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E-Commerce Buying and selling is an age-old human activity. Classical economic theory insists that it's a rational process - consumers, motivated by self-interest, exchange money for goods that will satisfy their needs. But often the things we take for granted are the ones we cease to question. Perhaps it's time we did, because a new wave of technology is revolutionizing the market-place. Electronic commerce is set to replace the shopping mall with the cyber-mall. In South Africa, Telkom is developing a product called 'Cybertrade' that will allow a shopper to conduct transactions in virtual space. "It is essentially a platform that is an enabler for electronic commerce," says Prem Gangiah, Cybertrade Product Developer from Telkom, "We are moving towards a business-to-commerce, or business-to-consumer electronic commerce, and one of the reasons for that is people have the tendency to want to stay at home to do to their business, rather than having to go to the local shop or the Pick 'n Pay's or Hyperamas of this world." South Africa is no stranger to cyberspace shopping. Telkom's old 'Beltel' system did over 45 million SA rands worth of business every year. But that was a DOS-based interface, without the convenience of Windows or a Web-browser. Cybertrade hopes to take virtual shopping to new heights. Using the browser, you'll surf the net for the product of your choice, then order and pay for it in cyberspace.
Because of encryption technology, cyber-trade will actually be a lot safer than present-day credit card transactions. In the run-up to Christmas in the United States last year, Americans spent $1.2 billion dollars in cyberspace - 4 times higher than the previous year. It's a massive growth industry. But how will e-commerce impact upon the South African economy? Unlike the United States, we have no mail-order shopping culture, our postal system is less efficient, and many South Africans cannot even afford a computer. "We'll see within the next five years a whole lot more people buying on-line, and I use on-line very loosely as it may be web TV or on the Internet," says Gregor Noriskin, of Microsoft South Africa. "I think the important thing is that people are very much attached to the tactile shopping experience. They like to feel and see what they are buying, and it will take a while for people to get used to buying on-line. They are going to need to replace that tactile shopping experience with an interactive on-line shopping experience." Despite all the problems facing a developing country such as ours, there is no escaping the cyber-trade revolution. Shopping will never be the same again. First and foremost: you won't have to leave home. Using a web-browser you'll have fingertip access to a huge range of products on your desktop. In a country like South Africa where product distribution is often difficult because of a lack of infrastructure, that has enormous benefits for the retailer. The second element is a revolution in merchandising. Not only can companies present a full range of products to someone living in a remote area, but by incorporating video into a multimedia presentation, the customer can see the product in action.
In Touch talked to a few shoppers about shopping on the Internet as opposed to tactile shopping.
"Most people these days don't have the time to go to shops anymore. Everyone is very busy nowadays, especially over the Christmas season and I would say more Internet than the shops." "... and they are much cheaper actually than going into a shop and buy." "... the thrill of browsing, looking around, going to the shops with friends. I don't shop on my own. It is more of a social event for me than actually a need for shopping." "I like to be able to pick something up to feel it and look at it before I buy it." Putting aside the non-economic reasons people go shopping, it is clear e-commerce has enormous benefit for both the consumer and the retailer. "If I want to book for a movie, I want to book now," says Dave Parratt, Senior Manager, Customer Electronic Delivery, Standard Bank. "I don't want to have to go and stand in a queue. If I want to book an airline ticket or work out where in the world I want to go, I want to do it now. I don't want the inconvenience. I want the ability to do it myself and I want to do it anytime I want to do it. These are really the key issues. The Internet is about convenience."
Don Peppers remarks : "If I make a recommendation to you, the chances are that you are going to like this book because other people who read books like you do, have rated this book high. (Check out www.amazon.com to see this in practice.) Over time, this can create an immense bond of loyalty between the customer and the company, because what the company really is doing, is anticipating your needs, even before you know them." This could herald a new era in advertising. The days of general mailshots will be over, to be replaced by advertisements tailor-made to the individual! Businesses will be able target specific consumers with advertising based upon a record of their buying preferences. But what if those preferences are unhealthy or neurotic? The danger of one-to-one marketing is that it will keep consumers in their pigeon-holes, reinforcing their pre-existing buying preferences.
As Plato suggested, poverty consists not so much of owning small property, as possessing large desires. By 2002, e-commerce will attract $40 billion worth of shopping. For all its wonderful advantages, cyber-shopping is going to make it much harder to gaze unmoved into the display windows of the next century.
CONTACTS
Gregor Noriskin, Consultant
Dave Parratt |
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Apart from the buyer and seller, there are three additional parties to every transaction - the bank that debits your account, the shipping agent that delivers the product, and the Internet service provider that hosts the transaction. But despite those extra fees, it may actually be cheaper to do your shopping on the net!
It also means vendors can customise products specifically to the client's requirements. Says Don Peppers, futurist and co-author of 'The One to One Future' and "Enterprise One to One' : "In a test programme the Levi jean company ran, their jeans initially cost more to make that way, but when they roll it out, the custom jeans will actually cost Levi's less to make than non-custom jeans because there is no inventory. You never make a pair of jeans until you have a customer. You don't throw a gross of jeans away in every size at the end of the season. You don't have a fire sale on custom jeans."
It is not difficult to imagine the day when the cyber-mall will approximate the real thing - making it possible for you to see and interact with a computer generated facsimile of the object you desire, but will there ever the a substitute for the hustle and bustle of a mall on a Saturday morning?
But will buyer and seller benefit equally? As e-commerce becomes commonplace, every transaction will be recorded, allowing companies to develop sophisticated profiles of their customers. Eventually, they'll know your preferences before you do.
Electronic commerce undoubtedly streamlines commercial transactions. The irony is ... it may be too good, promoting a profligate consumerism that is already the bane of the modern world.