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2017 06 – EFA Mailer

EFA Attends Government Meeting on African eCommerce and Infrastructure Financing

Dylan Piatti, EFA Co-Chair, was invited to present to a meeting held by the Department of International Relations and Cooperation (DIRCO) and the South African Institute of International Affairs (SAIIA) on 20 June. The event was on “making the G20 agenda relevant for Africa with a special focus on eCommerce and infrastructure financing”.

DIRCO and the DTI reported that the G20 Group of countries (which includes all the BRICS countries) has started to look at the international trade in eCommerce, and at eCommerce as a generator of business in the developing economies. A number of issues had been identified including – a lack of skills; infrastructural problems; the cost of data; lack of consumer trust; tariff & non-tariff barriers; shortage of financing options for start-ups and small companies.

We pointed out that SA should benefit from the lack of infrastructure in other African states, particularly the lack of shopping malls which should encourage cross-border online shopping which SA should be in a position to provide.

The meeting heard that the African Union had not yet considered eCommerce but that Minister for Trade Davies had suggested that this should be added to the agenda in the Spring. The background to the Minister’s decision to raise eCommerce at the AU can certainly be found his views earlier this month to the World Trade Organization (see below).EFA offered to provide a brief to the DTI on eCommerce’s needs.

Minister for Trade Davies Expresses his concerns on eCommerce rules at the WTO

On 9 June at the World Trade Organization’s meeting in Paris, Minister Rob Davies acknowledged that some of the new issues such as e-commerce are the alternative gateway in a world where trade patterns are changing.

Even though e-commerce is a part of the new world with huge advantages for many people, it could also “land up in a winner takes it all model as it is skewed towards the few while many others will be left behind. That is what is happening now and until that is changed, multilateral cooperation has a role to play in creating inclusivity,” he said. Minister Davies also emphasised that “If members [of WTO] just have the traditional rules for trade on e-commerce that will freeze the status quo and enhances and strengthens the advantages of the early comers against the late entrants.”

The World Trade Organization (WTO) started work on eCommerce back in 1998 and has been busy ever since creating guidelines for customs duties and tariffs through the global agreements on tariffs and trade (GATT) and TRIPS frameworks. The WTO work has often been criticised as benefiting the developed world.

EFA Co-Chair Presents at the Annual European Ecommerce Conference

Adheesh Budree, EFA Co-Chair, attended the Ecommerce Conference in Barcelona, Spain, earlier this month. We have asked that he contribute a report in next month’s Newsletter. One issue discussed was the founding of the Global E-commerce Association (GEA) with the following mission statement: “Our mission is to foster digital commerce around the world through networking, exchanging information and knowledge and sharing research and studies while enhancing consumer trust.”

EFA has indicated that it would be interested to join, depending on the requirements of the new body.EFA is affiliated to the two e-commerce associations in Europe – EMOTA and European E-commerce (see our website www.ecomafrica.org )

ICANN African Region has issued a report on DNS in Africa

ICANN Africa Region at its meeting in Johannesburg on 27 June announced the results of its mammoth study on Domain Names (DNS) in Africa.The study is intended to encourage more competition by setting up more DNS Registrars. The research, which took 16 months, has resulted in a 200+ page report covering 54 African countries, from the 3 smallest (with 75 domain names each) to the largest with nearly a million (South Africa). In total Africa has 5.1 million Domain Names worth an estimated $52m.

Research shows that the costlier the process of DNS registration the fewer are registered but that this has no impact on the number of users. Kenya, for example, has the highest penetration of internet users in Africa (most via smartphones) but as DNS registration is costly the number registered is far less that South Africa. However, factors other than cost also play a part: Many Nigerian companies opt for domain names that avoid the country’s .ni due to the stigma caused by the old Nigerian “419” email scams.

In Africa, the vast majority of names registered are for companies. Non-governmental organisations only represent 3% of registrations. A new DNS .africa is being launched in July this year with ICANN’s blessing.

EFA Meets with the ICANN Business Constituency

The ICANN59 is meeting in Johannesburg this week to discuss, among other issues what the next level will be for internet users in Africa. They will also be looking at how best to ensure the continuing security, stability, and resilience of the internet; addressing issues of abuse; public safety and other threats to the Domain Name System (DNS).

