Ecommerce in South Africa — while still just a slice of the overall retail pie — is growing as much as 35% per year. However, of this, the lion’s share still operates in the B2C space, suggesting that B2B companies — those that use the web to sell goods and services to other businesses — have yet to cotton-on to its very lucrative potential.
B2B is perceived as the less sexy sister of B2C, despite having a massive traditional footprint in South Africa. It’s also been slower to respond to customers’ new digital diets that sees them — be it to look for an air conditioner or forklift — use search as a primary source to enquire or buy.
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So what’s holding it back? Lethargy. It takes time and money to successfully operate in the ecommerce space. A core component of its efficacy relies on the creation of useful content that is amplified across the web to match customers’ Google searches.” In other words, if the owner of a SME wants to acquire the services of a tax consultancy, they are likely to look online first to review services and prices. “But if the tax practitioner isn’t there, then it’s lost itself a potential sale.
There’s also fear of online fraud. We’re still coming to grips with buying online with approximately 22% of local internet users having yet made an electronic purchase. Companies also need to ensure they have robust IT systems that can manage online enquiries and orders. Otherwise they risk reputational damage if they’re unable to deliver the goods.
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Overcoming these challenges could yield significant changes for local B2B ecommerce. Especially given companies reportedly gain 44% in order value by going online suggests a 2015 report from eCommerce Insights.com. “Besides the now ubiquitous success stories of Uber and AirBnB, innovative entrepreneurs in other industries are also using digital to disrupt traditional peers,” says Stewart.
Take travel for instance. “While the industry as a whole is set for a tough 2016, its fastest growth segment is independent travel consultants or ITCs,” says Rian Bornman, founder of FlightSiteAgent, a B2B online travel provider. “Estimated to represent R3-billion of the R37-billion travel category, it’s attracting travel consultants who break away from their previous jobs to go it alone.”
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Launched three years ago, the platform enables ITCs as well as individuals without prior experience (stay-at-home moms or township entrepreneurs) to search, hold, book or ticket flights free of charge for clients, family or friends using its online platform. They can also conduct business at home or from small offices at a fraction of the cost of traditional agents who may rent space in malls or high streets.
“The beauty of an online B2B model is its scalability into new markets and functionality,” says Bornman. “Locally, I believe these platforms, not only in travel, offer the unique opportunity to unlock value through job creation, skills transfer and stakeholder transformation; all equally important goals in a South African context.”
This suggests that innovative startups and individuals are those who’ll likely adapt the fastest to B2B online models — despite the multiple benefits available for traditional industries like mining to capitalise on. The so-called ‘self-sold market’ that sees buyers search for, research and evaluate products online, is typified by people who are connected and comfortable online. As such, it’s natural for them to break-away from traditional B2B business models and launch ecommerce platforms that cut out the need for bricks n mortar premises and intermediaries.
And when they do, there will be plenty of unclaimed territory for them to leverage and market their B2B businesses, products and services to.
