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PayPal on the opportunities arising from online retail developments

13th November 2015

By: Schalk Burger

Creamer Media Senior Deputy Editor

  

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Electronic commerce (e-commerce) and cross-border online retail are ways that well-performing businesses can realise new growth beyond their traditional markets, says electronic wallet and online payment company PayPal Africa and Israel regional director Efi Dahan.

While lackadaisical e-commerce can sink a poorly run business, owing to the power of customer experience and online peer review in bolstering or harming a company’s reputation and, thus, sales, a company that focuses on providing good customer experience and predictable delivery timeframes will be able to increase its revenue significantly through e-commerce.

However, the customer experience focus is not merely a best practice goal; good customer experiences count significantly in growing e-commerce sales, says Dahan.

For example, research commissioned by PayPal found that customers who are given a free goods return option are likely to buy 30% more goods from the same retailer. Further, about 22% of consumers in South Africa make online purchases, while 48% of those surveyed indicated they will likely increase online purchases in the next year.

“This means that about 46% of the consumer market is already online, and this proportion is expected to rise, not only in South Africa, but also in other emerging markets.

“Similarly, e-commerce is mainly constrained by the issue of trust and whether the consumer is comfortable dealing with a vendor or service provider online. Thus, sales increase significantly over time, if users have good experiences during the initial phases.”

Further, e-commerce often occurs across national borders and effectively provides a global marketplace for local companies. However, cross-border e-commerce is also constrained by the trust of users, which is why companies must ensure that they can always meet e-commerce obligations.

“A company that meets the deadlines and provides the correct products or services effectively and efficiently will excel in the e-commerce environment. However, companies that are not ready or are unable to meet the agreements with clients will quickly lose customers and reputation.”

About 56% of global e-commerce purchases are cross border (48% in South Africa), but cross-border transactions typically involve about twice the average value of local e-commerce sales. This means that cross-border e-commerce is lucrative, but requires that companies have good logistics links and predictable lead times to enable the goods to get to the customer, says Dahan.

Choice of payment methods is important to ensure that customers are comfortable using the payment method they want to complete an online transaction. Negative perceptions remain over security risks and personal information risks of online retail, which can be combatted by enabling customers to use various payment methods.

Meanwhile, Dahan emphasises that store visitors will often have done extensive research of products prior to entering, and, thus, an effective online retail strategy and presence can bolster traditional revenue streams, as well as providing new streams.

“In developing and developed markets, mobile devices are now becoming the preferred way of researching and buying goods. E-commerce is becoming commonplace. But convenience is key, as most users will not complete onerous tractions requiring many details to be entered. Balancing convenience with security is something PayPal always focuses on and is key to improving the shopping experience for users. However, offering a customer a payment method that he or she trusts is the best practice,” concludes Dahan.

Edited by Martin Zhuwakinyu
Creamer Media Senior Deputy Editor

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