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Issue Date: August 2000 (es)

SA e-commerce in search of a local trailblazer

1 August 2000

Business-to-business (B2B) e-commerce revenues in South Africa will exceed that of business-to-consumer (B2C) for the first time this year as South African companies cautiously start embracing the e-commerce revolution, according to the latest SA company e-commerce survey by IT researchers BMI-TechKnowledge.
However, South African companies do not need to start panicking yet, says BMI-T Internet and e-commerce analyst Andreas Bertoldi: the uptake of e-commerce is still extremely slow in this country, with a staggering 44% of companies not seeing e-commerce as a strategic business imperative at this stage.
"We expect e-commerce to take off substantially in South Africa, as it is a reality that has to be confronted by all companies," says Bertoldi in BMI-T's authoritative South African Company e-Commerce Survey. "But the expected growth is not ramping up as quickly as envisaged, suggesting that most companies are adopting a more cautious approach. We're still looking for the local trailblazer, like an Amazon.com, to point the way."
Transaction values (not including financial services) via the Internet look to climb rapidly from R6 billion in 2000, to R241 billion In 2005, but only about half (R2,5 billion) of transactions conducted via the Internet in 2000 will actually be completed online. The important indicator, says Bertoldi, is the strong growth in Internet access and the number of companies with websites. For the first time, more than half of companies with Internet access have a website, a 'critical first step' towards e-commerce enablement.
Excluding micro and survivalist companies, there will be approximately 320 000 Internet connected companies in South Africa by the end of 2000. The most notable growth has been from smaller companies (50 employees or less), where at least 87% will be online by 2001. By comparison, only 61,5% of small companies in the United States were connected to the Internet in 1999. "The growth of small business Internet, home page, and e-commerce activity globally, has been dramatic," says Bertoldi. "IDC expects the number of small businesses worldwide implementing e-commerce to reach over 2,9 million by 2003." However, the report, which benchmarks Internet and e-commerce activities amongst South African companies, also reveals that most of these websites are static information sites, and the number of companies selling online remains small.
Bertoldi, however, cautions that not too much emphasis should be placed on B2C Internet e-commerce revenues: "A significant amount of e-commerce already takes place via other electronic networks, and the overall growth in systems integration (the foundation of any e-business) is strong." At present, by far the biggest chunk of e-commerce revenue still comes from EDI-type networks, where transaction values look to grow from R126 billion in 2000 to R181 billion in 2005. However, companies using EDI and proprietary systems are expected to migrate to Internet-based systems in the next few years. BMI-T predicts that in line with international trends, B2B e-commerce will dwarf B2C revenues by nearly nine times by 2005. "Key for South African companies at present is the value of the Internet as a marketing and customer communication tool, rather than a purchasing or selling mechanism, says Bertoldi.
BMI-T believes that within the next three years the Internet will be a 'critical business component', and that the entry of international competition as well emerging local e-entrepreneurs will introduce a significant competitive threat to many companies. "Within the next few years, for many industry sectors, e-enabling your company will no longer be matter of choice, but a necessity," concludes Bertoldi.
For details contact Melissa Powell of BMI-TechKnowledge on tel: (011) 803 6412 or e-mail: melissa@bmi-t.co.za


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