E-COMMERCE

E-commerce in Zimbabwe20145330053
Abstract
The purpose of this research was to investigate the role that can be played by e-commerce in resuscitating
the economy of Zimbabwe. In undertaking the research, the researcher used a sample of sixty respondents
from whom data were extracted through a survey method. The sample included economists, information
technology students, lecturers and other university students. Additionally, the researchers also
investigated the potential factors that may hinder the successful full implementation and adoption of e-
commerce in Zimbabwe. In conducting this research, the researcher used questionnaires,documentary
reviews and interviews as data gathering tools. A randomly selected sample space of sixty respondents
was used to acquire data. Finally, recommendations on the way forward are suggested. The economy of
Zimbabwe has been dwindling since the land reform’s inception, hence the need to find solutions to boost
or resuscitate it, which was the rationale behind this research. Amongst the chief factors that may hinder
the full adoption of e-commerce in Zimbabwe, as cited by respondents, is security of online transactions

Introduction
I Introduction Zimbabwe experienced a grave economic downturn for the decade ending 2008, but the
situation improved a bit after the country adopted a multi-currency system and abandoned its own
currency in March 2009. According to the , the cumulative decline in economic output soared above forty-
five (45) per cent. Led by a strong growth in mining, agriculture and services, of one hundred and seven
per cent (107 %), thirty-five per cent (35 %) and fifty-one per cent (51 %) respectively and a recovery of
domestic demand and government consumption, the gross domestic product (GDP) grew by 20.1 per cent
for the two years ending 2011 [ Notwithstanding the robust economic rebound experienced in the period
2009 to 2011, GDP growth has moderated to 4.4 per cent in 2012 and slowed to an estimated 1.8 per cent in
2013, diminished by the sluggish performance of key sectors of the economy . The World Bank ] also has
it that the agricultural sector performance contracted by 1.3 per cent in 2013 as the production of maize
and cotton declined owing to adverse weather conditions and subdued yields among other factors. The
Zimbabwean economy also underperformed for the first half of the year 2014 [18]. The International
Monetary Fund also painted a depressed economic viewpoint for Zimbabwe for the year 2014 . Generally,
the economy of Zimbabwe has been dwindling and not performing well recently. The government of
Zimbabwe adopted an economic blueprint, ZIM ASSET, which will help it run the country for the five
years ending 2018, in an attempt to achieve an augmented trajectory of economic recovery. However, due
to globalization of markets, there is a rising need to do business internationally and enable customers to
do business

Definition of Terms
E-commerce stands for Electronic Commerce and generally refers to the buying and selling of goods
online, using the Internet or any other electronic means. E-commerce is a process that describes the
buying, selling, transferring, or exchanging products, services or information through computer networks,
mainly the Internet. Electronic commerce can also be defined as the use of telecommunication networks
for the distribution of business information, conducting business transactions and maintaining of business
relationships. Alternatively, e-commerce in its broadest sense can be defined as the use of information
and communication technologies in undertaking any commercial transaction or activity. E-commerce is
basically the buying and selling of products and services by businesses and consumers through an
electronic medium, without using any paper documents. E-commerce is widely considered as the buying
and selling of products over the Internet, but any transaction that is completed solely through electronic
means can be considered e-commerce. E-commerce is alternatively defined as the sale or purchase of
goods or services conducted over computer networks by methods specifically designed for the purpose of
receiving or replacing of order . The defines e-commerce as business conducted through the use of
computers, telephones, fax machines, barcode reader, credit cards, automated teller machines or other
electronic appliances whether or not using the Internet, without the exchange of paper-based documents.
Economy on the other hand, refers to the state of a country or region in terms of the production and
consumption of goods and services and supply of the money. Investor Word Inc. (ND) defines economy
as activities related to the production and distribution of goods and services in a particular geographic
region. The ordering of goods or services is done electronically, the payment and the ultimate delivery of
the goods or services do not necessarily have to be done online . An electronic transaction can be between
individuals, enterprises, households, governments, other public and/ or private organizations. E-
transactions are inclusive of orders made over the web, electronic data exchange and/ or extranet.
Normally, exceptions are transactions made by fax, manually typed emailed and telephone calls.

