Opinion: Startups Will Dominate E-Commerce In 2015

Opinion: Startups Will Dominate E-Commerce In 2015

Online startups are agile, have little lose and even when 60 percent of them fail, they can adapt and start something new, says online payments entrepreneur Peter Harvey in a guest column in ITNewsAfrica.

A South African, Harvey is CEO of PayGate, which serves as an intermediary between banks and online retailers for shopping transactions, according to Entrepreneur Magazine.

He founded PayGate in 1999 and has a large number of online merchants as clients including Woolworths, iTickets, airlines, universities, and hotel-booking websites.

Harvey studied computer programming at Wits Technicon in South Africa, then earned a degree in commerce from the Univerisity of South Africa, or UNISA, according to Entrepreneur Magazine.

“Five years ago we’d load 10 start-ups onto our payment gateway for every established business; now the ratio is more like 100 to one,” Harvey said in a column in ITNewsAfrica. “The sluggish job market in traditional corporates is driving a lot of young people to start their own businesses.”

From ITNewsAfrica.

2015 will see many more new e-commerce start-ups along with continued growth and innovation by established niche players, Harvey predicts.

“(Online startups) have little to lose, so even when 60 percent of these new businesses fail they’re able to adapt and try something else.  Things move fast in this market and we can’t predict who the successes will be, but overall about 10 percent of them do really well.”

Harvey states that this rapid growth is partly driven by lower barriers to entry and faster time to market. “Services like PayGate’s PCS mean it’s no longer necessary to get a merchant account from a bank before you can sell online, and we’re putting a lot of effort into supporting the developer community that’s a crucial enabler.”

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As new entrants work to gain a foothold, Harvey predicts most of the innovation will come from established niche players including specialist online retailers, airlines, ticketing companies and travel and tourism players. “These are players who’ve been around for a while, who understand their markets, know how to manage risk and are investing strategically. We’re seeing continued demand from these players for more payment methods to offer their customers as they expand into markets where credit cards aren’t common – they need to be able to accept debit cards, international payments like Paypal and cash alternatives.”

The growth of e-commerce will also drive further growth and innovation in logistics and distribution, says Harvey. “The Post Office is increasingly not a viable partner, so distribution is going to be an interesting space to watch. This week’s 20 million rand investment in WantItAll’s logistics startup Parcelninja is probably just the start.”

Across the board, says Harvey, regulatory compliance and risk management will continue to be a key factor. “Banks, merchants and customers all need to manage the risks of fraud, and it’s a complex business. If e-commerce is to carry on growing, payment service providers like PayGate need to take the lead in reducing this complexity and offering easy, affordable fraud protection services.”

Read more at ITNewsAfrica.