Competition watchdog zooms in on e-market to ensure fairness

Johannesburg – Looking at the versatility of modern-day business and the continual need to evolve, it is obvious that success in business lies in being an enemy to complacency.

Those with predictive data analysis capabilities tend to be better placed in preparing for the future, often with tested business resilience plans at their disposal.

Looking at the posture of major players industry-wide, a drastic shift has been seen from physical visibility with much stronger businesses dominating virtual platforms.

The 1990s was characterised by an evolution of the digital economy, initially deemed the effect of digital technology on patterns of production and consumption.

It has since evolved to encompass all parts of the economy that exploit technological change leading to markets, business models and transformation of daily operations. Amid the vulnerability of the economy, there has been heightened controversy around the digital economy and its enabler, the Fourth Industrial Revolution.

First, it’s the fear of job losses due to a reduction in physical labourers as a result of online stores and the market dominance by stronger businesses, in turn resulting in monopolies and price manipulation.

The latter in particular has been of major contention and has led to the government intervening through the Competition Commission launching an inquiry into the digital marketplace.

The commission emphasised the challenges of market dominance by platforms, characterised by the network effect and winner-takes all market. This inquiry comes at a time when the government has earmarked digital markets as core areas of its post-Covid- 19 recovery plan.

Online shopping has seen a significant increase in the past year globally and has emerged as a major contributor to most economies.

A report by Digital Commerce 360 revealed that US consumers spent about $861.12-billion (about R12-trillion) on online US merchants last year, a 44% year-onyear increase, equating to triple the 15.1% jump in 2019. In SA, World Wide Worx published that online store sales reached about R30.2-billion last year with Takealot emerging as a major player, generating R6.26-billion from March to September 2020.

Market dominance by players such as Takealot has resulted in smaller businesses being hard-pressed and heavily dependent on their platform, often with a nominal joining fee and an 18% success fee on sale proceeds.

The probe aims to cover online markets that facilitate transactions between businesses and customers, including, inter alia, e-commerce marketplaces, online classified marketplaces and software application stores.


If successfully done, it will result in a regulated online marketplace.

Sizwe Gwala.

By Sizwe Gwala

• Gwala is enterprise data governance manager at Alexander Forbes. He writes in his personal capacity.

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