“South African consumers are driving a mobile transacting revolution enabled by a slew of innovative home grown technology companies. Local retailers, brands and agencies are leveraging the power of mobile transactions in clever ways to unlock new revenue streams and boost customer retention.”

So says Bevan Ducasse, CEO of wiGroup, following the release of the company’s white paper on in-store mobile transacting.

According to the 2013 GSM African Mobile Observatory report, South Africa has just under 60 million mobile phones in use today. “In a population of only 50 million people, it’s reasonably safe to assume that the overwhelming majority of South Africans own a mobile phone. With the explosion of mobile transaction services and apps, and the increasing affordability of smartphones, the challenge today is how retailers can tap into the vast potential for additional revenue, customer retention and innovative marketing campaigns offered by mobile transactions” says Ducasse.

 

Global market adoption looking healthy

Ducasse says recent success in mobile payment adoption in other markets has been encouraging. “US coffee chain Starbucks developed a mobile payment app that processed $1-billion in transactions in 2013 alone. In China, the value of all mobile payments in 2013 came to $1.6-trillion, a more than 200% increase on the year before. While Africa has traditionally led the adoption of mobile payments and mobile money transfer, clearly the more developed markets are catching on.”

One of the key challenges of driving adoption of in-store mobile transacting has been a lack of uniformity.

Mobile phone-based transactions have come of age in South Africa, with wiGroup’s platform, wiPlatform, processing over half a billion rands in transaction value during the first six months of 2013.

 

“We have seen a 500% increase in mobile transaction volumes through wiPlatform in the first six months of 2013,” says wiGroup CEO Bevan Ducasse. “The market has clearly realised the value of the open platform approach, which makes it easy for retailers and app developers to work together, without having to make expensive and difficult changes at the point of sale.”

As South African e-commerce gains momentum, retailers can expand their reach significantly by adding online and mobile channels and picking the right technology and fulfilment partners for the journey.

Mobility enjoys such acceptance in the market that many new enterprise applications are now built for mobile access first and for other devices only as additional channels. In addition, there is large-scale mobile re-engineering of enterprise applications taking place, says Wesley Lynch CEO of Realmdigital.

 

In short, mobile is the major growth area of the moment; and the success of apps the reason for its popularity.

 

Unlike Internet-enabled enterprise mobility, apps offer a far more streamlined, tap-once experience. They also depend less on Internet bandwidth to function optimally as the application logic resides mostly on the device itself.

 

All sorts

Examples of the rise of apps can be seen everywhere in the market, and are of both the consumer-facing and internal varieties. This illustrates the appeal of mobile to companies of all sizes and industries, as well as the rich diversity of apps that have made mobile the next channel of business growth.

 

The most obvious call for enterprise mobility is from companies with field workers such as sales reps, work-from-home staff or roving employees.

 

In a sales situation mobility arms agents with more expansive catalogues than physical samples or print outs –facilitating the buying decision, order placements and even transactions.

 

Beyond sales, opportunity exists for interfacing with enterprise systems in near proximity without the need for desk-bound presence. In this context, depot or warehouse staff can interface with online stock systems and release stock, triggering live status updates of the system with dispatches.

 

Mobile also offers much more opportunity for self-service, for instance flight check-ins, hotel room bookings or reservations. Airline ground staff can check online seating plans on tablet devices while on-board the aircraft.

 

Mobility also extends the reach of the enterprise deep into the market, with promise for field service delivery. In this way medical results become available wherever patients or insurance clients find themselves, and can be entered into patient medical records immediately.

 

The direct, deep and continuous enterprise integration of mobile has increased the pace of doing business and enabled a more distributed layout of computing infrastructure within the enterprise.

 

Getting ready

With mobility increasing its advance in the enterprise it is important to seriously consider the implications of issues like the bring-your-own-device (BYOD) trend and the demands it places on security and systems management.

 

BYOD is effectively a convergence between business and personal technology, and it poses significant security problems. BlackBerry 10 has taken a stab at solving the risks with an elegant solution to split personal and business personas. Whether it takes on remains to be seen, but it does make it easier to deactivate enterprise access under certain conditions, such as when an employee resigns.

