Classifieds site Gumtree South Africa is making online peer-to-peer trade safer for consumers via a partnership with escrow service Shepherd.
The Standard Bank-powered third party service is available for Gumtree users as of today and aims to add peace of mind when trading online.
"Classifieds are immensely popular, but there are risks associated with trading online, such as meeting someone in person that you don't know, handling cash, or the risk of non-payment after delivery," says Johan Nel, country manager of Gumtree SA.
Shepherd operates as a third party that facilitates transactions on behalf of sellers and buyers. Martin Reynolds of Shepherd says the process is fairly simple. After the seller initiates the transaction, the buyer makes a payment into a secure trust account. Shepherd secures the funds until the buyer receives the item and accepts it, and facilitates the delivery through Ram couriers.
"The buyer simply signs the courier waybill to accept the delivery if satisfied with the item. Shepherd then releases the funds to the buyer. If the buyer isn't satisfied, the item is returned to the seller and the buyer's payment refunded," explains Reynolds.
According to Reynolds, this not only eliminates a lot of the risks involved but also allows customers to transact with someone living in a different city to them.
"There is no need to only deal locally anymore."
Nel says while millions of South Africans are already prolific traders online, there are as many who want to participate but are wary to do so. He says the biggest risk of transacting with a peer online lies in the exchange of money itself. Shepherd ensures buyers and sellers won't need to handle cash or delivery themselves, but the escrow service won't interfere in actual transactions.
"[Shepherd] won't set prices, haggle, or seek customers," says Nel.
Craig Polkinghorne, head of business and commercial banking at Standard Bank, says while e-commerce continues to grow in South Africa, the biggest concern for online shoppers remains the availability of secure payment platforms.
"Shepherd simply eliminates the payment risks associated with online shopping, enabling the buyer and seller to focus on completing the transaction."
Nel says there is always an element of risk when transacting online but in truth, the perceived risk is often higher than the actual risk. Fraudulent trades do happen but Nel says Gumtree SA rarely receives more than 5-10 cases per month of reported fraud or dissatisfaction out of the close to 22 million interactions that take place.
"Of course, there will be customers who don't want a middle man involved, and this service will remain optional so they can continue to conduct business directly. But that's not to say that we feel that having a facilitator involved diminishes the spirit of peer-to-peer selling. This service will enhance it, adding a layer of security and convenience."
However, the service and peace of mind it offers is not free. Shepherd charges a fee of 3.95% of the transaction value with a minimum charge of R30. It also sets a minimum transaction value of R250 and charges extra for shipping.