face and discuss among themselves their commonalities and complementarities. This personal touch has carried over successfully to post-workshop consultations, which are carried out regularly over the Internet using a virtual conferencing software licensed from WebCT. It is believed that this "one learning network" for all the merchants is a unique feature not found on other E-Malls.

Collective and cross-promotion: The PAN team in Singapore promotes the E-Mall through a variety of channels: mailing of printed brochures; use of e-mail lists; being featured in key magazines such as National Geographic and TIME, as well as being interviewed for television documentaries. PAN also participates in major international ICT conferences, trade shows, and international events organized by professional bodies, such as the International Federation of Libraries Association.

The merchants also undertake joint promotion and advertising for the E-Mall via their respective organizational publications and catalogs, "plugs" for the website at conferences and meetings, and personal referrals of the E-Mall. This cross-promotional strategy is potentially far-reaching as it reaches across the contacts and mailing lists of all the participating merchants.

The emphasis on interpersonal and group communication methods in the promotion of the E-Mall is based on prior experience in the development sector which shows that peer referrals are the most effective strategy for promoting a product while at the same time providing it with an endorsement of professional credibility.

Legal issues

The PAN team found itself in uncharted waters when it began to prepare business contracts to formalize its relationship with the merchants and to clarify the roles, responsibilities, and liabilities for all the parties. As few, if any, precedents exist pertaining to the terms of managing e-commerce at a multi-merchant mall, PAN had to create some of the rules for itself. Tricky issues, such as international copyright, legal jurisdiction of transaction, quantity of sales commissions, etc. were also addressed along the way. All these issues were addressed through long consultations with PAN's legal counsel, together with the participating merchants, which was in itself a good learning experience for all.

Business model

The main objective of PAN in establishing the E-Mall is to host an experimental laboratory for developing country partners to test the demand for their research and development products and services. However, sales revenue remains an important consideration for all and is sought for two primary reasons:

The altruistic objective of the development sector comes from its long tradition of freely sharing information with others so that public awareness of development issues is heightened, and experiences exchanged with the goal of advancing solutions to common problems. Although the for-profit and altruistic intentions of the merchants and participating organizations may seem to conflict at times, the dichotomy may in fact be a very helpful one for promoting traffic, if not business, at the E-Mall. Information provided free at the PAN website should draw visitors to the E-Mall and vice versa.

The merchants at PAN who function mainly as publishing houses see in the E-Mall an excellent opportunity for generating income from the sale of "subsidiary rights": all types of income that may be derived from a title after the original paper version is published. The prospects are brightest for merchants who publish journals. The E-Mall presents them with an excellent way to derive income from back issues and issues of journals that are out-of-print, especially as electronic versions of such journals already exist in the form of desktop publishing files and therefore minimum further investment is required to make them available on the E-Mall.

Development publishers among the PAN partners should find in the VBS an avenue for publishing highly specialized titles that may attract such a small number of potential purchasers that a paper version of the publication is not commercially viable. By publishing and selling it in an electronic format (which involves limited upfront investment) such "short-run" titles are once again viable. The main obstacle to electronic short-run publishing rests partly on its "cite-ability" within academic and research communities. This problem may be partly addressed by the publication of such titles in the PDF format, which offers page numbers and a consistent graphical presentation of the title as required by most citation conventions. (VBS is designed to work with the PDF format for this reason.)

Video and film producers will find in the VOD advantages similar to those publishers found in the VBS. The advent of low-cost but versatile digital video recorders has now made film production affordable to many more people than in the past. The cost of post-production (when shots and sequences are assembled and a soundtrack synchronized to fit the visual) has also declined dramatically. And because post-production work is now done on personal computers, film producers are able to exercise direct control on the creative process that leads directly to the release of digitized videos. Still missing is the distribution network to efficiently distribute such low-cost productions. VOD may be the answer.

Centralizing part of the E-Mall operation speeds up access for customers (by drawing on the high-speed connections and servers offered by PAN) and results in economies of scale (merchants are not required to individually establish and maintain their own servers and Internet connections). The latter is of major importance to participating merchants since they do not have the financial resources to establish and maintain their own servers for these electronic products.


The advent of e-commerce on the Internet has drastically changed the playing field for everybody. As market-driven strategies for e-commerce are mostly concentrated on commercial models, PAN is attempting to assist the development sector in finding its position in a world that has become e-business-oriented. By building a "development-friendly" E-Mall to cater to this group, PAN aims to open a route to the marketplace of the future for the Third World.


  1. Internet E-commerce News:
  2. Pan Asia Networking is a program initiative of the International Development Research Centre (IDRC) of Canada.
  3. IDRC is a public corporation created by the Parliament of Canada to help researchers and communities in the developing world find solutions to their social, economic and developmental problems.