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Timing matters in making ecommerce jump in Africa

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Many businesses are in danger of falling behind by ignoring ecommerce. Digital Planet CEO NEIL WATSON urges business to add an online sales channel before it’s too late.

Think ecommerce in Africa is still lagging behind the rest of the retail world? Think again. The success of relatively new online retailers such as Zando and Konga is proving that the continent is more than ready for online shopping. Take JUMIA, the Nigerian online shopping platform that was started in 2012. Less than three years later, the business employs 1 000 people and has warehouses in eight other countries.

Once, having an ecommerce channel may have been optional for business, but with each passing year and new set of figures, it becomes clearer that this is no longer true. The recent DHL Shop the World report highlighted the high growth potential of emerging markets in ecommerce. McKinsey highlights that the African ecommerce market is accelerating after a slow start and could soon account for 10 per cent of all retail sales.

Is time running out for retailers who haven’t yet made the leap to online platforms? The evidence certainly seems to say so. Some online players in South Africa are growing faster than brick-and-mortar shops, which means they are cannibalising traditional retail. For retailers, online platforms are becoming increasingly compulsory not just as additional sales channels, but to ensure that ecommerce players don’t end up eating their lunch.

The most important part of ecommerce is investing at the right levels at the right time. This differs depending on the kind of product you’re offering and how comfortable consumers are purchasing your product online.

For IT sellers, for example, the market is mature enough that it may already be too late. There are too many online players fighting for a piece of the pie.  Unless you have a big brand, an innovative concept or a lot of marketing spend, it will be hard to get above the crowd.

On the other hand, some markets such as fashion apparel are just beginning to mature. Players like Mr Price have invested tens of millions in building their online brand, ensuring that they are at the forefront and will be directing the market in South Africa.

Once you’ve determined that it’s time for you to build your ecommerce store, you then need to look at investing the right amount for the next three to five years. It can be tricky to invest at the right level. In large organisations, we often see an over-investment in technology when the market doesn’t warrant it. Investing too heavily too early means you may never see a return on investment.

The later you engage in online retail, the more developed the market will be, which has both advantages and disadvantages. A more mature market means that technology is more mature and there are skills available.

The downside is there will already be more competitors and it will be more expensive to establish yourself as a brand. You’ll also be learning while everyone else already understands the market so you could suffer reputational damage. Finally, the skills will be there, but will be much more expensive.

For most companies,  it’s better to start too early than too late. This will give you scope to experiment so that when the market arrives, you’ve learned your lessons and can take advantage without huge marketing investment and reputational risk.

Once you’ve determined the right time to make the leap, the real work starts. From the planning stage to the fulfilment stage, there is a lot that goes into a successful ecommerce channel. Customer service, logistics, reverse logistics, warehousing, marketing and many other specialised areas need to be considered. Most businesses do not currently have skills to tackle it on their own and would be advised to seek outsourcing partners who do have those skills on hand.

One thing is certain when it comes to ecommerce – it’s not a question of whether to explore online platforms but when. South African customers may have been slow to start transacting online, but we’ve reached the tipping point for ecommerce.

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Money talks and electronic gaming evolves

Computer gaming has evolved dramatically in the last two years, as it follows the money, writes ARTHUR GOLDSTUCK in the second of a two-part series.

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The clue that gaming has become big business in South Africa was delivered by a non-gaming brand. When Comic Con, an American popular culture convention that has become a mecca for comics enthusiasts, was hosted in South Arica for the first time last month, it used gaming as the major drawcard. More than 45 000 people attended.

The event and its attendance was expected to be a major dampener for the annual rAge gaming expo, which took place just weeks later. Instead, rAge saw only a marginal fall in visitor numbers. No less than 34 000 people descended on the Ticketpro Dome for the chaos of cosplay, LAN gaming, virtual reality, board gaming and new video games. 

It proved not only that there was room for more than one major gaming event, but also that a massive market exists for the sector in South Africa. And with a large market, one also found numerous gaming niches that either emerged afresh or will keep going over the years. One of these, LAN (for Local Area Network) gaming, which sees hordes of players camping out at the venue for three days to play each other on elaborate computer rigs, was back as strong as ever at rAge.

