According to research by World Wide Worx, even though online shipping started in South Africa in 1996, it is estimated to reach only 1% of total local retail sales in 2016, writes GARETH VAN ZYL.
Online shopping in South Africa was birthed in 1996, but e-commerce is only forecast to reach 1% of total local retail sales in 2016.
This is according to the managing director of research company World Wide Worx, Arthur Goldstuck, who was speaking at an event hosted by digital marketing initiative Heavy Chef in Johannesburg on Wednesday night.
Goldstuck said that local e-commerce sales are set to top R9bn in 2016.
This is expected to be 1.03% of total retail sales in the country in that year, a milestone for SA’s e-commerce space.
Goldstuck further said that online retail is expected to grow 26% year-on-year in 2015 to reach a market size of R7.5bn. The country’s total retail market size is forecast to be R807bn this year.
“For now things look great from a point of view of growth rate, but at the same time in terms of what it represents of the overall retail space, you have to understand that online retail is still in baby’s shoes,” Goldstuck told the audience.
Goldstuck noted that overall retail growth in SA has average around 7% per year, close to the global figure of 6%. However, he said that inflation eats into total retail sales and that the traditional brick and mortar market still has a stronghold over the online sales space.
“And that’s the backdrop of the online retail scene, because online retail is always going to be a subset of traditional retail,” he said.
Nevertheless, growing local internet user numbers, which are forecast to surpass 18 million this year, along with smartphone usage topping 23.5 million in 2015 are among factors driving greater local e-commerce adoption.
Unpacking the country’s e-commerce figures further, Goldstuck said the total number of online shoppers in SA at the end of 2014 amounted to 3.225 million.
He added that 60.8% of those ready to e-shop are doing so. Meanwhile, online shoppers aged 25-34 make up the biggest percentage of e-buyers at 16.3% followed closely by those aged 35-44 (15.6%).
Goldstuck also said that males make up 14.5% of e-commerce purchases in SA and females 13.1%. Couples that are married or living together are 13.2% of the local online buying population while those who are divorced or separate are the biggest segment of e-buyers at 18.9%.
Among the biggest categories of online purchases by adults are music and videos (3.6%), business purchases (3.6%), gifts (2.8%), clothing (2.6%) and software (2.4%).
Concluding his talk, Goldstuck said there are three essential rules that e-tailers in SA and the rest of Africa need to consider.
“Number one, the segmentation is more important online than offline,” said Goldstuck.
“It’s more important online because every user has a different motive and different fear when they go online,” he said, highlighting that fears still exist regarding the security of shopping on the internet.
The other two key points are that conversion is key.
“So, you have 5.2 million people that are ready to shop but only 3.2 million are actually shopping.
“And the third one, finally, confidence is actually the currency of online retail. And if you don’t instill confidence in your shopper, you’re actually undermining a key value of your own currency,” said Goldstuck.
Crouching Yeti strikes
Kaspersky Lab has uncovered infrastructure used by the Russian-speaking APT group Crouching Yeti, also known as Energetic Bear, which includes compromised servers across the world.
According to the research, numerous servers in different countries were hit since 2016, sometimes in order to gain access to other resources. Others, including those hosting Russian websites, were used as watering holes.
Crouching Yeti is a Russian-speaking advanced persistent threat (APT) group that Kaspersky Lab has been tracking since 2010. It is best known for targeting industrial sectors around the world, with a primary focus on energy facilities, for the main purpose of stealing valuable data from victim systems. One of the techniques the group has been widely using is through watering hole attacks: the attackers injected websites with a link redirecting visitors to a malicious server.
Recently Kaspersky Lab has discovered a number of servers, compromised by the group, belonging to different organisations based in Russia, the U.S., Turkey and European countries, and not limited to industrial companies. According to researchers, they were hit in 2016 and 2017 with different purposes. Thus, besides watering hole, in some cases they were used as intermediaries to conduct attacks on other resources.
In the process of analysing infected servers, researchers identified numerous websites and servers used by organisations in Russia, U.S., Europe, Asia and Latin America that the attackers had scanned with various tools, possibly to find a server that could be used to establish a foothold for hosting the attackers’ tools and to subsequently develop an attack. Some of the sites scanned may have been of interest to the attackers as candidates for waterhole. The range of websites and servers that captured the attention of the intruders is extensive. Kaspersky Lab researchers found that the attackers had scanned numerous websites of different types, including online stores and services, public organisations, NGOs, manufacturing, etc.
