Recession drives e-commerce

Channel distributors are feeling financial heat and are increasingly turning to e-commerce to offset the effects of the economic meltdown, said Henno Marais, MD of ImproWeb.

Speaking at a channel conference, held at the Grace Hotel, in Rosebank, he added: “ImproWeb will do for the South African distribution channel what Internet banking did for the banking industry.”

Marais predicted online sales in the channel would increase drastically. “This means the more retailers that trade online using integrated solutions, the bigger the market will become. This also means partners will not be competing to get part of a R514 million pie, but rather helping to increase the size of the pie.”

ImproWeb specialises in solutions for the distributor-reseller chain. The company has developed an e-commerce Web site solution and courier system that’s integrated with a distributor’s financial system, to save on labour and time.

Some of ImproWeb’s clients include Esquire Technologies, Genex, Annex Distribution, Frontosa, Rectron, Sahara Computers and Sonic Informed.

ImproWeb’s business management tools such as the e-commerce Web sites, quotations and invoices cut down on maintenance, Marais said. Resellers and distributors can focus on services and customer relations.

A customer makes an order from the distributor’s e-commerce Web site and pays by credit card. The automated system reserves the stock order and sends the order to ImproWeb’s courier system, which is then delivered to the reseller.

The distributor’s Web site, hosted by ImproWeb, shows the reseller the product’s specifications, user reviews and stock availability.

The solution takes away waiting periods and faxing quotations, Marais said. It provides the benefits of cost-effectiveness, short waiting periods and fast delivery of orders between the distributor and reseller.

“It’s designed to keep the channel in check; it’s a very structured way of planning the channel process and everyone benefits.”

Forty-four percent of all PCs are sold online, according to Marais, and the majority of sales made online are IT related. Africa has grown by 27% in Internet usage in the last eight years.

“Yet Africa only has 3.5% of the Internet usage in the world. Currently, only 10% of the world’s population is online.”

Marais said 65% of Internet users use the Internet as their primary source of product or service information. About 80% of European online users buy products online.

“We’re seeing more people shop online. Now is the perfect time for distributors to get on board because of the economic recession. The solution makes it easier for distributors and resellers, and it’s a cost-effective solution and will surely help offset the effects of the economic downturn.”

Marais pointed out: “As Internet access becomes cheaper and more accessible, consumer confidence and satisfaction in online purchasing increases. Technologies such as 4G with speeds up to 2 500 times faster than Telkom ADSL, will change the face of Internet usage, making the Internet more accessible to resellers and consumers.”

ImproWeb’s main focus is the IT industry, but it has signalled an interest in expanding the solution to stationery distributors, Marais added.

Steven Ambrose, analyst at World Wide Worx, said: “The market will be contracting in the year and distributors will be competing with one another everywhere they can. This business-to-business e-commerce solution has been done for many years. But the trend of online commerce and business-to-business is definitely on the growth path. We saw a 35% to 40% growth in online retail in 2008, despite the economic downturn.

“It does not mean it will be the end of the traditional channel model. The transactions might go electronic, but the relationships and knowledge sharing will become more important. The distributors that can seamlessly implement the technology effectively while building those relationships will stand out from the rest of the crowd.”