Gian Fulgoni lists eCommerce as the number two Burning Issue in his article. What is more relevant to South Africa in the eCommerce context is that the necessary infrastructure to the eCommerce was never around, till now. This the key attribute which makes eCommerce still “the next big thing” in Africa, even after being around for decades in developed nations.
The hot selling points for eCommerce and online stores are “lower prices, convenience and the broadest selection of products,” (Fulgoni, 2012) and what may surprise many SMEs, is that selling online is not an expensive venture any more with some of the new ecommerce solution providers, such as CloudSales & OpenCart functionality.
Here’s what Fulgoni said in January 2013:
Driven by lower prices, convenience and the broadest selection of products, online consumer spending is soaring. comScore data show that in the last twelve months $304 billion was spent via e-commerce in the U.S., with Travel accounting for $110 billion and Non-Travel (aka Retail e-Commerce) pulling in $194 billion. Retail e-Commerce now accounts for one in every ten discretionary dollars spent by U.S. consumers and in Q4 grew 15% versus the prior year, a rate about five times faster than for all consumer spending at retail.
Pure play online retailers such as Amazon and eBay have built massive businesses on the basis of e-commerce. Amazon for example, now attracts in excess of 110 million unique visitors in a month and reported North America sales of $7.9 billion in Q3, up 33% over the prior year. But the emergence of e-commerce also means that the physical store is under attack, which in turn means that those retailers who cannot maintain their in-store market share as their category shifts online face increasingly difficult times. Different product categories are shifting online at differing rates, creating particular challenges for multi-category retailers such as big store mass merchandisers. For example, the consumer electronics product category now sees about 30% of sales completed online while consumer packaged goods lags with no more than 1% of sales occurring via e-commerce. This means it’s particularly important for multi-channel retailers to monitor trends in their market share by channel and also by product category so as to clearly understand the nature of competitive online threats.
The channel shift to online has also put downward pressure on prices, because the Internet allows consumers to easily root out the lowest price for a product. This creates myriad challenges for retailers and manufacturers since pricing power is now in the hands of the consumer.