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Can SA expect a boom in ecommerce?
The ecommerce landscape in South Africa has historically been hampered by slow and expensive Internet access, but things are beginning to change for the better.
And if you are in any doubt as to whether speed is important for an ecommerce website, consider the following observations on the effects of latency on user behaviour:
- Amazon found every 100ms of latency cost them 1% in sales.
- Google found an extra 0.5 seconds in search page generation time dropped traffic by 20%.
Anyone running a South African website would be very familiar with the highly predictable dip in their web stats over weekends, indicating that most South Africans are still accessing the Internet from work. Compare this to eBay.com, where a Saturday morning is their busiest period, while at Bidorbuy.co.za, this is the least busy time of the week for the web site.
Many aspiring entrepreneurs setting out to open online stores tend to focus too much on the website itself, neglecting two other very fundamental aspects of any ecommerce operation, namely payments and fulfillment (getting the goods to the customer).
In order for ecommerce to flourish, it is equally important for local infrastructure to be developed around local payment and delivery systems.
As ecommerce has matured and become mainstream the world over, newer industries venturing online have learnt a lot from the pioneers of the web — the porn and online gaming websites. For example, if you have ever been to an online casino you would have noticed the variety of payment options offered.
Credit cards are a hugely popular form of paying online and aren’t going away anytime soon, but many South Africans that are going online these days do not have credit cards, and with increased pressure on the banks to reduce credit card fraud, online merchants need to offer other payment options.
Besides, and as a merchant, I would much rather receive payment through other more secure methods, because with credit cards, the transaction can get reversed by the bank long after the goods have already been shipped to the buyer — no questions asked.
Price, convenience, and to a lesser extent choice and variety, are the main reasons why people shop online. The problem in South Africa is we have not quite got the convenience factor working.
People need to have always-on broadband access at their fingertips, but perhaps even more important is that when the customer buys something online, it needs to get to them quickly and without hassle. While the registered counter-to-counter service offered by the South African Post Office is underrated in my opinion, I still find it a hassle to have to go to the post office to pick up a parcel. And door-to-door courier services tend to be on the expensive side for many types of products.
Things are starting to change though, and many of the vital ingredients for ecommerce to thrive in South Africa are starting to come together. Ubiquitous broadband access and many new online payment methods are becoming available and are sure to have a very positive impact on the uptake of ecommerce in the country.
But until same-day delivery is more affordable and commonplace, it is going to be difficult to fully cater for the convenience factor that buying online should provide.