According to tradingeconomics.com, the consumption expenditure in Uganda is anticipated to be over 50 trillion Uganda shillings. How much of this constitutes e-commerce, I do not know. The wave of e-commerce has taken the world by storm.
The e-commerce industry is expected to grow as Uganda becomes more urban with the formation and development more cities. Our large youthful population, socially connected mobile users and the deepening of the financial sector are also some of the other factors that are expected to drive the e-commerce growth.
Uganda has seen the development of e-commerce more recently and with the rapid growth of players in this industry, it is indeed an explosion! Will traditional shops survive it? Keep reading to find out.
So what is this thing – E-commerce?
Plainly stated, e-commerce is the popular concept of conducting transactions electronically on the internet. It involves both buying and selling online.
E-commerce has various forms but the most common ones are business to consumer (B2C), consumer to business (C2B) and business to business (B2B) e-commerce. E-commerce has provided a platform upon which, businesses and consumers can exchange goods without the constraints of time and distance. A consumer in Uganda can buy and receive a personal computer (or any item of interest) at any time of the day or night from a retailer in Europe, Asia or America depending on what s/he prefers. That is e-commerce.
The birth of e-commerce that came with the creation of digital retail has resulted into the question of whether the world will at one time choose to go entirely digital or there will be hardliners, the laggards, and the ones that will forever prefer the traditional brick and mortar shops.
The e-commerce development comes with its merits and they include;
E-commerce helps businesses reach a bigger client base compared to a stationary brick and mortar shop that may be limited to the number of consumers within its geographical area.
E-commerce helps businesses run operations with minimum inventory requirements. E-commerce therefore minimizes the costs associated with holding inventory. E-commerce forms like drop shipping have this advantage. You should note that a traditional shop cannot sell without inventory.
The biggest advantage is that e-commerce offers the comfort that consumers so much demand. Take an example, you can order for lunch through any of the platforms that sell food online without leaving your office desk. You can also buy an item from the comfort of your bed in your bedroom!
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Traditional/ conventional/ brick and mortar, is it still relevant?
Before e-commerce, was commerce, the activity of buying and selling something especially on large scale. This was conducted in different ways for example goods were moved door to door to find consumers, businesses set up the traditional (also known as brick and mortar) shops through which they displayed their products and required consumers to come to the physical place (shop) in order to look at a product and make a purchase.
Brick and mortar shops are still in existence today. In fact they are still the most widely used in Uganda. These seem to be more around as Uganda tries to improve its internet connectivity, level of literacy and the financial inclusion of the masses.
The traditional shops have their advantages that they present over e-commerce.
The biggest advantage that the brick and mortar shop offers is one of immediate gratification. The consumers in Uganda and world over still need to feel that sentiment that comes with physically being able to feel, examine and try a product before they make a purchase. Furthermore, the consumer, on making the purchase immediately leaves the store/ shop with the item s/he went to buy.
The other is the fact that physically visiting a traditional shop is a recreational activity for many a shopper. The satisfaction derived from browsing shelves, products and examining their price tags is one of its own kind.
The other advantage is that, despite the rise and prospects of e-commerce, traditional shops are still popular – even in the more developed countries. Consumers will still want to experience the feeling of dining in a real restaurant rather than constantly purchasing food online.
What now? E-commerce or brick and mortar?
E-commerce, just like other tech trends has to be adopted by the population. The adoption of tech trends have always been influenced by several factors depending on the society in question and the complexity of the technology in question. Tech adoption is usually affected by demographics, beliefs, literacy rates among other factors.
For the case of Uganda, e-commerce is one of enormous potential. It is tipped to grow with consumers leading the way moving to digital consumption and businesses slowly coming on board.
In terms of the age of the population, the biggest section of Uganda’s population are youth and these have been shown to easily adapt to the latest tech trends. The younger people easily try new things and can easily interface with the necessary technologies i.e. websites, social media and product apps.
On the other hand, there are older people, usually a full generation ahead that may not readily adopt the latest tech trends like e-commerce. These will always provide the demand for the brick and mortar shops.
The existence of illiterate individuals in Uganda will also continue providing demand for the brick and mortar stores. This is because interaction with most of the e-commerce platforms require a degree of literacy that some individuals do not possess.
The store is moving closer and closer to technology. You can’t be effective on the business side if you don’t understand technology. – Srinivasan Rajamanickam, Senior Director, Technology, Strategy, and Innovation, Tapestry
Arguably, e-commerce is the future driver of profitability and revenue and it is going to provide stiff competition for the stores that will choose to remain traditional in their operations but will not be able to entirely threaten the survival of the brick and mortar shops.
Clearly, e-commerce is not projected to decline soon but rather steadily increase. With the current rate, there will be no clear boundaries between e-commerce and the traditional shop as more and more shop and store owners will move part of their operations to the internet.
For the brick and mortar shops to leverage this opportunity, they should embrace e-commerce and incorporate it into their business operations earlier.
We can go on and on about whether and why the traditional shop is dispensable or not but to conclude, it is unlikely traditional shops will wilt as a result of e-commerce but rather that they will re-shape, adapt a different stance and find a way of thriving alongside e-commerce.