Thursday, December 18, 2014

The Rise of Online Shopping in Africa

Online transactions make up less than 1% of the overall retail market in South Africa according to Enst & Young. Although this is extremely low when compared with the UK, where online shopping constitutes 14% of retail sector purchases, this number is escalating at an impressive year-on-year rate according to latest MasterCard Worldwide Online Shopping Survey.

Part of the expected growth is due to the increased availability of the internet. The number of internet users on the African continent grew at seven times the global average, clocking more than 3,600% growth between 2000 and 2012, to 167 million users, according to data from Internet World Statistics, a website that tracks internet and social media usage.
The African region is also witnessing one of the strongest increases in mobile data usage in the world, predicted to double between 2014 and 2015, and with a 20-fold increase by the end of the decade. Mobile banking in South Africa, Kenya, Nigeria, Rwanda and Tanzania is supporting a fast developing m-commerce sector, enabling mobile transactions, remittances and payments.
Even with the increased availability of technology, recent research  shows that South African shoppers have the following concerns, which may be contributing to the low level of adoption:
- Consumers are under the impression that if they don’t have a credit card, they can’t shop online even though many e-commerce sites offer alternative forms of payment.
- There is perceived lack of security and potential for credit card fraud.
- The high cost of deliveries doesn’t justify the convenience of shopping from home.

Increasing Consumer Confidence

Technology solutions can boost confidence in online shopping by providing secure methods of payment and quicker product deliveries. System integration platforms can provide the necessary functionality to secure and streamline the entire online ordering process. By enabling the automation of business processes and the synchronization of data between the company’s online storefront and its back end systems, including CRM, ERP, and Warehouse Management as well as across vendor, partner and supplier systems, no matter where they physically reside (on premise or in the cloud), orders can be fulfilled more quickly, accurately and securely.
Businesses can also integrate their e-commerce and m-commerce systems with third-party payment platforms and services, such as exchange rates and credit checks to streamline the purchasing process. Real-time system integration enables customers to have online access to real-time inventories, pricing, and be able to track their own order status including delivery dates, translating into better customer service. Real-time information flows with suppliers and shipping companies enables immediate shipping from the closest warehouse to optimize delivery time. This is especially important during the holiday season where timeliness is critical for customer satisfaction.

Scaling Up for Higher Volumes of Data

These system integration platforms can also provide the necessary scalability to meet the higher volumes of online purchases. Overloaded systems can cause poor system performance and system failures that can result in lost business. For example, delays in system processing can cause customers to abandon sites before making a purchase. To handle the expected increase in traffic, systems need to be able to grow quickly and affordably. A system integration platform can include the needed computing power to handle peaks in traffic. As processing requirements increase, the management system can automatically recruit more nodes, adding scale elastically when it’s needed.
A robust system integration platform will not only enable rapid integration between all the applications, services and databases regardless of where they are located, by enabling processes to be automated across systems and real-time data availability, it will also help ensure that the entire system performs optimally. Orders will be fulfilled efficiently and securely, and companies will have happy customers placing repeat orders down the road.
Lindsay Britz is Regional Marketing Manager at Magic Software Enterprises South Africa.


Originally published in IT News Africa