Challenges in E-commerce
Zimbabwe still faces a number of economic challenges including a large external debt and insufficient
formal employment. The economy continues to dwindle and it has underperformed in the first half of the
year 2014, failing to meet the government’s growth forecasts. The rising informalisation of the economy
coupled with growing deindustrialization has seen the economy performing dismally. However, other
countries that have adopted and implemented e-commerce have reaped several benefits such as enjoying
cheaper products, convenience of buying products and services. The researcher seeks to investigate
categorized below by sectors. According to the most popular ICT in developing countries and one which
is developing rapidly in Africa and Asia is the proliferation of mobile phone. These mobile devices are
increasingly being used for m-commerce and m-banking, and entrepreneurs are using the devices for
calling and texting services and to acquire locally relevant information . Through the use of phones, rural
farmers have been able to engage in mobile money services, enabling them to create saving accounts, earn
interest on deposits and access a variety of credit and insurance products . Agriculture – through the use
of mobile phones and m-commerce, farmers in developing countries can increase their commercial
potential. Farmers who use m-commerce benefit by accessing agricultural information concerning stock
piles, prices, data visibility for value chain efficiency and the ability to tap into new and existing markets .
This kind of information helps farmers reduce the risk of under-selling, and under or over-supplying their
produce in a given market. In its study, the World Bank shows that access to price information by farmers
has helped increase farming income by 24 per cent . Gains of up to 57 per cent and price reductions of
around 4 per cent were realized and enjoyed by sellers and consumers respectively . Fisheries – E-
commerce sites may also be used to convey information regarding weather conditions and diseases,
issuing early warning signs, mitigating the risk of losses arising from such bad weather conditions and
disease outbreaks, hence benefitting the fish farmers .

E-commerce enabling technologies in Zimbabwe

Electronic Fund Transfer (EFT) According to Sienkiewicz (2002, p. 2), EFT refers to the “application of
computer and telecommunication technology in making and processing payments”. Account holders can
transfer funds from an account electronically on accounts at the same bank or at different financial
institutions.

Electronic data Interchange (EDI)

This is the electronic communication of business transactions such as orders, confirmations and invoices
between organizations (Kantor& Burrows, 1996). This saves time as well as money as transactions are
transmitted from information system to another through telecommunications networks. Use of EDI
eliminates paper handling and printing at one end while inputting data at the other. The OECD Secretariat
(2001) indicated how EDI has enabled big organizations such as car manufacturers to place orders as well
as manage inventories by sending electronic messages. Wind et al (2000) noted that EDI is one of the
technology enabling e-commerce that is understood by a few organizations.

1.8 Online Transaction Processing (OLTP)

BusinessDictionary.com explained OLTP as a computer system that processes time-sensitive data and
transaction-related data immediately at the same time keeping this data current. An Automated Teller
Machine is an example of OLTP. According to Dube et al (2009), ATMs were the first e-commerce
technologies into Zimbabwe introduced by Standard Chartered Bank and CABS in the early 1990s. Using
this technology becomes a problem when the database becomes unavailable due to data corruption or
systems failure as this might require offline maintenance which additionally affects cost-benefit analysis
of organizations.

Transaction Processing System (TPS)

Janssen (n.d) of Techopedia described a TPS as “an information processing system for business
transactions involving the collection, modification and retrieval of all transaction data.” The TPS
synchronizes the warehousing and distribution of an item, the credit and bank transactions from the
customers’ payment accounts and the business’ management of stock, sales, profits and payroll. This is
helpful for customers to easily buy goods and services.
Instant Messaging (IM)
This is a system whereby electronic typed messages are exchanged through the internet using a shared
application software on a mobile device or computer.

Barriers to e-commerce

No culture of online buying- Most Zimbabweans, it would seem, prefer making their
purchases in store because it is the way they have done it for years. People prefer to choose the products
and services, feeling them out, taking clothes into change rooms and such. A lot of people for example do
not even know what size clothes they wear, they just go into a shop and buy whatever fits. Even when
people where making mail orders in developed countries they were still unpopular in this country. Online
retailers need to overcome this reluctance shown by people which is no easy task. Few people order their
pizza by phone, they have always bought their pizza in store and that is not about to change because
PayPal came to Zimbabwe.

There are no clear advantages to buying online -Right now buying products
online in this country is nothing but a mere novelty with no apparent virtues. Why should I buy a
pizza online instead of going to the store? Most available online stores have a more limited
selection of goods and some even charge a premium when compared to their brick and mortar
counterparts.

Courier problem- Local couriers like to charge a premium and most do not deliver to remote
areas-the very places that would benefit from online shopping. For example couriers like DHL, FedEx
and UPS do not deliver to most growth points and rural areas and require you to visit one of their urban
depots to collect your packages. Why order online when you will have to go to the nearest town to receive
the goods anyway? It would help if couriers had an overnight or same-day delivery option that was
affordable.

Most people don’t understand online buying at all- Even when it’s virtues are
apparent, most people still don’t get online buying at all. What is it all about? Those involved in the sector
must embark on an evangelizing exercise extolling its virtues in much the same way Pentecostal churches
go about their business.

