How can e-commerce make a difference for your business?
Businesses all over the world are motivated by profits. They are constantly looking for opportunities to reduce costs while selling at the maximum price possible.
Advertisement
E-commerce offers an opportunity for businesses to improve their profitability by extending their customer base in a cost-effective manner.
Electronic commerce or e-commerce can be defined as a system of buying and selling of goods and services, or transmission of data or funds over a secure electronic network, mostly Internet or a closed network. E-commerce takes place only when a transaction is conducted end-to-end online without any face-to-face interaction or offline payments.
However, e-commerce can take various forms such as business-to-business, business-to-consumer (which is the most popular form). Consumer-to-business or consumer-to-consumer involves an individual providing goods and services to other individuals or business entities through electronic means. In the actual process itself, there are a number of variations such as where a seller provides customers with information about the goods and services online on offers available but no online transaction takes place as sellers are connected to buyers to conduct face-to-face transactions.
In Ghana, a popular website, Tonaton, is a good example of this type of e-commerce service, which is no more than online listing of goods and services. Another type of e-commerce process will be the one where sellers are connected to buyers and beyond the provision of information about goods and services, the actual sales process takes place online. In this case, the buyers click on an item of their choice, the information is transmitted to the seller, the said item is supplied and payment is made at the point of delivery. This example is relatively popular in Ghana, where prospective buyers do not have the mechanism to make payments online nor do the sellers have a secure online system in place to process such payments.
E-commerce landscape in Ghana
E-commerce is still in its early years in Ghana; without any solid data, we can only guestimate that it forms under 5% of commerce in the country. The biggest contributor to this 5 percent of e-commerce is mostly for online services generated from other countries, especially international airline ticket bookings, online visa application and payments, hotel bookings, online shops for consumer goods, real estate listings, food service deliveries, online book stores and online listing of cars.
Challenges
The biggest challenge facing e-commerce uptake in Ghana is the availability of secure payment system. It is important to recognise that the country has come a long way with proliferation of online payment system such as mobile money, M-Power Payments, Etranzact, visa and master cards, Slydepay, among others. Ghana Interbank Payment and Settlement Systems (GhIPSS) is also offering ‘gh-link e-commerce’ which enables holders of domestic Automated Teller Machine (ATM) cards to make online payments. However, majority of Ghanaians are still not making payments online. Besides the lack of a tradition of buying goods and services online are some genuine concerns about security and trust.
For most consumers, there is a perception that online purchasing is fraught with fraud and one is not guaranteed that the item purchased will be delivered. There is also the fear of losing payment information to criminals online who can use it to make unauthorised purchases. Since most online and offline shops do not have return policies for goods sold, nor offer any cash back guarantees for product defects, it poses a greater cost or risk of transaction on the consumer which makes them more cautious and, therefore, less willing to buy products online.
Prospects
E-Commerce holds a lot of potential to facilitate faster, more profitable trade not only in Ghana but around the globe. Using e-commerce systems, an entity in Ghana will be able to service clients in any part of the world, thereby increasing their market size significantly. Public service delivery can also benefit from e-commerce, since it will reduce costs, improve efficiency and ensure on time service delivery. It is a common sight to see a large queue of consumers standing in line to buy prepaid electricity from the Ghana Electricity Company outlets. Using e-commerce, such consumers can sit in the comfort of their homes and make such purchases. If made to work and deliver smoothly, the establishment of the Payment Portal of the Government of Ghana (https://www.epay.gov.gh) is in the right direction since it can stimulate e-commerce within the public sector.
Conclusion
The potential of e-commerce in Ghana is huge. With the current growth in e-commerce companies, online payments service providers providing secure user friendly payments options, on time delivery systems and a strong consumer protection regulatory environment, it can grow in leaps and bounds over time.