EFA held an initial meeting to explore the possibility of a MoU between the ICANN Business Constituency and EFA on issues of common interest. For more information please contact me, alastair@eomafrica.org

Addressing the Skills Gap in eCommerce

EFA has prepared a structure to introduce eCommerce to startups and SMMEs. Please find this on the website (https://ecomafrica.org/position-papers/ ). Members are being asked to provide their expertise to fill in the different aspects of eCommerce in this training module. We greatly welcome your contributions! For more information please contact me (alastair@ecomafrica.org).

EFA in contact with Startups Common – possible EU support for a Startups laboratory

Startups Common, a Finnish initiative with projects ongoing in Indonesia, Vietnam and Europe, is looking at Africa to help governments (city, regional and national level) to digitize their startup ecosystems for government economic development, service progress tracking, service flow management, data collection, data management, analytics and international benchmarking, and issues having a direct impact on regulation changes.

It is researching what to prioritise in order to achieve maximum impact including developing better entrepreneurship and innovation policies, more transparency and access, etc., in order to generate startups in the ICT fields. EFA has started to discuss the possibility of getting them to support an eCommerce incubation in SA. More information alastair@ecomafrica.org.

The EU ePrivacy Regulation

Continuing our report on the progress of the EU’s new privacy initiatives, our European colleagues are very concerned with the ePrivacy Regulation (ePR) which is intended to replace the Privacy & Electronic Communications Directive.
This is supposed to support the General Data Protection Regulation (GDPR) which comes into effect next May.

The GDPR allows companies to approach their existing customers with marketing material and to process data on how an individual uses a website in order to present that person with relevant content/adverts, etc. The general rules have special requirements for personal sensitive and financial data.

One can imagine that the POPIA regulation when that is published will more or less follow a similar approach.The new ePR, however, takes a far more restrictive approach. It is now before the European Parliament for debate and probably will take another 9 to 12 months to be adopted (and then a further 2 years before implementation).

The ePR would require that consumers have complete anonymity when entering a public online space (so no collecting potential customers’ data or recognising returning customers); and emerchants will have to ask for consent before either collecting shoppers’ data, location data or storing any data! This goes far beyond the GDPR, and in fact, contradicts the main Regulation.

The ePR also appears to be moving towards a “pay per use” approach to the internet content, which is raising considerable concerns and accusations that the approach will alter the whole spirit of the internet and create an elitist aspect – the rich will pay for content while the poor won’t be able to. Of course for us in the SA this approach would mean that we will have to start paying for European content. Hopefully, this approach will be defeated totally by the European Parliament.

New US Study on the Digital Age suggests that no company has got it completely right yet.

Bain and Company, a well-known authority on the consumer goods market in the USA has published in its monthly ‘Bain Brief’ the results of its 3rd annual research into what digital means for consumer goods companies. It’s conclusion: – “In recent years, most consumer goods companies have exponentially grown their digital agendas, typically resulting in higher costs of time, energy and money. Yet for many, top-line growth remains elusive and profits are under pressure.”

Here are some other interesting views from that report: – “There’s no arguing with the need for a digital transformation. According to Pew Research Center, consumers globally are shifting media consumption to digital channels at a staggering pace, with 55% of people in the US watching video online every day and nearly 1.86 billion monthly active Facebook users exposed to ads when they log in.

In many categories and countries, e-commerce channels will contribute the majority of industry growth. Digital operations have generated great benefits, boosting stock accuracy by 18% or reducing forecast errors by 35%, for example. And the emergence of a new type of competitor—innovative, digital-first insurgents like Three Squirrels,

The Honest Company and snack company Graze with healthy access to venture capital, little initial reliance on physical retail channels and no need for scale traditional advertising budgets—puts the pressure on incumbent brands to respond or fall behind.

The challenges go beyond spending more on digital initiatives without seeing improved results. [Bain] also learned that the gaps between leaders and laggards are getting bigger. The nature of digital gives trailblazers an advantage, and the less digitally mature companies will find it increasingly difficult to catch up.

E-commerce search algorithms favour brands with better historical digital sales, for example. Meanwhile, targeting digital marketing to consumers, in turn, creates more digital engagement, which then delivers better data to target with. Digital talent and agile culture beget better talent and culture. The list goes on.

While some players have emerged as digital leaders and provide critical lessons, no single company has figured everything out. Insurgent brands start with digital fully embedded in their organisations, while most scale consumer products companies still rely on pockets of digital activity or are in relatively early stages of acting on their strategies in one or more aspects of digital. However, smart choices and nimble ways of working can accelerate progress and set new standards for the industry.

