Posted by The professional executive is considered to know what he is talking about. Especially when it comes to technology, if the CEO or, better yet, the Chief Information Officer says something, everyone stands up and listens. And this is quite true for the industry as well as colleagues within the company itself. They know, therefore they cannot be all that wrong.
And in case you are one of those Chiefs who hold the opinion that there isn’t enough demand or know-how in the market to justify B2C or B2B online payments, then here’s our knowledge-share for you.
While legislators and technical professionals try and argue out the reasons for why virtual commerce cannot drive real money, here are a few opinions that people from the CIO Pakistan Facebook group have been harping about. That’s what you need to know right? Whether or not there is actually a demand for e-commerce out there? In that case, here’s the ammo you need!
The Background
E-commerce, in theory, makes it easier for online consumers to make interactive purchases that provide an instant boost to the economy. Imagine the scenario whereby a consumer could use their credit card and make a number of purchases online which will not only drive the retail (or virtual) outlet, but also provide indirect business to the delivery channel, packaging companies and other smaller businesses which may be in the middle of the transaction before the delivery is actually made. Take this one step further and perhaps the mobile commerce might make sense to you even quicker.
Make an order and transfer your credit to the shop’s account whereby the money stays within the system until it can be cleared by a central clearinghouse to be taken out of the system and converted into tangible cash.
And before you say it, let’s keep the legislation out of the argument at the moment. What you really need to be driving is this message: Electronic Commerce is about economies of scale. If there are 90 million Simcards out there, and let’s assume that there are 60 million active mobile phone users. Please take out a really large calculator to figure out how much money will be moving in the system if each consumer makes a purchase of Rs.100 every day. Depending on how merchants promote it, there can be more impulse buying online than offline. You can get consumers to browse a lot more across a greater number of websites, offer them deals and allow them to customize what they want to purchase and who they want the recipients to be. From the merchants standpoint, companies can certainly use analytical tools and have more customized offerings to create not only value addition to their services, but also create a stronger and more loyal customer base.
Let’s stop there for one moment and see what some of our Facebook groupies have to say.
Shehzad Khan writes “Being a corporate buyer, there are a host of items and services which I would like to buy online besides the routine Pizza delivery during extended office hours when I’m busy working on a multi-million dollar callcenter tender for Pakistan’s 5 largest banks.
Here are a few: I can’t recharge my postpaid cell phone account online. I can’t find any online charging mechanism on my provider Warid’s website and I am sure none of other operators provide this service.” Oh. Is that it? Buying airtime through third party vendors is already a reality. Check out some of the ecommerce websites for steps guiding you to buying airtime via your mobile phone.
Shehzad continues, “I can’t buy printer cartridges, paper rims or can’t even order other stationary items online for my office or home or if I am out of the city and need these items delivered to my home.”
As a service provider, Shehzad would love to put his IBM Lotus software development and CRM solutions services online for potential buyers, sell his Wireless / WiMax network planning services to customers in and outside of Pakistan. “For last 10 years, I have been waiting for the market to mature so that I can sell my hosted IVR, Self Service & Hospitality services online to all market segments, be it the larger banks or the small Student Biryani walas.”
Faisal Khan, CEO of NetAccess Communications points out, “I’m still waiting for local companies to start SaaS (Software as a Service) where there can be apps such as CRM, HR, GL and Invoicing. This is simply missing from our market.” Shehzad echoes the sentiment by expressing, “One of the major reasons for the slow growth and expansion of our nationwide data network is the lack of local content that we can watch and show online, local products / services that we can buy and sell online and the lack of local activities that we can do online. I have been a preacher of broadband networks and high speed last mile access throughout my career but I keep getting stuck at this simple question – ‘what would the user do with this much bandwidth?’ and the ball stops there.
Today we have Video Content services and metropolitan gaming networks but still we lack the killer apps like what Faisal said.
Muhammad Omer Arshad shows another business niche that will benefit with the enablement of online payments.
Like many freelancers, Omer is involved in outsourcing and deals with clients in Europe, USA, Canada and Australia on a daily basis. While it is easy for the work to be sent to abroad via email, FTP or a courier, the return payment is still quite a hassle with many people depending on wire transfers. “With my clients abroad we prefer to make transactions up to US$1000 via credit card since wire transfers are slow and a relatively expensive procedure.”
Faisal Khan engages in a rebuttal on the subject by pointing out that, “Wire transfers are the most secure and economical methodologies of transferring money.”
