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ISSUE NO 53 IN SEARCH OF THE BUSINESS MODEL

CONSUMERS NOT LIKELY TO GET MOVIES VIA THE INTERNET

According to Forrester Research, digital cinema and cable-based video on demand, rather than internet distribution, will change the way the public watches movies. Will the same hold true for Africa that will not become so heavily cabled?

(source: http://www.itweb.co.za/sections/internet/2001/0103130833.asp )

AFRICAN E-COMMERCE FACES FORMIDABLE OBSTACLES

Perhaps more than any other technology-driven phenomenon of the past decade, the success of e-commerce is predicated upon a complex mix of catalytic enablers that go to the heart of a market’s social and technical infrastructure, from easy availability of capital to basic literacy to telecommunications networks. Almost by definition given the state of their infrastructure, the developing markets of Africa were destined to lag far behind their Western counterparts in the e- commerce race. On the whole, obstacles to e-commerce in the Africa region stem mostly from the fact that the concept is Western-born. Local markets have to adjust their infrastructure while tweaking foreign-developed concepts for implementation in environments with starkly distinct uses and customs.

It is worthwhile to note here that the two stripes of e-commerce (B2C and B2B) face different prospects as they respond to fundamentally distinct sets of needs. B2C brings businesses and consumers together in flexible marketplaces, creating a new channel for the sale, purchase or peer-to- peer exchange of various products and services. B2B also creates an electronic marketplace (for business transactions), with the ultimate ambition of streamlining business processes and reducing costs across firms and industries. Initial indications from the South African market are that B2B is developing much faster than B2C, principally because as a business marketplace, it addresses profitability issues and is less dependent on the administrative shenanigans that plague the region.

To a large extent, the conclusions of Pyramid’s analysis of the prospects for a viable Internet sector in Africa are not surprising:

* Pure play business models like Amazon.com will not work in Africa; nevertheless, a model that shows good potential is a "virtual mall" model that brings together established retail companies and e- commerce enablers.

* Addressable markets for online shopping are small in most markets, and any B2C venture would walk a fine line between a low revenue base and potentially high costs.

* In the African B2C space, the Internet has failed to play the disintermediation (or elimination of intermediaries) role that is at the root of the success of Internet ventures elsewhere; in turn, the economic feasibility of B2C ventures is highly questionable.

* The models that are most likely to work will be those that find a way around the deficiencies inherent in local markets and offer users attractive alternatives.

(source: Pyramid Research via http://www.AfricaNewsNow.com)

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