MWeb provided an 8Gbps line to the expo, to connect all these gamers, and recorded 120TB in downloads and 15Tb in uploads – a total that would have used up the entire country’s bandwidth a few years ago.

“LANs are supposed to be a thing of the past, yet we buck the trend each year,” says Michael James, senior project manager and owner of rAge. “It is more of a spectacle than a simple LAN, so I can understand.”

New phenomena, often associated with the flavour of the moment, also emerge every year.

“Fortnite is a good example this year of how we evolve,” says James. “It’s a crazy huge phenomenon and nobody was servicing the demand from a tournament point of view. So rAge and Xbox created a casual LAN tournament that anyone could enter and win a prize. I think the top 10 people got something each round.”

Read on to see how esports is starting to make an impact in gaming.

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Blockchain unpacked

Blockchain is generally associated with Bitcoin and other cryptocurrencies, but these are just the tip of the iceberg, says ESET Southern Africa.

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This technology was originally conceived in 1991, when Stuart Haber and W. Scott Stornetta described their first work on a chain of cryptographically secured blocks, but only gained notoriety in 2008, when it became popular with the arrival of Bitcoin. It is currently gaining demand in other commercial applications and its annual growth is expected to reach 51% by 2022 in numerous markets, such as those of financial institutions and the Internet of Things (IoT), according to MarketWatch.

What is blockchain?

A blockchain is a unique, consensual record that is distributed over multiple network nodes. In the case of cryptocurrencies, think of it as the accounting ledger where each transaction is recorded.

A blockchain transaction is complex and can be difficult to understand if you delve into the inner details of how it works, but the basic idea is simple to follow.

Each block stores:

–           A number of valid records or transactions.
–           Information referring to that block.
–           A link to the previous block and next block through the hash of each block—a unique code that can be thought of as the block’s fingerprint.

Accordingly, each block has a specific and immovable place within the chain, since each block contains information from the hash of the previous block. The entire chain is stored in each network node that makes up the blockchain, so an exact copy of the chain is stored in all network participants.

As new records are created, they are first verified and validated by the network nodes and then added to a new block that is linked to the chain.

How is blockchain so secure?

Being a distributed technology in which each network node stores an exact copy of the chain, the availability of the information is guaranteed at all times. So if an attacker wanted to cause a denial-of-service attack, they would have to annul all network nodes since it only takes one node to be operative for the information to be available.

Besides that, since each record is consensual, and all nodes contain the same information, it is almost impossible to alter it, ensuring its integrity. If an attacker wanted to modify the information in a blockchain, they would have to modify the entire chain in at least 51% of the nodes.

In blockchain, data is distributed across all network nodes. With no central node, all participate equally, storing, and validating all information. It is a very powerful tool for transmitting and storing information in a reliable way; a decentralised model in which the information belongs to us, since we do not need a company to provide the service.

What else can blockchain be used for?

Essentially, blockchain can be used to store any type of information that must be kept intact and remain available in a secure, decentralised and cheaper way than through intermediaries. Moreover, since the information stored is encrypted, its confidentiality can be guaranteed, as only those who have the encryption key can access it.

Use of blockchain in healthcare

Health records could be consolidated and stored in blockchain, for instance. This would mean that the medical history of each patient would be safe and, at the same time, available to each doctor authorised, regardless of the health centre where the patient was treated. Even the pharmaceutical industry could use this technology to verify medicines and prevent counterfeiting.

Use of blockchain for documents

Blockchain would also be very useful for managing digital assets and documentation. Up to now, the problem with digital is that everything is easy to copy, but Blockchain allows you to record purchases, deeds, documents, or any other type of online asset without them being falsified.

Other blockchain uses

This technology could also revolutionise the Internet of Things  (IoT) market where the challenge lies in the millions of devices connected to the internet that must be managed by the supplier companies. In a few years’ time, the centralised model won’t be able to support so many devices, not to mention the fact that many of these are not secure enough. With blockchain, devices can communicate through the network directly, safely, and reliably with no need for intermediaries.

Blockchain allows you to verify, validate, track, and store all types of information, from digital certificates, democratic voting systems, logistics and messaging services, to intelligent contracts and, of course, money and financial transactions.

Without doubt, blockchain has turned the immutable and decentralized layer the internet has always dreamed about into a reality. This technology takes reliance out of the equation and replaces it with mathematical fact.

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