THE COMPUTERISATION OF AFRICA While there are still few e-- commerce opportunities in Africa, firms that have been able to open up an online shop-front have made a killing. E-commerce includes both business-to-business (b2b) and business-to-consumer (b2c) elements, but it's in the former category that the real money lies.
The most advanced African nation in terms of e-commerce revenues is South Africa. In SA, 13213 e-commerce revenues amounted to R2.4bn in 2000. And the market is expected to grow to reach $20bn by 2005.
Business-to-consumer revenues are also improving. Analyst Arthur Goldstuck from World Wide Worx, says the online retail market - the B2C market - hauled in more than $16m during 2001. As an indication of how e-commerce is set to blossom in Africa, this $16m represented a 100% increase on the revenues of the previous year.
Traditional bricks-and-mortar food shops like Pick 'n Pay and Woolworths have expanded their revenues dramatically by opening up online stores. There are also a number of Internet-only e-commerce ventures which have raked in the cash for South African operations. Kalahari.net, an SA firm pitching to become the Amazon.com equivalent for Africa, generated $1.7m in sales during 2001.
Another site, the ShoppingMatrix.com reported $1.5m last year, through punting items from computer software to books, travel tickets and clothes. Another success tale is that of SA online auctioneers, bidorbuy.com. The auctioneer adopted a similar method to the one that allowed US online auctioneer eBay.com to become a household brand in the US. When it first flighted, bidorbuy attracted 175,000 registered users, a number which dropped when the firm tried to introduce a fee for auctioned items. Having scrapped the fee, bidorbuy MD Andy Higgins said the firm plans to reach profitability by July 2002.
According to Goldstuck, the most popular e-commerce items sold in SA are books, magazines and stationery, followed by music, sports and recreational equipment. Food and beverages follow.
Goldstuck pointed out that online retail is still no real moneyspinner in South Africa. It accounted for only 0.1% of SA's R188bn annual retail market. In a market like the US, for example, the online market makes up a full 1% of retail sales.
Business-to-business
So the business-to-consumer ecommerce side is just beginning to bloom, but what of the business-to-business e-commerce in Africa? In a recent survey by suppliers on MarketSite Africa, an e-marketplace established for the African trading community, 32% of the suppliers reported that their sales had improved when they began using the website marketplace to trade with dealers. In addition nearly half (43%) of these suppliers found an improvement in their customer relationships through use of the e-marketplace.
While there is an undeniable potential for million-dollar e-commerce revenues in Africa, Internet commerce is still at an embryonic stage. It is only really South Africa - and to a lesser extent Egypt - that can report any kind of e-commerce revenues at all.
Within East Africa, Kenya has generated small e-commerce successes, while Uganda and Tanzania are trying to spark their e-market into life. A recent survey on e-readiness in Africa, concluded, "African e-commerce revenues are so small as to be non-existent".
Analyst Herman de Kock says that many countries in the continent don't have the basic building blocks of e-commerce yet, such as Internet connectivity and stable phone lines.
Meteoric growth in profits expected
De Kock says that Africa can only really expect to join the e-commerce revolution in about 10 years time. "There is the potential for e-commerce revenues in Africa within the B2B side of the market. But on the B2C side, it looks minimal for the immediate future," says De Kock. "It will take at least another 10 years before Africa starts reporting sizeable revenues.
De Kock says that once the infrastructure is in place, however, there would be numerous advantages for Africa, especially in the banking sector. There is also some evidence that Africans are toying with online travel services. British Airways' e-business manager for Africa, John Westermeyer, recently revealed that Africans are the fourth largest subscribers to the airline company's email database. Having said that, even within the comparatively wired South Africa, online travel revenue accounts for only 0.03% the total travel market.
But, more than anything, these individual successes indicates that African companies are undeniably intent on selling goods through the Internet - only reliable web access is holding back the process.
But as more African countries join the digital revolution, firms can expect to see a me meteoric growth in profits as the entire world becomes a shop-front for the African entrepreneur
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