E-commerce @ the crossroads

The future of electronic commerce in SA has arrived at an important crossroads. For the last year or more, analysts, Internet services, software suppliers and integrators have proclaimed that the region is on the brink of an important breakthrough in both business-to-consumer and business-to-business commerce.

According to some analysts, business-to-business Internet commerce revenues will grow from around R500 million in 1998 to more than R1 billion in 1999.

A quick survey of the statistics reveals some breathtaking predictions. According to some analysts, business-to-business Internet commerce revenues will grow from around R500 million in 1998 to more than R1 billion in 1999. At the same time, online retailers can expect to see a business growth of hundreds of percent. The number of potential Web buyers will grow with equal rapidity. Roughly 1.5 million of the SA population is connected in early 1999 and this could rise to over 4 million in 2002.

But although such figures are impressive and raise the profile of e-commerce in the minds of the people that matter - consumers, businesses and purchasers - too much emphasis on startling growth can obscure the more complex issues facing businesses of all sizes and industries including retail, healthcare, manufacturing, government and banking.

There are numerous issues that businesses need to address to successfully implement their e-commerce projects. From an IT standpoint not only do they need to build a robust, scaleable and flexible Internet presence, but they need to integrate their Internet applications with existing IT architectures, whether these are in-house solutions or ERP systems. They must also exploit Internet technology to link with their business partners forming virtual value or supply chains.

From a broader business perspective they need to reevaluate their business model and develop a vision that will accommodate those long-term changes in the SA business landscape provoked by the unstoppable growth of the Internet. Add to this the specific challenges facing SA - both within our borders and beyond - and it is clear that at the end of the millennium a new realism is necessary in order for organisations to understand and then exploit the online opportunities within their grasp.

Much has changed in recent months in the area of online business-to-consumer transactions. Many organisations have succeeded in establishing powerful retail sites, especially the well-known online brands in the US such as Amazon.com. Many of these businesses are setting up South African operations.

But South African retailers can`t simply replicate the US online business model. It`s important to remember that many of these very visible online ventures aren`t making a profit and are supported by the volume of venture capital that simply isn`t available in SA. And although some retailers in the region have found success reaching a global audience, the issues facing most of these organisations are far more localised: language, culture and currency profoundly affect commerce of all kinds but also offer businesses many advantages.

It is also important to note that there are many different ways in which innovative companies can use the Internet to improve their performance. Not every company needs to build an online store but all of them will benefit from the power of the Internet. There are of course several other factors that are helping to smooth over differences in online retailers between countries. Harmonisation of taxation and the eradication of most cross-border tariffs have made the sale of goods across frontiers a much more attractive option.

One area where the Internet is sure to make an immediate impact is in business-to-business commerce. Retailers can choose a local strategy, avoiding the issues of currency, language and cross-border tariffs. And when it comes to trading with the rest of the world, suppliers across the whole world can more easily compare themselves to their global competitors, as can their customers. Although online retail sales have aroused a lot of interest, most analysts believe the impact of the Internet will be felt most strongly in business-to-business transactions.

Above all, the focus falls on serving the individual and exchanging information effectively both within organisations and with business partners. Organisations of all kinds are dealing with well-informed customers, increasingly familiar with technology and the benefits it can bring. Whether it`s a government department, a hospital or a well-known high street bank, the need to service the customer as an individual rather than an accumulation of many benefit forms or bank accounts is greater than ever before. Most are now turning to online technology to achieve this vision.

There is no doubt that e-commerce is already a growing force in SA, forcing retailers and businesses of all sizes to reevaluate both their internal structures and the complex pattern of relationships that exists with customers and business partners. But rather than being a threat, e-commerce is an opportunity to benefit from more precise and profitable business relationships than ever before. But just because it is a progression rather than a revolution doesn`t in anyway lessen the urgency with which SA businesses need to act. Rather it means examining the individual organisation`s unique position in the marketplace and their own industry.

By carefully studying the different elements of e-commerce, and selecting the right technology and business partners, organisations can capitalise on their own strengths, building towards a profitable future where they are perfectly poised to exploit the fantastic opportunities available to organisations of all sizes and industries in SA.