 

To make sure security and device management and a range of other mobility issues are seen to, enterprises must adopt a mobile application strategy. Its success will depend on having the right technical architecture and skilled development partnerships to design, develop and deploy the applications.

Consumers in Kenya and Tanzania can now use M-Pesa to pay for a range of online goods and services including airline tickets, says Robin Philip, marketing director for South African payment services provider PayGate.

“There is very little e-commerce activity in many African countries,” says PayGate Philip. “But that’s not because people don’t want to be able to buy online – they just haven’t been given the right payment options.”

Philip believes enabling customers to pay online merchants using M-Pesa will make their lives more convenient, as well as giving the merchants access to a much bigger market.

“Imagine a customer who wants to buy computer equipment or vouchers online,” says Philip. “If the merchant has enabled M-Pesa, the customer can choose that as a payment option when they go to check out. We give them the merchant’s M-Pesa account information, they make the payment using their phone, we process it and tell the merchant so they can complete the transaction.”

“M-Pesa is already a mature product in Kenya and is taking off very fast in Tanzania,” says Philip. “With our growing presence in the region, for us it has been a logical step to offer it as an e-commerce payment method. It’s a very appropriate solution for local conditions.”

Tanzanian airline FastJet is among the first to offer M-Pesa payments for online bookings.

Philip says PayGate is concentrating on providing diverse payment methods to suit local conditions. “Different countries have their own favourite ways to pay,” he says. “We don’t believe that should hinder consumers from having access to the services they want online.  If any merchant knows about a payment method their customers love but we don’t offer, we’d love to hear about it.”

The classified advertising business is busier than ever before, with new mobile channels bringing a younger audience to a well-established marketplace.

 

Offering users their choice of print, web or mobile access to the same large database of classfied ads has boosted traffic substantially. Ten years ago we thought we were doing well running 35,000 ads a month. Now we’re easily doing double that number.

 

There’s a generational shift in the media that people prefer. The 20-somethings who enjoyed Junk Mail in print when it launched in the 1990s have now partly moved to the web, but their grown-up children prefer to buy and sell via their mobile phones. It’s still the same experience at heart, just through a different medium.

 

South Africa is a very classifieds-friendly market. In some wealthier countries people tend to give their old stuff away. Here we have a large middle class of people who on the one hand want to make some extra cash from stuff they don’t need or want anymore, and on the other hand really enjoy a bargain. Classified ads fill a real need.

 

It’s in some ways a form of entertainment. There’s a strong community around Junk Mail and people are very loyal to the brand. There’s a certain element of trust built up. Here’s a typical story: A friend bought a used dartboard on Junk Mail from someone in another town and accidentally overpaid by R50. He told the seller to include the change with the dartboard when he mailed it – and sure enough, the dartboard arrived with a R50 note taped to the back. There’s a feelgood element to these interactions that keeps people coming back.

 

The popularity of classified advertising and the relative ease of setting up an online platform also means there is lots of competition. A lot of entrepreneurs look at it and think it will be easy to do. Fortunately size really does count in this business: The bigger your user base, the more likely it is that each advertiser will make a successful sale, and the more attractive your community is. At Junk Mail we plan to make the most of our advantage.

2012 has seen interesting technological advances. Vodacom and MTN have both announced the rollout of 4G as South Africa heads towards full LTE mobile networks, fibre optics are becoming more accessible and consumers have rushed to buy the iPad 3 and iPhone 5. We’ve asked 5 experts to weigh in on which developments will be making waves in 2013:

Winner of the IBM SmartCamp program initiative which is in the second year is MODe, a nano-finance company from Kenya offering mobile users the ability to take a small loan against their next prepaid mobile top-up. This offers mobile users the ability to use their mobile for a while longer before their next paycheck. With the large number of mobile users in Africa this venture is lucrative based on the volume of users alone, MoDe has already reached 200 million transactions. The owners of MoDe Josphat Kinyua and Julian Kyula are expecting rapid growth in transaction after rolling out the technology to new countries and extending the product offering to cater for other prepaid purchases, such as prepaid electricity.