Coordinated frontal efforts are absent- Zimbabwe is a very small country and all the
online selling efforts have been fragmented. There is no Zimbabwean Amazon/e-Bay instead there are a
dozen unpopular, some downright ugly sites, some are cheap imitations of their international counterparts
lacking most of their functionality, some are broken. Most are geek projects with very little merchandise
on them and run by people with little business experience. You would not believe how many sold houses
are still listed on some selling websites-some posts were made years ago and there is not monitoring
process to weed out sold listings. The big guys like OK, TM and Meikles are not bothered by online
selling. It would be very different if say Econet were to make an online Amazon, they have the financial
leverage and business acumen to make it work.

Adolescent payment systems- while we now have payment systems at our disposal most
are still in their infancy and are either still in development or the public do not yet understand them well.
Vpayments for instance would do well to add more banks to their portfolio, EcoCash’s MasterCard
solution is just likely to lead to USSD fatigue – Why don’t they just develop an app? EcoCash would also
do well with an official API that would ease integration with online stores allowing customers to click
and pay instead of going through hurdle after hurdle of USSD codes-it’s so frustrating when the process
fails 5 steps down the way.

Expensive payment systems-compared with going to the bank and making a singular
withdrawal most of the payment systems in this country are expensive. For a typical withdrawal you will
be charged $3.50 maximum. Swiping your card will incur POS charges per swipe. My bank charges $2 for
each swiping transaction. The same fee is levied for online transactions.

Liquidity crunch- people are in a vice they would rather do their purchases the old fashioned
way rather than try something new and take on unknown risks of buying online.

Most local goods are not suitable for online selling -one of the arguments
advanced was that since local factories have fallen silent most of the goods sold online are imported
goods which we have seen are sold at a premium. It would be cheaper to purchase the items directly from
China rather than buy from a local dealer who is selling them at a premium. I mean as long as we are
buying online why not just skip the middleman? In our agro-based economy no one is going to buy their
tomatoes online
Benefits to using e-commerce

Enabling technology Duncombe and Heek(2005) stated cost reduction, market benefits and other
competitive benefits as some of the benefits brought about by the usage of technology enabling e-
commerce. Makwembere (2005) pointed out how dollarization has brought change on how people do
businesses through the use of e-commerce technology like mobile money transfers services. Mobile
companies like Econet now allow their customers to buy airtime, pay bills, transfer money through
mobile phones as well as pay for goods and services electronically. These mobile companies have also
partnered with banks which makes life for Zimbabweans easier. Banks are now giving top priority toe-
commerce in the strategies of their businesses which has led to a launch of many debit cards which in turn
has increased internet banking.

Here are my reasons why e-commerce in Zimbabwe has huge

potential.

1. Online searches for purchasing information are rising

According to a recent article in Business Day BDlive, Luke Mckend, country director for Google SA,
shared some statistics that showed how Africans are increasingly Googling with the intent to buy.
“What’s particularly interesting is commercial intent queries, searches for purchasing information,” says
Mckend. These searches typically indicate an intention to buy. “The more people are online the higher the
propensity is for them to spend money,” says Mckend.

2. E-commerce in Zimbabwe is starting to take root

Zimbabwe’s e-commerce sector is gaining more momentum. One example of a Zimbabwean e-commerce
platform is Zimall.The online shopping mall sells goods via the internet from local suppliers. Customers
can order goods, which are then delivered, using Pay now. The platform leverages Ecocash and Telecash,
the two popular mobile-money transfer tools in Zimbabwe.
3. Internet penetration rapidly spreading
As the level of data connectivity increases, technological innovations will continue to open doors and
provide new opportunities for e-commerce in Zimbabwe. Mobile money transfer services and usage of
smartphones have boosted the market for e-commerce platforms. The proliferation of mobile phones is a
factor that can make e-commerce the next big thing in Zimbabwe.

4. Chinese company invites Zimbabwe firms onto e-commerce platform

Chinese company, Jumore E-Commerce, is offering Zimbabwean companies an opportunity to showcase

their products and services free of charge on its cross border e-commerce platform called Jumore,
ZimTrade has said. Through the platform, Zimbabwean companies will be able to market their products
in China and other participating countries. Jumore can be used to procure products/services as well as to
promote investment opportunities, ZimTrade said. “Business conducted through this platform covers
several categories ranging from raw materials to industrial products, as well as different services such as
finance, insurance and logistics,” it said. To qualify for listing on the website, ZimTrade said a company
should be manufacturing or trading in high quality products and should be able to timeously deliver
products to buyers. Since the launch of this initiative in January 2016, over 10 countries which include the
US, UK, France, Germany and South Africa have launched national pavilions within the platform. Sixty
countries are expected to have registered on the platform by the end of 2016.Meanwhile, ZimTrade said
Trade and Investment KwaZulu-Natal (KZN) of South Africa was inviting local companies and investors
to the KZN Expo Week, which will take place in Durban from October 17 to 21 2016.The KZN Expo
week is a trade and investment event that provides a platform for companies to network and showcase
their products and services. The Expo also provides an opportunity to market Zimbabwe as a safe
investment destination. ZimTrade is urging local companies to attend the Expo, which according to the
organizers, will include business and trade exhibitions, B2B meetings, site visits and tours of
infrastructure and logistic hubs,” ZimTrade said. South Africa is Zimbabwe’s largest trading partner
accounting for 70% of the country ’s exports in 2015. According to Trade Map, South Africa is a major
source market for Zimbabwean products averaging 45% of the country’s import bill between 2011 and
2015.Zimbabwe and South Africa are both members Sadc and qualifying products enjoy duty-free entry
into both countries. In addition, the two countries have an operational bilateral trade agreement, which
also gives duty-free concessions to qualifying products.

