An Intro to eCommerce in SA

The ecommerce environment in South Africa is, without doubt, a growing industry: reports released in 2012 indicate that the internet economy is roughly equal in size (as a percentage of Gross Domestic Product [GDP]) to the agriculture sector.

This figure is around the 3% mark, and indicates that penetration of the internet into markets is ubiquitous across the whole country. Even if a company’s products cannot be purchased online (one cannot, for example, buy property or purchase that Nissan NP200 for sale very easily in an online transaction), without an adequate, well-functioning and up to date website, the enterprise will, in effect, be invisible on the fastest growing mass medium in the world.

The rapid rate of development of the internet and its communicative capabilities over the past decade has, in turn, created immense opportunity for entrepreneurs to identify and offer services that contain value for internet users. The core capabilities of the internet relate to communication of information and information retrieval, and as the massive success of internet search engines points to, information has become a valuable commodity. Whereas information is a commodity in and of itself, access to information contains the additional benefit of saving time which, as any economist will attest to, is a scarce resource which can be quantified in monetary terms. Put another way, the mere act of saving someone time contains a value that can be quantified, and is a service that can be exploited for profit. Whereas this line of thought begun with identifying information as a commodity that the internet not only supplies but also augments with savings in time (time also being a commodity).

Ecommerce, if the above argument is taken to be true, can be seen to offer two commodity categories to internet users: the first is an actual object or product/service that the consumer purchases via an online platform or website, and the second is the convenience of not having to physically visit a shop to conduct the transaction.

There are two primary forms of ecommerce sites. The first type of site is a selling platform for individuals who have items/services on offer to consumers. These types of sites, like, do not carry stock themselves, but you, as a customer, could nonetheless still buy hunting gear (for instance) and could perhaps be compared to an online and virtual mall organised by product type rather than by shop type. The site will offer a track record of the individual seller to give consumers a good idea of the reliability of the seller and the quality of their services.

Other ecommerce sites are sellers of products and use the net as a virtual store where all transactions take place. The critical advantage that this type of store over physical shops is that whereas the latter need to rent actual space in a shopping centre (as well as a stock room or warehouse), the former only needs space for stock. The renting of a domain name is a negligible, and whereas maintaining a good website isn’t without costs, these costs have proven to be significantly less than the renting of retail space. This, in its turn, means the lowering of product costs and an increase in consumer surplus.

Ecommerce is changing the way in which business transactions take place, and is set in the near future to revolutionise retail markets.