Eric Edelstein

Most business’s i’m involved in are Internet centric.

However, there are a few offline, traditional business’s that I spend some of my time on - one of them, the eSquared Fashion Stores, has showed me a major advantage of doing business as an Internet Company in South Africa.

This week the eSquared shop in Durban had it’s SECOND break-in - and it only opened a year ago.

In the early hours of the morning, the robbers pushed the doors open through the gates, then climbed up the gates, and managed to squeeze in between the open doors and the top of the gates. Of course the security company was there quickly - in 5 minutes - but not quickly enough - in that short time, the robbers escaped with computer hardware, and tons of stock, and in the process broke some of the valuable Andrew Wharford pottery which is displayed around the shop.

Luckily no-one got hurt, but it got me thinking of the differences between “proper” Internet business’s and the traditional business’s.

We always think of fulfilment as one of the main benefits of having a non-ecommerce based Internet business. But I think crime is a huge advantage as well.

My definition of a “non-ecommerce based Internet business” is where there is no physical product to deliver.

So examples would be:

1. Any advertising only business - banners, sponsorships, lead generation, media arbitrage. (many of the 2.0 business’s fit this mold. Take the “current” facebook model as an example - their revenue is currently being derived from banner advertising, and the sale of $1 gifts”)

2. Any informational business, where the product purchased is an e-product - think eBooks, paid podcasts, e-Research, Software delivered via downloads

3. Subscription based business’s (eg: membership clubs and online dating sites being 2 examples)

In the last year eSquared, has had a number of shoplifting incidents, attempted break-in’s and 2 break-in’s. In each case, business is disrupted, and the store has to be fixed (a few weeks ago they tried to saw through all the locks on the gates, and failed, and we had to replace all the locks). In the latest incident, we’ll have to organise new stock quicker, our insurance premiums will most likely go up, we had to close the store while we were sorting stuff out, and the mindset shifts for awhile away from building the business to details around the robbery.

Even e-commerce based business’s where physical delivery takes place have hugh advantages over a traditional retail business, as many of the ecommerce business’s drop ship the goods, so they don’t have to hold stock. Thinking about it, I guess ecommerce business’s which have warehouses in SA have similar security issues.

Now if they can just sort out the number of Internet users, the speed of the net, the ease of accepting payment from customers, and the rest of the long list preventing Internet usage from exploding in SA, we’d see a lot more South African’s trying out an Internet business.

For now, we’ll just have to buy new locks and upgrade the CCTV.