 

Tom Rosamillia, vice president of Corporate Strategy and general manager of Enterprise at IBM, says “the important thing when judging and selecting winners of the SmartCamp is not necessary how advanced the technology is but how the commercial and applicable the technology is to the market.” Tom went on to mention, that he hopes that Government takes notice of initiatives like the IBM SmartCamp to develop technology entrepreneurs in South Africa, which will ultimately lead to job creation and the decline in unemployment.

 

With 40 qualifying entrants which competed at the Cape Town KickStart event four entrants where select to as finalists.

 

The winners of the SmartCamp program benefit from free software and a project resource manager offering the winner one-to-one guidance through all stages of their project development. In addition all finalists and winners benefit from networking opportunities and exposure for their products and services.

 

In order to qualify for the IBM SmartCamp the organisations has to meet the following eligibility requirements:

• be less than 5 years old,
• be privately held, and
• the business must be actively engaged in developing a software-based product or service.

“The last winner of IBM SmartCamp was exposed to over 300 Venture Capitalists” explained Tom, offering great financial growth opportunities for a start-up company.

 

MoDe is on their way to San Paulo, Brazil where the Regional winner for will be crowned.

E-business is growing in all possible areas – network connections, consumer numbers, transaction volumes, revenues, and the range of digital content and services on offer.

But as the industry continues to bloom, it is also diversifying. The addition of mobile and social platforms to traditional Web channels is making the market more accessible than ever, but it also presents big challenges.

All told, it is time for the e-enabling industry and merchants to re-think their game plan. What integration and design challenges will present themselves? What risks are there in transitioning to mobile and social, or in running all three platforms in parallel?

Drop the prefix already

Firstly, it bears repeating that business is business, no matter the style of execution. M-commerce, as it was once called, is a form of e-business, and e-business is just a form of business.

It's true that social and mobile platforms, particularly mobile, will drive the next wave of e-business, and the challenges that come with the new territory will be different from the last.

But even if e-commerce mutates to the point where a handful of social communities and mobile hardware platforms dominate all others in the distribution of content and sale of products, the steps will be evolutionary and not involve a rip-and-replace exercise.

Changes big and small

Practical first steps
Currently, mobile commerce development is still driven by its starting promise of 'democratising' access to digital content and services. In the short term, therefore, innovations will need to be practical in nature.

Most immediately, this consists of:

• Re-designing user interfaces to suit the small screens
• Catering for all mobile platforms – including feature phones

Similarly, social is at an immature stage of its evolution, and changes to accommodate it will be more introductory than sweeping:

• Social platforms can still be treated as a customer ramp-up opportunity for online and mobile platforms, and less of an integration nightmare.

Re-architect
Other, more drastic changes are dictated by consumer behaviour:

• As more and more consumers become e-commerce converts, the underlying systems' load profiles must be redesigned.
• Micro-payments are changing the way people transact, and consumer-to-consumer payments will be next. Immediately, this requires re-architecting mobile commerce platforms; in time these changes will filter through to all e-platforms.
• Legacy systems were built with particular consumer behaviour in mind – stationary shoppers at an unknown location. With changing expectations and possibilities, future change will include location-aware services, near-field communications and other innovations on the roadmaps of hardware manufacturers.

Who to pick
It's worth considering, finally, whose help you will enlist to get ready for the increasingly social and mobile character that doing business may take.

Building your own plug-ins may not be the best route to follow – there are countless good existing solutions and programming interfaces for just about anything you might need. And entering the market with a monolithic app platform may give you what you need for now (at a cost), but does it have the agility to stay relevant?

The best bet in a changing market is to pick the niche apps that fulfil your needs, and to work with an integration partner with a track record of success in strategic e-business projects (including, of course, mobile and social).

This is the most open-ended approach to a problem where the only constant is change.

From the get go, the business sector has been anxious to discover a way to exploit cellular services technology to access customers. Early mCommerce offerings failed to live up to the hype but excitement is again emerging, this time with a variety of options to suit the desires and budgets of almost any business.

