Online commerce catches on

Johannesburg - While South Africa has been slow to adopt online transacting, many businesses now see international markets as a viable option and are using the internet to break into them.

This is the view of entrepreneur Adriaan Gie, the founder of online business to business platform Plusto plusto.com

Plusto is loosely based on the highly successful international trading forum Alibaba.com, which provides a place to meet and interact for customers and suppliers from around the world.

Plusto takes the concept one step further: it helps users calculate international freight tariffs and customs duties, and facilitates focused online auctions by setting up an efficient data link between suppliers and customers.

Gie said that he was inspired to start Plusto after trying to import equipment for a chain of gyms from Asia. He faced endless hassles trying to source the equipment and find out about import costs.

From there Plusto underwent two years of development as Andre du Preez helped to establish it in return for a small equity stake in the business. Du Preez has developed platforms for several South African retail and financial businesses.

South African habits

According to Gie, many South Africans remain wary of online commerce.

"In the US, consumers are far more comfortable interacting online and in some cases people make a living simply trading off online auction site E-Bay," said Gie.

South Africans, on the other hand, have been far more circumspect. Gie estimates that annually, the country sees a mere R1bn of online transactions across business to business markets.

According to Statistics SA, the gross turnover for all industries in South Africa was more than R4 trillion, indicating that online business accounts for a tiny portion of total trade in the country.

But this is changing, says Gie. "South African small businesses are looking to strike out into international markets because sales volumes locally are weakening, and businesses are looking for other avenues to boost sales."

Gie also points out that with the global economy on the skids, businesses around the world will be seeking the most cost-effective suppliers to allow them to extract as much cash as possible from their operations.

In the small business arena, Plusto will help calculate customs and duties for transactions with specific countries, as well as transport costs for goods ordered over the platform.

Plusto aims to trade more than &euros;500m in the first year and has targeted &euros;1m in registered funds by January 2009.

Advice for entrepreneurs

Gie believes that you must understand what need to fulfil for a client.

"In Plusto's case, we help companies move stock, help small- and medium-sized enterprises move into international markets and help take the hassle factor out of integrating parts of the global economy," Gie said.

He believes that while money is a motivation for entrepreneurs, many products or companies become a success when they perform services for non-financial reasons.

He said: "If one looks at Google and E-Bay, they started as online social experiments and developed from there."

His advice to entrepreneurs thinking of launching their own business is to stick to their guns when they believe they have hit on a good idea.

He concludes that "you only fail when you give up".

- Fin24.com