While there are pockets of South Africans, mostly high-end consumers in gated communities or high-tech office parks, that are ahead and have participated in the new subscription delivery model curve, the majority of the local population remains behind this curve. Quinton Pienaar, CEO of Agilitude, a Zuora reseller and South Africa’s first Salesforce.com reseller, says that technology is proving to be a powerful enabler of new consumption and delivery models, and can assist South Africa in embracing this new way of consuming goods and services.
In a research study done by Zuora and the Economist entitled ‘Supply on demand: changing patterns in consumption and delivery models’, Pienaar says what emerged is that advances in technology, including cloud computing, are considered top of the list of possible drivers of change in the consumption of goods and services.
“Technology allows us to scale, and to provide checks and balances at all stages of the transaction. The winners are the ones who can figure out how to build a platform that protects customers while adding value in the market,” explains Pienaar.
Economic factors and demand for greater convenience round out the top three drivers of changing patterns in consumption and delivery models, with only 2% of respondents selected environmental concerns.
Mark Walker, IDC regional director for sub-Saharan Africa, says that the average South African consumer is not as advanced as their global peers due to several local challenges: “While South Africa innovates, there are critical infrastructure and regulatory issues that impede its progress.”
Walker says there is a small portion of the local population with access to payment facilities via banking or credit card networks. The regulation of online purchases of online services such as Netflix or other online based content limits consumption.
Availability of US or internationally based subscription services are not offered in South Africa according to Walker: “Many subscription service suppliers do not offer local services due to concerns around the quality of online services; and the delivered content. There are also security concerns related to local logistics and delivery.”
He says that technology constraints, most significantly bandwidth limitations also impact the successful roll out of local subscriptions services. As with most international product offerings, affordability is a major barrier to entry. “A large portion of South African consumers are not able to afford online based services at the current pricing levels,” says Walker.
Pienaar believes that the time will come for subscription services to be embraced in South Africa: “The business benefits are way too important to ignore. This new delivery channel provides access to new revenue opportunities; it offers much needed differentiation from competitors, gives access to new customer segments and increases customer loyalty.”