There are 9.50 million e-commerce businesses in operation in the United States, making it the home of the world’s highest number of e-commerce businesses. These businesses account for over 36.25% of all businesses worldwide. E-commerce platforms encompass a wide range of online activities, including buying and selling goods and services, electronic funds transfers, online auctions, and internet banking, offering an unparalleled convenience, accessibility, and flexibility to both businesses and buyers. But what about government e-commerce platforms? What are they and why are they becoming more important for government operations? In this blog post, we introduce to you the scope of these so-called government e-commerce platforms that are revolutionizing the way governments make their purchases, and how we at GLASS are taking them to the next level to achieve the next generation in government procurement.
The ABC of e-Commerce
According to Amazon, the largest U.S. e-commerce marketplace and the most popular worldwide e-commerce and shopping store, "‘E-commerce’ or ‘electronic commerce’ is the trading of goods and services on the internet.” Furthermore, in one of our blogs, we mentioned that “An e-commerce platform is a digital space that enables businesses to showcase and sell their products or services directly to consumers.”
Basically, e-commerce operates on the fundamental principle of facilitating online transactions between buyers and vendors. At its core, e-commerce platforms serve as virtual marketplaces where buyers can browse, select, and purchase goods or services from the comfort of their own devices, such as computers or smartphones. These platforms typically feature user-friendly interfaces, intuitive navigation, and secure payment gateways to ensure a seamless shopping experience. Upon selecting desired items, users proceed to checkout, where they provide necessary payment and shipping information. Once the transaction is completed, the vendor typically receives a notification and prepares the order for shipment or delivery.
Behind the scenes, the functionality of e-commerce platforms relies on a complex network of interconnected systems and technologies. Product listings, inventory management, and order processing are managed through sophisticated backend systems, often integrated with customer relationship management (CRM) and enterprise resource planning (ERP) software. Additionally, secure payment processing is facilitated by encryption protocols and payment gateways, ensuring the confidentiality and integrity of financial transactions. Furthermore, logistics and fulfillment operations play a crucial role in ensuring timely delivery of goods to customers, with e-commerce businesses often partnering with third-party logistics providers for efficient order fulfillment and shipping services.
We've all operated on an e-commerce platform at some point, whether it's to purchase a product or service or to sell something of our own. Every passing minute sees the creation of e-commerce platforms with a wide variety of product and service offerings. Amazon, Shopify, eBay, AliExpress, Etsy, are well-known names to most. We all know what e-commerce is and what e-commerce businesses are, but why doesn't anyone talk about government e-commerce? Do governments not use them? Do they not need them?
Is Government e-Commerce… a thing?
Governments around the world are increasingly embracing digital platforms to streamline their procurement processes and enhance transparency, efficiency, and accountability. However, there are 2 ways to carry out an electronic government procurement process:
- The most widespread form, found in cities worldwide, is e-government procurement (e-GP) or electronic government procurement. This process occurs through official digital platforms that facilitate a significant portion of the purchasing process, as regulated and established by local, federal, or state laws. These platforms streamline many tasks involved in finalizing purchases: sourcing suppliers, issuing tenders, evaluating bids, and awarding contracts. Essentially, it involves the digitization of the public procurement process, replacing traditional paper-based methods with electronic or digital ones.
- The second option, less known, is what we call government e-commerce. Through this method, government agencies procure products and services via e-commerce platforms external to the government sector. These platforms are not governmental digital platforms but rather belong to the private sector. Through them, vendors offer a variety of products and services that government buyers can purchase electronically. Generally, this method is used for small government purchases that do not require going through the official public procurement platforms of each territory.
In simple terms, government buyers can make their purchases through official government procurement platforms, depending on the type of purchase they intend to make, or they can choose to make small purchases through e-commerce platforms (or on-site stores), which could be any of the options mentioned earlier, also commonly used by the general public.
However, and here's where it gets interesting, should governments, being the largest consumers in the world, conduct their purchases on traditional e-commerce platforms just like any other citizen? Considering the weight and impact of their transactions on the economy, wouldn't it be better for them to make their purchases on e-commerce platforms that take into account the unique aspects of government transactions? This is where we truly delve into "Government e-Commerce": when governments utilize e-commerce platforms developed specifically with every aspect of the public sector in mind. This includes the incorporation of digital tools allowing real-time tracking of transactions made by various government buyers associated with each governmental agency, as well as prioritizing small, diverse, and local suppliers to achieve the socio-economic purchasing goals often set by governmental entities.
If governments must use official government procurement platforms for larger purchases, ensuring transparency, efficiency, and security in transactions, why not do the same for their smaller purchases? Small purchases are so named because they typically do not exceed $10,000 (depending on local, state, or federal regulations), yet this type of purchasing represents the majority of transactions made by cities. For instance, in 2021, New York City made a total of 95,148 purchases, out of which 83,312 were micro-purchases, M/WBE Noncompetitive small purchases, and small purchases, representing more than 80% of the city's purchases.
How are we taking government e-commerce to the next level?
Glass Commerce, our flagship product, is a one-of-a-kind government e-commerce platform. Not only does it fulfill all the requirements expected of an e-commerce platform, but it also serves as a governmental tool.
In developing Glass Commerce, we have thoroughly examined the needs and challenges faced by each governmental agency when it comes to making their purchases. We know that for certain purchases, government agencies must utilize official government procurement platforms (electronic government procurement). However, the same doesn't hold true for small purchases. In such cases, government buyers can procure goods or services from wherever they choose. They can purchase from a large national retailer or a locally-owned office supply store. If they choose to purchase from the national retailer, the money spent will likely leave the local economy, as the retailer's profits will go to their headquarters located elsewhere. On the other hand, if they choose to purchase from the local office supply store, the money spent will stay within the community, supporting the store's employees and contributing to the overall economic health of the city. Furthermore, if the local office supply store is a small or minority-owned business, the government buyer's decision to purchase from them can have an even greater impact on the local economy.
So the big question was: How can we harness the immense purchasing power of governments to help them achieve their socio-economic purchasing goals while also connecting them with the backbone of our economy -small businesses-, enabling them to access the governmental market portfolio as well? For us, it was a win-win situation from the start!
Glass Commerce is not just an e-commerce platform through which secure, fast, simple, and effective transactions take place. Our platform never aimed to be just another run-of-the-mill e-commerce platform. Nor did we create it with the intention of it becoming the preferred e-commerce platform for governments. What we built was a digital government tool. It possesses all the characteristics of an e-commerce platform like the thousands available in the market, but it was specifically developed with the peculiarities, needs, and challenges of government agencies in mind.
We didn't just create a government tool with exclusive functionalities for public procurement departments; we also sought to build a bridge between governmental agencies and small, local, and diverse businesses that don't have easy access to the business opportunities offered by governments. With Glass Commerce, we're solving a problem that has gone unresolved for years.
We believe that governments have enormous growth potential (even greater than the private sector), and at GLASS, we will continue to help them reach their full potential by building transparent, secure, user-friendly platforms that above all else, address the needs of governments.
This blog was written by Gisela Montes, GovTech Community Lead at Glass.