Also, experts found that the group used publicly available malicious tools, designed for analyzing servers, and for seeking out and collecting information. In addition, a modified sshd file with a preinstalled backdoor was discovered. This was used to replace the original file and could be authorised with a ‘master password’.
“Crouching Yeti is a notorious Russian-speaking group that has been active for many years and is still successfully targeting industrial organisations through watering hole attacks, among other techniques. Our findings show that the group compromised servers not only for establishing watering holes, but also for further scanning, and they actively used open-sourced tools that made it much harder to identify them afterwards,” said Vladimir Dashchenko, Head of Vulnerability Research Group at Kaspersky Lab ICS CERT.
“The group’s activities, such as initial data collection, the theft of authentication data, and the scanning of resources, are used to launch further attacks. The diversity of infected servers and scanned resources suggests the group may operate in the interests of the third parties,” he added.
Kaspersky Lab recommends that organisations implement a comprehensive framework against advanced threats comprising of dedicated security solutions for targeted attack detection and incident response, along with expert services and threat intelligence. As a part of Kaspersky Threat Management and Defense, our anti-targeted attack platform detects an attack at early stages by analysing suspicious network activity, while Kaspersky EDR brings improved endpoint visibility, investigation capabilities and response automation. These are enhanced with global threat intelligence and Kaspersky Lab’s expert services with specialisation in threat hunting and incident response.
More details on this recent Crouching Yeti activity can be found on the Kaspersky Lab ICS CERT website.
R5m in software fines
South African companies paid almost R5.2 million in damages for using unlicensed software in 2017 up from R3.6 million in 2016.
This is according to data from BSA | The Software Alliance, a non-profit, global trade association created to advance the goals of the software industry and its hardware partners.
The significant increase in unlicensed software payments – which includes settlements as well as the cost of acquiring new software to become compliant – is the result of more accurate leads from informers, says Darren Olivier, Partner at Adams & Adams, legal counsel for BSA. In 2017 BSA received 281 reports in South Africa alleging the use of unlicensed software products of BSA member companies – this up considerably up from 230 leads in 2016.
“BSA’s recent social media campaign also helped to create awareness among local companies about the need to comply with existing legislation in order to avoid legal action,” Olivier says.
The result has been a 13% increase in settlements paid in 2017, with the settlements total reaching almost R2.5 million.
While the average settlement paid by companies in 2017 was around R36 094, in some cases the amount owed was far greater, as is evidenced by Shereno Printers, a print and design company based in Gauteng, which ended up paying a hefty settlement amount of R260 000 last year in an out of court settlement.
The company’s case was in line with a broader trend, which saw the print and design industry as a whole rank among the top sectors plagued by unlicensed software.
Aside from settlements, companies also paid more than R2.6 million in licenses purchased to legalise their unlicensed software.
And the ramifications of software piracy extend beyond financial implications. “It also results in potential job losses and loss in tax revenue. This is not to mention the financial and reputational damage brought about by security breaches and lost data,” comments Olivier.
As unlicensed software has not been updated with the latest security features, it leaves businesses vulnerable to cyberattack, he explains.
This is a particular problem for companies operating in South Africa where economic crime has recently reached record levels, according to the Global Economic Crime Survey. Indeed, 77% of South African organisations have experienced some form of economic crime. What’s more, instances of cybercrime totalled 29% of economic crimes reported.
This in turn, raises questions around government policy and the adequacy of existing copyright legislation, which only enables the registration of copyright in films, but not in computer programs.
Olivier notes that it is likely the percentage of unlicensed software on South African computers has increased over the past year. “We received many more leads this year, which is an indicator that the amount of pirated software is greater than in previous years,” he comments.
Often unlicensed software is not so much a case of deliberate piracy as it is a result of poor software asset management (SAM).
“For this reason, the BSA encourages all businesses to ensure they have effective SAM practices in place. Companies should be able to confirm what software they are using and are licensed to use – this will help them to identify unlicensed software and can also bring about cost savings. Even the most basic SAM practices such as regular inventories and software use policies can help,” says Chair of the BSA SA Committee, Billa Coetsee.
With this in mind the BSA offers a range of SAM solutions, not only to help organisations reduce legal and security risks, but also to create business value.