The majority of future growth for many brands will come from digital commerce, in particular, online and mobile channels. Online grocery penetration alone is expected to grow by 15% annually through 2025. That’s why leaders are gearing up to partner with the top digital retailers, optimising web search and honing online product assortments. Some are also selectively experimenting with direct-to-consumer models.

But while digital commerce is an important path to growth and many company executives readily admit that their millennial consumers prefer buying online rather than in stores, there’s a paradox: Most traditional companies, especially food and beverage players, are moving cautiously to manage channel conflict and profitability.

Some companies fail to think through the right assortments or pack sizes for digital. For example, it may be cost-effective to ship bulk packs of shampoo, but do consumers really want to purchase 24 bottles at once? Food and beverage players say online retailers are top-priority customers, yet too few assemble the required cross-functional “A” teams to turn those accounts into growth stories. Many also haven’t developed new capabilities to serve different business models and unique needs. A simple example: a supply chain built to ship pallets is not well-suited to direct-to-consumer models that ship smaller volumes or individual packs.”
Read the whole ‘Bain Brief’ here: http://www.bain.com/publications/articles/deconstructing-the-digital-agenda-in-consumer-products.aspx

Amazon and Online Clothes Shopping

It’s always interesting how national regulations change consumers’ behaviour. According to the US-based retail consultancy, PSFK, Amazon Prime subscribers are being invited to try out a new feature that could solve the biggest issue with online clothes shopping in the USA. Prime Wardrobe will allow users to try on clothes before they buy them. Shoppers select at least three clothing items to try (including shoes and accessories) and get a week to decide what to keep. The rest can be shipped back easily: Amazon includes a prepaid shipping label, a resealable box and can arrange for UPS pickup.

Shoppers who keep three or four items will get 10% off their order, and those who keep five or more will get 20% off. The feature is free for Prime members, though it’s currently only available to selected users.

A great model, but under the Consumer Protection Act in the SA customers have 15 days to return unwanted goods to the emerchant (the cooling off period). A Returns Policy is common in the USA but not mandatory.

Brief News and Useful Stats

  • Zambia & Malawi are to sign a cross-border MoU on cooperation for telecoms and broadcasting;
  • Rwanda, drones are being used to deliver blood samples to hospitals and it is foreseen that drones will soon deliver purchases to rural areas;
  • Zimbabwe’s ISP, Powertel, owned by the Electricity Supply Authority had an operating loss last year of $550,000 and liabilities in excess of its $1.6m current assets;
  • Sending money to Africa is more expensive than sending money elsewhere in the world. The Global Remittance Conference in New York heard research from the NGO Financial Sector
  • Deepening (FSD) that on average a consumer spends almost 10% of the total transaction in banking charges to remit money to Africa, compared to the global average of 7%, and the UN’s Sustainable Development Goal of 3%.
  • Coming to your shopping mall soon – recent articles on the SA e-news have showcased the new technical innovations in Pretoria’s Menlyn Park – including charging points for electrical and hybrid cars; license plate recognition; a parking App to help you locate your car; and a recognition system which tags individuals with a unique number to assist in counting traffic to shops in the mall (I hope they’ve squared that with the Protection of Personal Information Act).
  • Facebook’s Communities Summit in Chicago this week celebrated the founder of a private Facebook page, Female in Nigeria, a self-help group launched a couple of years ago that now has over 1 million members.
  • Facebook also unveiled research that shows that people spend an average of 1.7 seconds looking at a piece of content, but can recall content after seeing it for only 0.25 seconds. Not surprisingly young people scroll twice as fast as older people. Mobile has become the most popular medium for video.
  • Ericsson’s annual Mobile Report shows that there are now 985m mobile subscriptions in Africa, a 4% year-on-year increase. Ericsson also foresees that 4G will overtake GSM as the largest access technology next year.
  • Lastly, the Knysna fires – PnP offers its customers around SA to buy online for delivery to the affected areas. The Gift of the Givers has developed an App to allow people to donate online.

Google Fined Heavily by the EU

Google suffered a major blow on the 27 June when after the European Commission’s Competition Department fined the search giant a record $2.7 billion for unfairly favouring some of its own services over those of rivals. The anti-competition case has been pending for some time. In addition, the EU is threatening Apple with a $14bn fine for tax evasion (using the Republic of Ireland’s very generous tax regime to avoid paying EU taxes); Amazon, Uber and Airbnb are also under investigation for tax issues, while Facebook is being investigated for anti-competitive activities.

Alipay eCommerce payments solution introduced to SA

EFA member, Peach Payments, is to roll out ACI Worldwide’s Alipay system in SA


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