Internet Shutdown By The Government Is Harming Iranian eCommerce
Although it may be too soon to predict how the protests would affect Iran’s economy, early indications point to a severe disruption in the retail and e-commerce industries.
The government has imposed severe restrictions on access to the Internet in general and to well-known social networking sites in particular, which are crucial for e-commerce. The use of the Internet and social media to spread information and photographs about protests, possibly inspiring a wider portion of the public to participate in demonstrations, has the administration greatly concerned. Videos of the widespread turmoil reaching other countries are likewise not liked.
Authorities have been restricting Internet use and sluggishing connections to make it more challenging to upload videos for more than three weeks. The move to completely restrict WhatsApp and Instagram, however, has an impact on e-commerce.
Instagram in particular is a very well-liked medium for people to sell goods and services online, as well as little family businesses and larger corporations with workers. According to some estimates, Iran has close to one million units of these businesses. However, businesses with 10–200 employees only make up a minor portion of this total, notwithstanding the lack of accurate data.
Thousands of major and small businesses both experienced an instant stoppage or slowdown in sales as a result of the interruption of the Internet and the Instagram ban.
According to a research released on October 8 by an online business group, e-commerce companies with 10 or more employees lose anywhere between $1,500 and close to $20,000 every day. These sums are significant in the local currency.
Smaller enterprises owned and operated by individuals and families would suffer substantially less loss, but the effects of that loss would be harmful to their ability to support themselves.
According to a news source, ecommerce businesses have frequently lost all of their revenue, although most have noticed a reduction in orders of 70%, and in the best circumstances, merchants are only losing 50% of their sales.
According to an unofficial survey of 104 retailers (10–200 employees), 53% are losing $1,500 a day in sales, compared to 21% who lose up to $3,000, 18% who lose between $3 and $15,000, and the top 8% who lose more. Businesses with more than 200 employees make up the top tier.
Given that there are likely hundreds of thousands of tiny family companies losing a few tens of dollars each day, the overall daily losses from e-commerce could amount to millions of dollars. Additionally, postal delivery have dropped by more than 25%.
This excludes the overall harm caused by Internet outages to the economy. According to some sources, the government and businesses have started using the phone and fax to communicate.
Although there is no comprehensive assessment of daily e-commerce volume in Iran, the sheer volume of social media accounts and websites that conduct business online gives an idea of the impact on the country’s economy.
If the protests come to an end, it is unclear if the government plans to keep Instagram and WhatsApp off limits. Even without the current protests, the hardliners who have been in charge of the administration and parliament for more than a year intended to further censor online access. Some individuals now seem to be advocating that foreign app limitations should remain in place indefinitely in order to maintain the religious government’s ideological and political constraints on its inhabitants and to avoid the influence of Western culture.
