E-commerce growth will 'catch up' to traditional buying

2013-09-13 08:41
Digital e-commerce solutions are set to catch up to traditional payment methods. (Duncan Alfreds, News24)

Digital e-commerce solutions are set to catch up to traditional payment methods. (Duncan Alfreds, News24)

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Cape Town - While e-commerce is growing fast in South Africa, it will take some time for the platform to overtake traditional sales, an industry expert has said.

"E-commerce is still such a small percentage of the overall market that this is still a number of years away," Mark Chirnside, CEO of PayU told News24.

PayU is a mobile and online payment service provider and Chirnside said that online transactions are growing rapidly in SA.

"The growth in online is significant again this year, with some key merchants growing above others. The growth in small merchants going for the first time online is very significant, this is helped by such services as EasyMerchant from PayU."

First National Bank also sees e-commerce as a growth area that will eventually become mainstream.

Growth

"Right now we speak of it [e-commerce] as if it's something special or something new. As it continues its compound growth which will continue in high double digits for many years... it will just become the normal way of doing business," FNB CEO Michael Jordaan told News24.

Some estimate that e-commerce transactions are growing at 12.95% a year and as more people adopt smartphone technology and data costs decline, it is expected that the growth rate will escalate.

"We'll probably look back at those antiquated old days when you had to physically go and buy things and that will suddenly become the quaint thing," Jordaan added.

Goldman Sachs reported in 2011 that global e-commerce sales would reach $963bn this year and grow at 19.4%.

In SA, mobile is the sharp end of e-commerce growth, despite the dominance of computers, said Chirnside.

"Computer still dominates e-commerce payment transactions, but tablet and mobile are now exceeding 30% monthly."

PayU said that as e-commerce platforms became more successful, it was likely that banks would enter the market more directly.

Solutions

"Banks are unlikely to offer the number of payment options, particularly from competing banks that would reduce the options a merchant can offer. It is possible and I'm certain a number of banks will attempt to enter the market," Chirnside argued.

Jordaan seemed to agree with this view, saying that the e-commerce ecosystem was broad.

"I do think there's room in the broader ecosystem for third party payment providers. There certainly are institutions who want to operate with many banks and in that role third party payment operators can actually perform a useful interface."

He said that solutions where competitors co-operated to deliver the best customer experience were probably likely to succeed.

"We're good at building our interface with the customer, not always so good at building them with our competitors. I think it's quite a rich ecosystem and there's a lot of room for 'co-opetition' - that will be one of the words of the future."


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