eCommerce boom expected
Running a business on the internet in South Africa is looking increasingly promising, with the cost of broadband access expected to become more affordable with the laying of new undersea cables and the recent shake-up in network licensing by the Independent Communications Authority of SA, the telecoms regulator.
This is expected to lead to a 30 percent increase in local e-commerce sales, according to Arthur Goldstuck of information technology research company World Wide Worx.
He notes that online vendors are not as vulnerable to the retail cycle as stores that rely on bricks-and-mortar infrastructure to generate sales.
This is because sales made online often derive from consumers deciding to move already existing spend to sales made on the internet.
Goldstuck believes the opening up of broadband is good news for Web-based businesses and says it is likely to lead to people spending more time researching products online, which can translate into sales.
Allen Jaffe, the managing director of search engine optimisation company RIO media, says the number of businesses dependent only on the internet to generate their income is growing at a "radical" rate.
"There are people that have quit their jobs and run businesses online," says Jaffe, who believes that South Africa has yet to experience the real boom in e-commerce.
He says about 10 percent of retail sales in the US are done online, while in South Africa such sales make up only about 0.5 percent of sales.
Jaffe also runs Book Cape Town, an online business that handles travel and hospitality bookings. Service providers pay commission for bookings generated by the site.
Because internet fraud is "huge", Jaffe says, he always gets the ID number of clients before they embark on a tour. Another constant security risk is that a website can be hacked and have its traffic directed to a rival site.
Jaffe uses a white-label internet security site for his payments, for which he pays a minimum fee every month.
But Neil Ashton, who runs search engine optimisation company Access Solution, says businesses that run on the internet still have to struggle with costly couriers and high banking fees, as well as the low number of credit card users in South Africa.
Ashton, who has an online business selling rugby and cricket T-shirts, says it costs between R2 000 and R4 000 to get an internet payment gateway. The bank will take a commission of up to 7 percent on each credit card purchase.
He does not believe that the laying of undersea cables will necessarily cause his business to boom, mainly because this infrastructure will not do anything for the many people who do not have credit cards.
"It’s going to be nice, but I don’t think it’s going to double my turnover."
For an online business, it is vital to be picked up by search engines. Such listings bring in 90 percent of Web traffic.
Ashton says there are 47 elements to consider when it comes to optimising your site for search engines.
Some of these include the text of the site, reciprocal links to other sites, meta tags (code keywords that give a user’s site a higher ranking on search engines) and how regularly the site is updated. Sites that are more frequently updated are ranked higher by search engines. He says websites that use Flash graphics will not necessarily score higher in searches than those that don’t.
He recommends that business owners use pay-for-click adverts initially before one’s website is ranked well by search engines, as this process can take about three months.
Owners of online entrepreneurial ventures have a much better rate of success if they sell niche products, services or information on the internet, rather than trying to sell generic content, says Ashton.
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