Growth and Development of E-commerce in Zimbabwe

Introduction

The value of e-commerce through the setting up of online marketplaces is enormous for developing countries like Zimbabwe as it can support the development of the local economy, create jobs, and offer everyone access to affordable goods and services (Kabango, 2015). There were, however, some hindrances limiting the growth of this movement. Still, over the past few years in Zimbabwe, there has been a phenomenal rise in the availability and growth of Internet services countrywide.

Internet Accessibility and Digital Divide

Local ISPs like Telone have largely modified their rates and increased their coverage to make Internet services more affordable and accessible for homes, schools, and institutions. They have also set up public hotspots and Wi-Fi zones. Mobile network providers such as Econet have also done likewise to ensure the availability of affordable broadband everywhere, meaning that everyone has a certain degree of Internet access, thus narrowing the digital divide between urban and rural areas.

Advancements in Payment Systems

The use of mobile money, Internet banking, and efficient payment gateways like Paynow have been well received by the general public and have become arguably the most preferred and easiest ways of transacting and making bill payments. For example, Ecocash and its competitors now have APIs that can be integrated with other systems to allow hassle-free transacting. Since these two factors, Internet connectivity and electronic payment systems, were previously the major drawbacks in attaining economic progress via e-commerce, it is safe to say that the introduction of online marketplaces and stores will now offer sustainable business solutions.

Changing Consumer Behavior

The perceived belief, supported by Dzoma (2014), that most Zimbabweans have no culture of buying online due to a technological phobia, is slowly fading away as most people are now involved in online shopping and making payments over the Internet. To give context for how quickly online marketplaces are growing on a global scale, Airbnb was founded in 2008 and is now valued at $26 billion. It currently has more than 2 million listings, which is more than the largest hotel chain (Luca, 2016).

Local vs. International Marketplaces

Online marketplaces are thriving on an international level, but locally there are limited options for trading products online with local marketplaces. At the moment, Ownai, a local online marketplace, is still the only renowned and reputable market of its kind in the country, with its other counterparts not performing really well. Dzoma (2014) explained the reason for this, saying there are no Zimbabwean versions of eBay but instead there are a dozen unpopular, downright ugly sites that are cheap imitations of their international counterparts lacking most of their functionality.

Challenges in Online Trading

Due to such circumstances, individuals who wish to trade or buy online would tend to just stick with international marketplaces like eBay and Amazon, which are fully functional and reliable. Even in this case, these individuals or others interested in trading online may be limited by the fact that they would require Visa/Master Cards to transact on these platforms, and the majority of the average person may not own one or may not have the foreign currency to deposit to it. Other factors that may limit trading on international online marketplaces include the fact that Zimbabwe is a third-world country, and as such, markets like eBay may still have particular services unavailable for us. As such, extra overhead and costs may be involved in having products shipped into the country.

Opportunities for Local Marketplaces

This would leave Ownai as the preferred option, but due to its counterparts not performing very well, it reduces the range of choice of products in the case that you do not find what you're looking for on the store, and prices may not be competitive. This is all due to the lack of a variety of digital marketplaces locally that offer satisfactory functionality and attractive interfaces that can lure the general public to route for online trading, which I’m confident my project will deliver.

Potential for Peer-to-Peer Selling

At times, individuals who may not even be in the retail business may need to make some extra income by selling off products or gadgets of satisfactory condition that they no longer require or that they deem as excess, but they may not have the platform to do so. For example, property, gadgets, and cars sit idle whilst their owners are doing something else. Used products remain stored away in garages because owners do not want to expend the effort to try to sell them, and as such, valuable products and services are not provided because there is no efficient channel for selling them (Fradkin, 2013).

