SA's e-commerce industry "on cusp of great things"
This interview first appeared in Business Day.
While South Africa’s e-commerce industry was poised for significant growth in coming years, the industry as a whole needs to innovate to realise its full potential, Groupon South Africa — the discounted daily deals online operation said at the weekend.
South Africa’s internet economy has been steadily increasing over the years‚ in part because of the surge in online shopping. It was worth about R59bn in 2011‚ making up 2% of the economy. It is expected to grow to about 2.5% by 2016.
According to Daniel Guasco, who along with Wayne Gosling is joint CEO of Groupon South Africa, the local e-commerce industry has experienced positive growth in 2013, despite a slow start internationally.
Mr Guasco said Groupon was focusing on how to take its model to the "next level".
Groupon SA is part of the listed US-based online retail giant Groupon which is to date the fastest internet company to reach a $1bn turnover.
The company offers its online customers a product, service or travel special, at a discount to the conventional retail price. After a user registers on the site, daily specials — targeted to the user’s city and specific likes — are emailed to them.
The offer is available for a limited time — from 24 hours to six days in the case of travel deals.
Groupon sells about 1,000 deals a day globally.
There have been concerns in the past that consumers are tiring of the emailed daily discounted offers.
Mr Guasco said that the company was looking at how to innovate and this included making the emails more "personalised".
"We want to add more deals that are interesting to them and deals which are more personalised and provide mobile apps," Mr Guasco said.
Mr Gosling said the company was expanding its business model, but would continue to use the daily deals as a base. The company is looking at a payments service that provides retailers and other local businesses with the ability to accept all credit card payments at a lower rate than other providers.
While online fraud was "a big issue" in online retail which had in some instances stifled the growth of e-commerce, Groupon says it has systems in place to counteract the threat.
"In fact just last week we had an attempted attack which we stopped in seconds, because of the kind of systems we have in place … we work closely with the banks and the logistics company and we have a range of software (to curb online fraud)," Mr Gosling said.
Mr Gosling said the local e-commerce industry would be further buoyed by the increase in the number of South African’s able to access the internet.
Research conducted by the Digital Media and Marketing Association and Echo Consultancy estimates the total internet population in South Africa in 2013 at about 14-million users.
This represents 39% of the adult population.
Mr Gosling said there were three drivers that were accelerating the growth of e-commerce in the country.
"These are credit cards — the propensity to use credit online. Logistics, (which has made delivering of the goods easier) and the price of connectivity. Connection speeds are going up and prices going down because of competition … when all these things come together it will create a perfect storm of the success for e-commerce, we’re on the cusp of that happening," Mr Gosling said.