Why the future of sales is e-Commerce

Why the future
of sales is e-Commerce
Recent trends in
the way people shop, show that click and buy is the future of sales or commerce
According to Business Insider, an
American based online financial and technology news portal, walking or driving
to a regular shopping mall is no longer the preferred shopping method.
The Business Insider report reveals a steep
drop in offline sales, growing at a negative rate since 2010. At the same time
sales online have accelerated. The decline in offline sales is largely
attributed to the fact that shoppers now have convenient alternatives like,  ebay, amazon, alibaba,  etc.
The Business
Insider data reveals that an average of 69% of American consumers purchased
consumer electronics online in 2013, 67% purchased books, while 63% purchased
clothing and apparel.
The move online by
American retailers is already having a negative impact on the big traditional
retailers in America. Many are closing retail outlets as they witness significant
decline of in-store traffic.
For example, Barnes
and Noble, the largest book seller in the US has plans to close a minimum of
226 of its bookstores between 2011 and 2021. Staples, another major retailer in
the US will close 225 retail outlets by 2015. Gap, a major fashion retailer
closed 189 retail shops between 2012 and 2013. Abercombie and Fitch, also a
fashion retailer, is closing 180 retail outlets by 2015.
The growth of
e-commerce is not restricted to America. Outside America, China is another
country seeing a significant boom in online trade. Online retail sales,
according to China’s Ministry of Commerce rose 41.2% in 2013 to $296.6 billion
higher than the estimated $262.5 billion worth of e-commerce sales made by
American companies in the same year, an indication that the Chinese e-commerce
market has overtaken that of America. KPMG, the global consulting and audit
firm, forecasts that the e-commerce market in China will reach $540 billion by
2015, almost double its current level.
The growth in China
is driven by the increasing number of Chinese people going online to shop.
According to an article in Forbes Magazine, the number of online shopping
customers in China rose from 242 million in 2012 to 302 million in 2013 with
the magazine forecasting that the number of Chinese people shopping online will
increase to about 700 million in the long run, which will see online shopping
rising to about $687 billion assuming expenditure per head remains the same as
in 2013.
Africans are also
catching up fast on the e-Commerce trend as internet penetration and smart
phone ownership increases on the continent. A report “Lions Go Digital”
prepared by the Mckinsey Global Institute (MGI), puts internet penetration on
the continent at 16% with 167 million internet users in 2013 with an average of
67 million smart phones and an estimated $18 billion in internet contribution
to the African economy.
However, the report
also shows the huge potential in the internet economy in Africa driven mainly
by e-commerce. The report estimates that internet penetration will reach 50% of
Africans by 2025, with an estimated 600 million internet users, using an
estimated 360 million smart phones and generating e-Commerce sales worth $75
billion annually.
The clear big
picture that is fast emerging is that there is no promising future for big
shopping malls but a huge future for click and buy or e-commerce. Two of the
biggest growth markets in Africa for e-commerce are Nigeria and South Africa.
A taste of how the
increasing appetite for online shopping by Africans is shaping out was
witnessed in the recent Nigerian version of “Black Friday”, when two of
Nigeria’s e-commerce giants, Jumia and Konga offered their version of “Black
Friday” discounts online.
Jumia, for example,
recorded over 1.5 million visits on Black Friday, which was twice its average
of 700,000 weekly visitors on its site and  up 10 times over similar Black Friday sales
recorded in 2013.
Interestingly, over
50% of visitors who accessed the site did so through an Andriod or iOS mobile
device.  The top three selling items were
low priced smart phones, a clear indication of the increasing reliance of many
Africans on budget smart phones to access the internet and interact on social
media, with online shopping increasingly becoming one of the reasons to buy a
smart phone in Africa.
Konga, the rival
online platform also had a similar sales boom on “Black Friday.”  A statement from the company states that
Konga recorded about N600 million ($3.5m) in sales on Black Friday, a record
breaking 1440% year on year increase in online revenue.
During the Black
Friday sale period, Konga said, it recorded 670 per cent increase in new orders
from shoppers across every state in Nigeria reaching a peak of 1,659 orders
placed within one hour and processing over 100,000 packages during the sales.
The three most sold
products on Black Friday by Konga were the Spark Android Tablet, the Infix Zero
phone and Polystar 32” LED TV.
Emerging is a
gradual change in consumer behavior in Africa’s largest economy fueled by
increased internet and smart phone penetration. The MGI report notes that an
average of 25% of urban Africans go online daily and this proportion is
expected to rise over time as internet and smart phone penetration increases on
the continent. The change in consumer behavior is helped by a pick-up in
e-payment systems across the continent.
If the current
trend in internet and smart phone penetration continues, MGI estimates that the
result could be a leap forward in Africa’s economic growth and development with
the internet contributing some $300 billion to Africa’s GDP by 2025.
E-commerce has been
shown to increase shopping appetite, reduce costs and expand retail sales to
previously unreachable markets. This will all have a positive impact on the
economy and open new opportunities for businesses and individuals.
For individuals,
there is little to fear in the growth of e-Commerce. For the new shopping malls
emerging across the African continent, the fast growth of e-Commerce is
something to be concerned about in the long run as Africans get more
comfortable “clicking and buying.”




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