Credit card transactions are tied to percentage charging, so I am not sure Omer can say it is ‘economical’. If you’re getting paid by credit card, the reversals are a hanging Damocles sword for 180 days!” Abdullah Ibrahim furthers this with some experience. “I am an application developer and most of my clients are also located outside Pakistan. To me, transactions via credit card are like scattering your money. You have to wait 90 days for the 20-30% of the money. I really want to see some permanent, reliable and cost effective ways of money transfer in Pakistan. Perhaps the likes of PayPal! Being a service provider, my biggest need is to have a service which lets you receive money from anywhere in the world.”
And there has been a campaign to get Paypal to notice the demand in Pakistan. Originally launched by Faisal Khan through a personal letter to the President of Paypal in early 2009.
Since then, Faisal has been requesting the online community to help create the buzz by linking to the post on his blog and adding to the pressure. So far? Nothing.
The Trust Factor
So there is a demand there for B2C eCommerce. What will it take to get the infrastructure a bit better aligned with the demand? Isn’t a little crazy if a service provider has to note down a credit card number and then make a manual transaction somewhere? Ali Hadi offers, “Trust is a critical component of successful e-Commerce. Given the impersonality, anonymity, and automation of transactions, online vendor trustworthiness cannot be assessed by means of body language and other environmental cues that consumers typically use when deciding to trust offline retailers. It is therefore essential that the design of e-Commerce websites compensate by incorporating circumstantial cues in the form of appropriate trust triggers. I think eCommerce is not instant coffee, having seen that there is either a fear factor or lack of awareness level among the application users and developers. In an online environment, you are selling more than just a product or service – you are building a trust network.”
Ali questions the whole ‘SaaS is a commodity business in the international market’ model. “How can we say that there is opportunity here when companies haven’t implemented their CRM within their own networks as yet? How many companies can actually say that they have measured the resultant benefit of having an integrated system? What we’re talking about here is like having a Blackberry or Nokia N97 in your hand but the application that you’re using most is for photography and MMS. The SaaS model easy to understand but when it comes time to actually make it happen and see the reality of the situation, it’s really a tough pill to follow.”
Muhammed Saquib Baqai offers, “Unfortunately people here don’t consider efforts put in by the merchant to secure the client’s personal information being transferred during the transaction. This is commonly done by using SSL (Secured Socket Layer) certificates in addition to the self-signed certificates, the easiest way to get SSL, but what’s the use unless some authentic root authority is there to certify you and your site? Then there are vendors like Verisign (NIFTe is already available in Pakistan) who provide the best online security there is at an added cost.”
He continues, “During my limited exposure working in the field, a normal merchant just doesn’t care about securing the website / online business because he doesn’t finds the ROI which is not tangible in this scenario for the money he is paying. If consumers would demand that their favorite vendor or shop should provide them with a secure channel to do the transaction, the merchant would be more inclined towards spending on securing the personal information. Unfortunately our average consumer is also not concerned if they are passing sensitive information on a http or https channel.” This is just lack of awareness and the ‘oh it can’t happen to me’ syndrome!
eCommerce is not Instant Coffee!
eCommerce, like everything, might take an instant, but it still needs to brew in an enabling environment. The “ROI” problem is something that we’ve been hearing about for at least a decade! I refuse to believe that developers don’t create innovative and sensible products because they are interested in the ROI. If anything, the Business Developer Managers and Marketing guys need to be more concerned about the return on their investment. But for that, they need to be convinced that the demand exists and that there are enough people in the foodchain who are interested to make this happen.
Ali Hadi explains, “If we’re hearing the echo continuously, than there is problem somewhere in the business environment, if eCommerce is instant like everything than why hasn’t it been fully implemented in our business sector? Is there problem with eCommerce enablers who are continuously brewing same coffee and have made it tasteless or do we need to change the methodology at work here? I mean, there is a need to identify and measure the awareness level in the society before offering anything to end user and consumers. There is an existing ROI problem in the software industry and I agree that we still need to brew the eCommerce environment.”
Once the awareness kicks in and companies see the potential that is there for them to increase their outreach and the size of the markets they serve, why won’t they put the added pressure on lawmakers or eCommerce enablers to further the process? Of course, market dynamics are always dictated by the consumer provided the marketer is able to identify a pain point and put pressure on it. By realizing that the electronic commerce will facilitate more business and increase the spending in the markets without any real investment from the companies, why wouldn’t that make sense to the service providers?
Calling all corporate muscle out there. Understand the problem. Appreciate the opportunity. Make the noise.
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