INTERNET USAGE STATISTICS FOR AFRICA
3.3 THE FUTURE OF E-COMMERCE
This section will look at the way forward for e-commerce and how potential future developments will impact decisions made by prospective entrants to this market.
3.3.1 Infrastructure in South Africa
Jobodwana (2009) reported that wider access to broadband, ADSL and 3G accesses have boosted internet connectivity, with the number of South African internet browsers increasing by 121 percent in two years, from 1.8 million in May 2005 to 3.8 million in May 2007, according to research firm Nielsen/NetRatings.
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These figures are a positive move as they serve to address some of the issues highlighted as factors holding back the progress of e-commerce in South Africa.
One of the largest infrastructure improvements over the last few years was the completion of the Eastern Africa Submarine Cable System (EASSy). On 5th August 2010 Dr. Angus Hay, CTO of Neotel announced, on behalf of the EASSy Cable Management Committee, that the EASSy system has entered commercial service on 30th July 2010 (EASSy, 2010a). The World Bank Group (2011) describes EASSy as an initiative to construct and operate a submarine fiber optic cable along the east coast of Africa to connect eight coastal countries and island nations to each other and to the rest of the world. EASSy will be the first optical fiber connection for most of these countries to the global optical fiber network. EASSy is expected to significantly increase the supply of high quality reliable broadband capacity while simultaneously reducing wholesale bandwidth costs and supporting a parallel reduction in end-user prices for telecommunications service which will boost regional competitiveness and enable Africa to participate more fully in the global information economy. This is expected to help provide the conditions for growth of existing businesses and to attract new enterprises which need modern low cost connectivity.
In a statement released by Chris Wood, CEO of WIOCC and Co-Chair of the EASSy Management Committee, EASSy (2010b) announced in December 2010 that the Eastern Africa Submarine Cable System will be upgraded in 2011, more than doubling the current available capacity on the system.
3.3.2 Mobile Electronic Commerce
As early as 2002 mobile electronic commerce (m-commerce) has been seen as a major future trend, where mobile phones and personal digital assistants (PDA) would be used to further the reach of e-commerce (Anumba & Ruikar, 2002).
The next stage for telecom companies in partnership with businesses is to allow users to buy and sell without being connected to any wired network. M-commerce is the new trend and is expected to drive the future development of e-commerce. Being able to buy and sell goods and services over mobile devices is an important step
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towards achieving an anywhere, anytime paradigm. Location and time will no longer constrain people from completing their transactions (Maamar, 2003).
The comments by Maamar (2003) are supported by Jobodwana (2009) who states that M-commerce is emerging in Africa and South Africa especially as either a complement or an alternative to e-commerce as originally conceived, though there are arguments that mobile telephone technology “m-commerce” will surpass “e-commerce” as the method of choice for digital commerce transactions.
This trend towards mobile commerce is highlighted by Doherty and Ellis-Chadwick (2010) when they remark that retailers will also face growing pressure from consumers to allow their services to be accessed flexibly from a growing array of mobile devices, as they want to be able to shop on the move.
With regard to mobile advertising it is believed that while people may not be buying on their smartphones now in huge numbers, mobile commerce is poised to take off.
"The smartphone is to mobile advertising what broadband was to the PC. Pre- and post-broadband, it is night and day and mobile commerce will go through the same type of transition. Mobile purchasing is small today, but we do believe the technology is aligning to make it much more prevalent. As smartphones become a bigger part of the market, and users become more confident, mobile e-commerce will gain traction," said Gian Fulgoni, chairman of comScore (Megna, 2009).
In an attempt to highlight the potential of m-commerce the number of mobile cellular users was extracted from the Central Intelligence Agency of the United States of America’s (2009) World Fact Book. The number of mobile cellular users worldwide was reported as being 4,849.4 million in 2009. This is over two and a half times the number of internet users reported in the same publication. The list of 220 countries making up this total are headed by China with 747 million users, India with 670 million users, United States with 286 million users, Russia with 230.5 million users and Brazil with 174 million users. The highest ranked African country on the list is Nigeria in 16th position with 73 million users. South Africa is ranked 26th with 46.4 million users. From these figures it is safe to say that there is significant potential for
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m-commerce, particularly, it would seem, in the developing nations where this form of technology is significantly more prevalent than the normal internet users.
3.3.3 Social Networking
According to Brown, Broderick and Lee (2007) word of mouth has greater impact on product judgments, attitude formation and decision making than formal marketing communications. The importance of this statement regarding the power of word of mouth, and the link to social networking is highlighted by Doherty and Ellis-Chadwick (2010) who comment that with millions of people around the world, from an ever widening age profile, spending ever more time communicating with their “friends” via sites, such as Facebook, it is very likely that the power of social networking will continue to expand and have far greater affect on modern consumers’ online shopping behaviour.
“The social networking feeding frenzy shows no signs of stopping. Better make sure your business is on the bandwagon -- and not just standing in the way. Maybe there's a bubble waiting to pop here. Maybe not. Unless you're an investor, who cares? When the dot-com bubble burst, the underlying business model was still sound and it still changed how the world did business. The social networking industry is driving a whole series of equally profound business changes. It's not that you're throwing out the book on customer service, sales and marketing. It's just that the book has a bunch of new chapters -- and maybe a very different ending (McKenzie, 2011)”. These comments make it quite clear that Social Networking, in whatever form, is having and will continue to have a significant influence on the way in which e-commerce is conducted in the future.