Ecommerce giant comes to Zimbabwe

The recent launch of the Zimbabwean service by Internet payment giant PayPal could provide new
economic opportunities for local consumers and businesses. But it could create short term risks unless it
quickly expands to allow Zimbabwean businesses to receive payments using the service. Innovative
businesses can use the expansion of PayPal to partner with overseas companies, and tariffs on goods
bought online could be lowered to incentivize broader trade links. PayPal enables Zimbabwean businesses
and consumers to purchase goods and services from 203 countries around the world, ranging from the US
to France to Taiwan, using mobile phones. Since PayPal has 148 million users, including many online
retailers and services companies, this means that the opportunity for global consumption from within our
borders has changed momentously.

! PayPal's annual payment volume from 2012 to 2016 (in billion U.S. dollars)

Consumers benefit
Zimbabweans’ purchasing power has dramatically increased due to PayPal’s new service, as the
transaction fees associated with buying goods and services from millions of SMEs abroad has declined.
Products ranging from the thousands of products sold by Internet giant EBay, to ‘Mom & amp; Pop’
e-commerce stores, are now all available to the local consumer. The potential economic benefits are
difficult to overstate. It means that the world has opened up for the consumer. Zimbabwean retailer prices
now face enormous pressure to adjust to the increased competition. The move signals that Zimbabwe is
open for business. PayPal reduces the risks of doing businesses for small and medium enterprises (SMEs)
by providing buyer and seller protection on transactions. While PayPal only allows Zimbabweans to
purchase from abroad at present, the launch sends out the message that Zimbabwe is open for business to
the millions of SMEs using PayPal around the world. Growth in Internet transactions between
Zimbabweans and overseas companies could provide the signal that the economy is open to trade,
investment and growth. Even if the short-term cost is an increase in imports, the local consumer’s
purchasing power will have significantly increased, and there are opportunities for innovative
partnerships between our exporters and overseas companies. Overseas companies that trade with
Zimbabwe provide the potential for marketing Zimbabwe as a trade destination in overseas media. For
example, a US electronics company in Cleveland, Ohio could provide opportunities for Zimbabwean
companies in non-competing industries to offer joint press releases in Cleveland ’s local newspapers. An
incentive for such partnerships could be provided by lowering trade tariffs for overseas companies that
offer local exporters marketing opportunities in their local media.

Long term growth

As and when PayPal expands its services to include payments to Zimbabwean merchants, our high
literacy rate and mobile telecommunications infrastructure could lead to a significant boost in ICT-related
sectors such as Business Process Outsourcing (BPO), an estimated $304 billion dollar market worldwide
(HfS Research, 2013).For example, a Zimbabwean entrepreneur would be able to set up a micro customer
service business using PayPal payments, a Skype account, email, and serve customers from India to South
Africa to the US on behalf of small businesses worldwide, with less than $1000 in capital. Compared to
tangible exports such as wood and furniture, the low setup costs and rapid cash flows of BPO operations
make them an accessible business to thousands of Zimbabweans, if the payments, distribution network
and risk-reduction infrastructure of companies such as PayPal are in place. –

Zimbabwe’s Ecommerce Payment Platforms

A big reason why we are having so much Ecommerce activity now in Zimbabwe is the availability of
payment platforms and ways of making payments online. The lack of an easy and secure payment
platform was a major stumbling block for Ecommerce in Zimbabwe. Fortunately, there are now a plethora
of payment platforms and methods to choose from. Ecocash debit card, Telecash and ZimSwitch options
are just some of the options available. Educating the market on using the technology and its benefits
should be the priority as a lot people are still rooted in the idea of using cash to make payments. But as
Steve Jobs famously said, “A lot of times, people do not know what they want until you show it to them,”
we can be encouraged that once people get an idea of how easy it is to buy online using a MasterCard the
floodgates will open.
Conclusion
I think it will take Zimbabwe a while to adapt to the e-commerce trend as people a still learning how to
use the technology that has been put forward I feel that with the growth of internet usage and the
partnerships that Zimbabwe has made in the past years will have a positive impact on the growth of e-
commerce in the nation of Zimbabwe.

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