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Cheaper smartphones boost SA e-commerce

Cape Town - The cost of data and smartphones have contributed decisively to the growth of mobile e-commerce in South Africa, says an industry insider.

"My take on this is that the device cost is only one aspect and accessibility to affordable data is another.  Four years ago the cheapest smartphone cost in the region of R1 500 now you can get a smartphone for R499," Brendon Williamson, GM of Business Development at PayGate told Fin24.

According to industry tracker Gartner, smartphones first outsold feature phones in 2013, as the later technology hit 53.6% of market share.

However, Gartner cautioned that the accelerating growth was being driven by lower cost handsets.

"This increasing contribution of smartphones was led by growth in Latin America, the Middle East and Africa, Asia/Pacific and Eastern Europe, where smartphone sales grew by more than 50% in the fourth quarter of 2013," said Gartner.

Price sensitive market

People in these markets are generally more price sensitive than those in the US or Europe, for example.

But it's not only about devices; data to many people who have migrated from basic phones is a grudge purchase and high cost turns them off utilising mobile internet services.

"The reduction in device prices will definitely create an increased in uptake, but service providers still need to start
providing data at affordable rates. Some providers have started reducing their data rates and are packaging contracts specific to the pay as you go user," said Williamson.

Most people would agree that data has come down significantly in price. In 2002, for example, R45 bought you 1MB on Vodacom, but today, that cost has declined to as low as 24c per MB in a bundle.

The introduction of Cell C and Telkom Mobile has, in part, contributed to a price war as operators battle for subscribers.

SA has also seen a number of programmes to drive free Wi-Fi in public spaces as a way of jump-starting consumers' access to internet services.

Mobile shopping

The City of Tshwane is in the process of rolling out an ambitious city-wide Wi-Fi network that aims to offer free services to all residents.

Williamson said that retail enterprises could see additional benefits by offering Wi-Fi access to a captive audience.

"What better than having your consumer caught-up in a world of shopping with free data, allowing the consumer to browse sites within your mall and even purchase online from the comfort of one of your malls coffee shops and collect the item in store if possible?"

As more people access internet services, it is likely that they will migrate to digital payment platforms and companies have to ensure that these platforms are available as consumers demand it.

Statista reports that digital shoppers in the US grew from 172 million in 2010 to 191 million in 2013, and is projected to reach 215 million by 2018.

However, while mobile shopping makes up a small percentage, it is expected to play an increasingly important role.

Research firm eMarketer expects mobile commerce to grab around 1.2% of online sales this year in an online retailing market expected to grow to $304bn.


- Follow Duncan on Twitter

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