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E-commerce emerges as telecoms springboard

Bonnie Tubbs
By Bonnie Tubbs, ITWeb telecoms editor.
Johannesburg, 24 Apr 2015
Me&you mobile hopes to win over consumers via its online marketing initiatives and services.
Me&you mobile hopes to win over consumers via its online marketing initiatives and services.

A number of telecoms companies have started shifting focus from retail to e-tail - the latest being SA's newest mobile entrant me&you mobile - as the country continues to bridge the digital divide.

Yesterday, Brett Howell, who is heading the new mobile virtual network operator (MVNO), said the company would be a 100% online offering - part of me&you mobile's lean operating cost strategy - from sign-up and RICA, to marketing and account management.

Howell says there are no immediate plans to include brick-and-mortar offerings, nor to make use of traditional marketing channels beyond the short out-of-home teaser campaign launched on 15 April.

E-telecoms

French mobile operator Orange, which began its consumer foray in SA at the beginning of 2013, is another player - and aspirant MVNO - that went online first with a purely e-commerce offering. The company has used its online store and local content Web site to start engaging with South African consumers to gauge their appetite and trust around its offerings. At the moment, the site sells high-end devices, but plans are afoot to offer telecoms services online.

Africa Analysis telecoms analyst Ofentse Mopedi notes SA's biggest mobile players, Vodacom and MTN, also plan to be "serious players" in the e-commerce space, in a bid to open up additional income streams. "MTN has already predicted that, in the next five to 10 years, as much as half of its revenue will come from digital services such as e-commerce and financial services."

E-commerce is the trend towards which the telecoms market is leaning, with far more services set to be offered by even more telecoms companies in SA, says Mopedi.

"As the country continues to bridge the digital divide, with Internet services becoming more accessible to an increasing number of households, it makes business sense for companies to start experimenting with e-commerce solutions on a greater scale."

BMI-TechKnowledge director Brian Neilson points out Afrihost, too, is now online. "[You can] order your MTN SIM online and they will deliver it to you."

ICT expert Adrian Schofield says the consumer market in general will quickly become populated by e-commerce services as an essential part of retail operations and, in many cases, as the principal means of delivery. "Even products that traditionally required 'touch and feel' are now being delivered via e-commerce, as the customer can easily return unwanted items."

Brand clout

It is this growing trend, says Neilson, that means being an online player in itself does not give me&you mobile the edge, especially given SA's established players are now online and have the big brand share.

"Being online is not difficult. Building a big brand is. That is why the big brands like Edcon, Pep, Mr Price and the banks have a lead in the MVNO space, and of course the established mobile operators have a huge lead in terms of brand."

Neilson notes, within the multi-channel strategy that now underpins the way businesses go to market, online is an essential component "from day one".

Schofield previously suggested the only viable MVNO is one that relies on loyalty to its brand across a range of products and services, as with Virgin, Mr Price - and First National Bank, if talk of the institution's imminent MVNO launch is to be realised.

Although me&you mobile has no existing brand loyalty on which to build a base, Schofield says it does have a mix of potential customers - "those who will add the new service to their existing usage (to try it out), those who have been unhappy with existing providers, and some who will be first time users because they do not have to commit to a contract".

However, there is still a strong element of caution about giving credit card details online, especially for monthly billing, says Schofield.

In October last year, total Internet shopping spend by the end of 2014 was expected to near the R6 billion mark - up from just R688 million when the e-commerce curve started its marked rise in 2006.

World Wide Worx's 2012 Internet Matters report revealed the local e-commerce market was growing at a rate of around 30% a year, and showing no signs of slowing down. "In fact, taking into account the fact that a number of major consumer brands and chains have not yet devised comprehensive online retail strategies, the scope for future growth is even greater," said the company's MD, Arthur Goldstuck, at the time.

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