Lack of research hampers the growth of e-commerce as a whole

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Alastair Tempest, CEO of South Africa Ecommerce Forum. Photo: YouTube

While the e-commerce sector in South Africa is experiencing significant growth, the lack of available economic data and the high costs of mobile data are hampering investment and future growth of the online shopping market.

So says Alastair Tempest, CEO of the Ecommerce Forum of South Africa (ECFSA).

He spoke at recent public hearings on the Competition Commission (CompCom) online platform market investigation, to help promote fair competition and tackle so-called agglomeration in the market.

In May, CompCom officially began its investigation of online platforms in South Africa. The survey focuses on digital platforms with intermediary online transactions between businesses and consumers, the scope covering e-commerce players, infrastructure developers, fintech players and payment platforms. .

CompCom released a first document for public comment late last year. He noted that the local digital platform industry is rapidly concentrating and that there are many tactics and exploitation methods used to ensure the dominance of market leaders.

In the paper, the competition watchdog highlighted several issues, including conglomeration, which can be used by e-commerce players to gain an unfair advantage over their rivals.

During his virtual presentation, Tempest highlighted several areas of concern in SA’s e-commerce market. He noted that when examining the impact of competition rules in South Africa, it is essential to have a complete picture of the industry under study – through in-depth research into the online shopping landscape. .

EFSA is the national chapter of the Pan-African Forum for Electronic Commerce in Africa, which is recognized by the African Union and relevant United Nations bodies.

“When considering the impact of competition rules, it is essential to have a complete picture of the sector under investigation. South Africa’s e-commerce data is very thin on the ground, and there is a serious need for economic data on turnover for business-to-consumer (B2C), business-to-business (B2B), consumers to (C2C) and government use of online shopping / sales.

“In addition, data on employment is completely lacking at present. EFSA is trying to provide good data, but we still have a long way to go, ”explained Tempest.

The scarcity of independent data on e-commerce in South Africa reduces the potential for investment that could lead to further growth of the sector, he added.

In addition to data provided by individual companies, two surveys were conducted on last year’s e-commerce sector in South Africa (World Wide Worx and Statista).

However, according to Tempest, neither survey included estimates for services sold online (such as travel, hospitality, financial services). Online sales for B2B, government-to-business or C2C are also not included. There are also no estimates of employment generated by e-commerce.

“As we pointed out in our submissions, we have identified this data gap as a very serious problem. First, while B2C is obviously very important, B2B digital commerce is becoming the driving force behind South Africa’s business, and it will see exponential growth in the future, especially with the stimulation of the free zone. African continental exchange. If we look at the whole world, B2C is the tip of the iceberg, but B2B is the vast hidden activity, three or four times bigger than B2C.

Second, he pointed out that in South Africa, what is often mistakenly identified as C2C e-commerce has a special and extremely vital role to play in “social media e-commerce”.

SMEs and sole proprietorships use the wide array of social media to sell their products directly to the consumer – or to other businesses, with the most popular social media being TikTok, Facebook Marketplace, Instagram, and WhatsApp.

“Social media e-commerce favors women and young owners, encourages cross-border commerce and promotes innovation of its users. “

Other issues he addressed included the high costs of data and the major digital divide in South Africa, the indirect interdependence between the big players and all other new and small entrants in the market, as well as the importance to take into consideration the African continental free trade. Zone – to which SA is bound by treaties.

“Despite CompCom’s efforts, the cost of mobile data in South Africa remains higher than in other major digital economy leaders in Africa. The ease of doing business in South Africa has taken a hit and work is needed to improve government services and eliminate bureaucracy.

“For those who sell in other markets, customs procedures need to be improved. Bank charges remain high compared to countries with mobile money, although improvements are promised in 2022, ”he concluded.

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