No one anticipated the success that mobile telephony would achieve. According to Nielsen South Africa, more South Africans use mobile phones than radio or television. And an astounding 35% of South African smartphone users revealed in a Google report into worldwide smartphone usage and mobile marketing that they would rather give up their TV than their smartphone.

No other communication channel can deliver retailers an audience as comprehensive as the mobile phone.

Bouncing back

To my mind it was Apple's release of the iPhone, and shortly thereafter it's App Store, that offered mCommerce the opportunity to return to the spotlight.

Until this point, mCommerce strategies predominantly relied on wireless application protocol (WAP) technology. Its SMS delivery mechanism, however, proved to be problematic, and security and congestion drawbacks were significant enough to undermine its virtues and subdue large-scale adoption amongst SA retailers.

Apple's iPhone highlighted an alternative to these SMS systems with its glitzy marketing of actual applications. The impact of this promotion was and continues to be astounding, supported by improvements in modern mobile devices and development technologies, particularly HTML5.

A recent report released by international research firm IDC predicts that the number of annual mobile app downloads will increase from 30.1 billion in 2011 to 200 billion in 2016, an ascent it calls blazingly fast. A closer look at the state of the US market gives a clearer indication of what South Africa can expect to experience in the near future.

• Huffington Post: mCommerce will be bigger than eCommerce within 5 years.
• ABI Research: In 2015, $119 billion worth of goods and services will be purchased via a mobile phone.
• Juniper Research: The market for mobile payments is expected to quadruple by 2014, reaching $630 billion in value.
• ATG Inc: 20% of all consumers and 32% of 18-34 year olds are researching purchases via mobile at least monthly.

Ticket to ride

We can already see local organisations capitalising on the rise of mobile applications. FNB for instance has achieved significant success with the launch of its mobile banking application and not just in the realm of marketing either. Recently CEO Michael Jordaan announced on his twitter account that the bank had in excess of 200 000 transacting apps, delivering over 2 million transactions and R4 billion in transaction value.

Although FNB's return from its mCommerce initiative is certainly compelling, many companies will find that developing a native app is simply not appropriate for their businesses. The cost and complexity involved in developing, maintaining and continuously enhancing an application for numerous platforms, not to mention the approval processes required from the various app stores, presents a daunting hurdle that is only justifiable to a minority of businesses.

Fortunately the emergence of HTML5 – the latest iteration of the language used to create web pages – means organisations no longer have to deliver device-based applications but can look to web-based offerings accessible via a mobile device's browser. Native apps will still have a role to play, if well thought-through, but certainly look set to face major competition in the popularity stakes as HTML5 gains traction.

Alternatives to applications are also available. Mobile couponing, for instance, could be an influential tool in the retail fight to combat constantly slipping engagement rates. A recent report found this form of couponing to offer redemption rates often exceeding 50%; comparatively, paper coupons typically return redemption rates of up to 2%. Mobile couponing is able to achieve its high returns through the use of geolocated, relevant messaging which engages the mobile user with an offer that can be instantly gratified at a store which is at that moment in close proximity.

Location based marketing certainly should not be ignored. Location-based social networking site Foursquare enables users to check in their locations through their phones and informs them of their friends' locations as well as places to go and see close by. Large retailers and brick and mortar stores are taking advantage of this by providing coupons and freebies to those who check in often or first. American Express, for example, has expanded its Foursquare promotion internationally, delivering to its cardholders special offers only available through the application, such as buy one get one free promotions to customers looking for a place to eat.

There's significant advantage to be gained from using a number of mobile capabilities to improve the customer instore experience. Retailers can create a 'bricks & clicks' environment by combining location based services, barcode scanning, and push notifications as an example. In such an environment merchants enable their customers to access the benefits of online shopping such as product reviews, comparative information, and special offers while still delivering the physical instore shopping experience and promoting greater length of time spent within the store's walls.

Retailers simply cannot afford to dismiss the role of the internet in the performance of physical stores. The tendency to define the online influence by the number or value of transactions taking place fails to recognise the considerable number of consumers that turn to the web for information on the best product for their needs, stockists, comparative pricing and current availability within their travel comfort zone. This rapidly growing pool of shoppers may be making their purchases instore, but their decisions are often made before they've stepped out their front door.