- Category: Shelley Galliver
- Published on 27 July 2016
- Hits: 221
By Shelley Galliver
Companies have built entire businesses virtually: they never see a customer face to face. The entire offering and purchase transaction happens online. The products are delivered, implying the customer never has to leave home.
More significantly, the seller doesn’t need a retail environment, which naturally carries a cost. In fact, many of these online businesses don’t even warehouse their products, but simply act as an online channel for existing suppliers and interested customers. Airbnb, the world’s largest accommodation provider, owns no real estate; Uber, the world’s largest taxi company, owns no vehicles; and Facebook, the most popular media provider, creates no content. These are just some examples of companies who have created businesses simply by providing an online solution.
So, do opportunities exist to move elements of our industry online, selling products via e-commerce? Definitely! Although customers may believe the purchase experience of some products needs to be tactile, the trend has shifted to purchasing building and plumbing materials online. South Africa is fortunate in that courier companies have already learnt to adjust their business models to accommodate the e-commerce market, as you never want to pay more for delivery than for the product itself.
Now we need to consider whether this opportunity exists throughout other African countries. We know we cannot deliver from South Africa to other African countries, as the courier rates have not got to the point of being reasonable compared with the cost of the product. So the option would be to deliver from a warehouse in-country, but then you have the overhead costs of stock, rental and staff to contend with. Often the courier network is also not as developed in some countries as what we have come to expect in South Africa. Then there are also the issues around country‑specific duties and whether your products carry SADC certificates. So now you need country‑specific sites and pricing. And then your last, but perhaps biggest complexity, is that we don’t see the same online traffic in Africa that we are seeing in South Africa. This is mostly due to high data costs on the continent, relative to average incomes. Thus your target audience is vastly reduced, with less people browsing online with the intent of purchasing.
So for now e-commerce in Africa seems to be a little far off. Yet, if we have a good grasp of how quickly this form of purchasing has developed over the past few years, I think the sooner we can open those doors to all our neighbouring countries, the sooner we have the potential to grow our businesses exponentially.