Limitations of Current Platforms

Most online marketplaces do not offer such individuals the option of selling their products and may only offer it to more established retailers, and part of the goal of this project seeks to offer them this platform. Of course, there are other means, but they may not be as efficient. For example, advertising on social media may not be as efficient due to its informal nature; individuals who wish to sell may waste time on individuals who have no intention of trading. Many tend to advertise their products or look for certain products in WhatsApp groups, but there is limited transparency, and there is the risk of being conned. Also, a WhatsApp group can only carry a limited number of people. Newspapers can be costly to advertise with and may not be as efficient as not so many people buy them consistently on a daily basis. Auctions are another channel, but one might not get as much income as the auctioning firm also takes a significant cut of the money received on purchase.

Empowering Small Retailers and Entrepreneurs

Since a significant size of the population are self-employed retailers, an online marketplace can give them the ability to expand and advertise their products in addition to a physical shop or store they own. Usually, these small-scale retailers may only own one small shop, and someone who limits their shopping to a particular area in the CBD of a town may never come across the store unless recommended by a friend. Also, young entrepreneurs who cannot afford the overheads that come with brick-and-mortar stores can even operate their start-ups on digital stores (MecuryMinds, 2014) from the comfort of their homes, moving their businesses forward.

Buyer Challenges and Solutions

Potential buyers also face the challenge of not knowing where to get certain products or services, and as such, they spend a lot of time to get what they need whilst there is a retailer who has a stock of these products that they are unaware of. For example, a student who is about to start their first year at a university may not afford to purchase a brand-new laptop from locally renowned IT stores like Fuser Tech or Solution Centre, which are very expensive. The best way forward for such a student would be to attain a second-hand machine, but the challenge would be then to find retailers offering good condition machines at a reasonable price with a wide range to choose from. This would require a lot of manual effort visiting shop by shop instead of logging in to a platform where there are a wide range of retailers with a variety of machines to choose through them and simply scrolling through till they find what they are looking for.

Advantages of Digital Marketplaces

Digital marketplaces would better brick-and-mortar stores in this regard as it was previously impossible to record how long a person searches, which sellers/buyers behave badly, and how long it takes to agree upon a contract. Now, companies like Uber, eBay, Airbnb, and others can measure user activity precisely using click data, messaging activity, and reviews. Using their data, the above platforms can enact and enforce better policies (Fradkin, 2013). Digital marketplaces tend to offer more affordable prices compared to brick-and-mortar stores when delivery costs are put aside due to the presence of transaction costs (costs that are auxiliary to the actual amount of money exchanged in the transaction) (Fradkin, 2013).

Conclusion

This is usually due to the overheads that are involved in the day-to-day running of a brick-and-mortar store. A global online marketplace like the one proposed in this project would offer a great challenge to departmental stores in terms of variety and choice. This is because they allow a retailer of any type to offer increased product choice at competitive prices and superior customer experience, without the restraints of inventory and logistics (Rossi, 2016).

A particular organization can only store a finite number of goods and logistically it can only distribute a certain number as well. A large number of spam posts are also related to such platforms, and with that being said, the proposed digital marketplace should incorporate spam filtering algorithms to counter this issue. Most online platforms are also bombarded by ads irrelevant to what the user is looking for, and although this may be a source of income, the proposed system should only include ads relevant to the platform, if any at all.

References

• Kabango, G. (2015). The Role of E-commerce in Developing Economies: Zimbabwe's Experience. Journal of Electronic Commerce in Organizations, 13(3), 1-15.
• Dzoma, N. (2014). Zimbabwe's E-commerce Landscape: Challenges and Opportunities. African Journal of Business Management, 8(21), 999-1005.
• Luca, M. (2016). How Airbnb Designs for Trust. Harvard Business Review, 94(12), 114-123.
• Fradkin, A. (2013). Search, Matching, and the Role of Digital Marketplaces. Stanford University, Department of Economics.
• MecuryMinds. (2014). The Future of E-commerce for Small Scale Retailers. Retrieved from [URL]
• Rossi, B. (2016). The Impact of E-commerce on Traditional Retail. Business Insider. Retrieved from [URL]