By Victor
Joseph Mnyawami.tech360magazine guest writer
Amazon.com,
Ebay.com, shopzilla Alibaba.com and ShopatHome.com, score 10 if you guessed that they are all popular online shopping
sites based in the US, Asia and Europe, It’s a big Business out there worth
Billions of dollars and making people billionaires. The question is what is
happening here in Africa and specifically, Tanzania.
Electronic commerce, commonly known as e-commerce, ecommerce, eCommerce or e-comm,
refers to the buying and selling of products or services over electronic systems such as the Internet and other computer networks.
Electronic commerce draws on such
technologies as electronic
funds transfer, supply chain management, Internet marketing, online
transaction processing, electronic
data interchange (EDI), inventory management systems, and automated data collection systems. Modern electronic
commerce typically uses the World Wide Web at least at one point in the transaction's life-cycle, although it may encompass
a wider range of technologies such as e-mail, mobile devices and telephones as well.
Historical
background
E commerce can be traced just as far back as when electronic devices
were networked for the first time, or rather when Michael Aldrich, an English inventor invented Online shopping
back in 1979, But things did not get merrily until the 90s when the world wide
web as we know it today was available commercially, after that , Jeff Bezzos
came up with his Amazon.com and by 1996 eBay.com appeared and after that
Alibaba.com then the word e-commerce became an everyday term, at least
in the developed countries.
The
Nature of Electronic Commerce
E-commerce
comprises business transactions conducted using electronic communications
Processes
and facilities (and especially the Internet). May take any of the following
forms;
Trade
in Physical Goods. Following the universally known example of Amazon.com, in theory
consumers in many countries can now purchase goods from anywhere on the globe
by placing orders and paying over the Internet.
the
client. All that is necessary for these types of trade is effective electronic
communications.
Trade in Online Teleservices.
These include services such as call centers, Internet
service providers, server services and so forth.
E-commerce in Africa.
Within
the framework described above, what is the reality of e-commerce in Africa? It
must be said that—with the exception of South Africa—there is minimal
evidence of ecommerce on the continent.
Several factors are the
cause for this situation, unlike in the early days of e-commerce in the
developed economies there was much commentary about supplier reliability (the major
e-malls and brand names prevailed), privacy of information (credit card
fraud was the topic of the day), and the “World Wide Wait” as a result
of slow telecomm links. Those concerns have greatly diminished and ecommerce
has matured in the major developed nations. This is far from the case in the
developing world and especially Africa. Currently common obstacles to ecommerce
in Africa are specific to the socio-economic milieu of the continent.
The obstacles to e-commerce in Africa
are many and varied:
§ Policy
Regimes: Monopoly provision of telecommunication access and weak Regulation
results in high costs of service and limited business opportunities for
value-added services.
§ Legal
Frameworks: Most countries are still to legalize digital signatures and contracts
and tackle issues such as Intellectual Property Rights and Consumer Protection
in the digital arena. Dispute settlement in the whole B2C arena and protection of intellectual
property rights in the teleservices and “virtual goods” marketplace are
significant inhibitors.
§ Financial
Environment: Credit cards are taken for granted in the developed world and are the sine
qua non for B2C e-commerce. Also, e-entrepreneurs can often look to vibrant
venture capital sector to fund new ventures. These are fundamental gaps in most
developing countries. Many developing economies are almost entirely cash-based.
Credit cards are virtually non-existent, and central bank clearing facilities
are very limited. Concerted collaborative efforts between fiscal authorities,
banks and private sector merchants will be needed to create an e-commerce
friendly financial environment. A sea change in banking attitudes will be
needed to enable a venture capital market.
§ The
Information Infrastructure: Whether e-commerce relates to
physical goods or teleservices, the costs of equipment and connectivity loom
large in developing countries, especially in monopolistic regimes. Limited
bandwidth adds to the problem of providing off-line teleservices and online
teleservices demand high quality fast network access.
§ Transportation
and Delivery Systems: Perhaps nowhere is the contrast between developed and developing
countries more vivid than here. The essence of B2C ecommerce is instant
gratification! The placing of an instant order (and perhaps the equally quick
debiting of the consumer’s account) has to be followed up with appropriately
quick delivery of the goods. While this is eminently feasible for virtual goods
such as music files, it is far from so when it comes to physical goods.
Airfreight is risky, infrequent and expensive in Africa; customs clearance
procedures are long and complex; local warehousing facilities hardly exist.
However, The
above mentioned problems are not here to stay, Policies and Legal structures
tend to change if the change is demanded, for example, with the increasing
number of Africans who are engaging in online activities, governments will have
to start aligning their policies to accommodate that, With the trend towards
mobile means of transferring money which is getting very popular very fast in
these parts of the world with services such as m-pesa and tigo pesa, the
Financial environment is due to change towards e-commerce, Also, as new and better
Information infrastructures such as the new fiber optic cable get installed, The
problems of slow connectivity and limited bandwidth will be a thing of the past
in the very near future.
Africa may be more than a decade behind the progress of
electronic commerce, but one thing is clear, it is happening now and I am sure
it is going to have even more impact here than it had in Europe, Asia and the
Americas.
E-COMMERCE GLOBAL FACT FILE:
·
Amazon.com reported a net income of US$ 631 million in 2011 with revenues of a
staggering US$ 48 billion.
·
China's
online shopping sales rose to $36.6 billion in 2009.
·
The United
Kingdom has the biggest e-commerce market in the world when measured by the
amount spent per capita, even higher than the USA.
·
Revenues in
B2B ecommerce in the US was at US$ 133.3 billion in 2005.