e-Commerce not as relevent as it could be

e-commerce will only thrive when it becomes relevant to local entrepreneurs and consumers

May 26, 2011

South Africa has, over the years, gradually moved towards providing an enabling environment for e-commerce to take place. Regulation such as the Electronic Communications and Transactions Act of 2002, which aims to facilitate e-commerce by creating legal certainty and promoting trust and confidence in the electronic landscape, and the recently passed Consumer Protection Act of 2010, has provided increased security and peace of mind for consumers which has allowed for more online trade to take place.

As a result, more South African consumers have gained confidence in online transactions. The latest MasterCard Worldwide survey on online shopping revealed that 51% of South Africans with Internet access are shopping online. According to the survey, online retailers remain optimistic about revenue growth and this is further supported by the fact that even 2 years ago in 2009 e-commerce sites such as Kalahari.net saw their revenues increase between 20-25% compared to the previous year. As optimistic as these figures may seem, a large number of South Africans still do not have access to the e-commerce trade. Out of a population of about 49 million people, only six million have access to the Internet – a reality that counteracts efforts to make e-commerce viable in our local economy. It poses a missed opportunity for a bigger market share for entrepreneurs who buy and sell in the virtual space.

E-commerce cannot thrive without access to a computer and an affordable broadband network. With almost half of the South African population living below the poverty line and 24% of it unemployed, the price of new computers is beyond the reach of most people. Companies that provide refurbished computers and peripherals that are sold at a fraction of the price of a brand new PC  enable the lower LSM market to afford the opportunity of accessing ICT when it was previously impossible and open a door of opportunity to provide technology resources that ultimately improve society’s ICT skills, create jobs and accelerate e-commerce activity. It is only when the man on the street has access to the virtual world that the potential and convenience of e-commerce will be understood and utilised on a broader scale.

Lower LSM consumers will need more guidance in understanding the dynamics of online transacting, security and how they are protected by South African law against unethical online businesses. Change management strategies need to be put in place to shift mindsets and change negative perceptions about buying products and services online. Entrepreneurs need to instil a culture of online trading by encouraging their existing customers to experience the convenience of virtual shopping on their portals. In time, if the experience is seamless and timeous, word of mouth will increase impact on usage.