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eCommerce South Africa: Waiting on Brick and Mortar

Core factors surrounding the dynamics of online shopping in Sub-Saharan Africa and other developing nations often paint a grim picture. Infrastructural limitations and unemployment are fundamental to the broader lack of internet accessibility and connectivity, while potential security breaches and expensive fee structures form the basis of consumer concerns. In South Africa, the plummeting Rand, labor disputes resultant in inflation and ever-rising fuel prices are also hurting the broader retail sector.

On the positive side, research suggests that South Africans have a healthy appetite for online shopping that if nurtured, could grow as exponentially as their enthusiasm for social media and mobile phones. That there are 13 million internet users in South Africa, 4.3-million of whom regularly shop online, indicates that with eCommerce growing at 30% per year in its infancy, there’s still a lot of uncharted territory to be explored.

By the same token, this also points to an additional, often unnoticed challenge… that failure to convert online users to eShoppers, may be directly linked to the coy attitudes of well-known retail companies to enter the online sphere. After all, trust does not begin and end at the shopping cart when one has to decide whether or not to enter credit card details. For many consumers, it may very well begin with a recognizable brand that they can identifiy with. Sales conversions have always been made through association (think ads), knowing what the brand represents, knowing that if you do have a bad experience and need to vent about late delivery, you can approach in-store customer service and get support.

Positive growth in eCommerce over the past few years has been driven largely by new brands, most of which, up until taking that courageous plunge, were virtually unknown. Enterprises such as Kalahari.net, later joined by the likes of Bidorbuy and Yuppiechef to name a few, have been key in driving online consumer confidence in the country. And… to it, they have brought about remarkable change.

A recent Mastercard survey revealed that 90% of the 4.6-million e-shoppers were satisfied with their shopping experiences, with most revenue coming from items such as for CDs, DVDs and books. On the other hand, the study also highlighted a slight downward trend in online shopping habits compared to the past two years. This pointed to the fact that it is consumers who’ve become comfortable shopping online that return to buy more products.

Arthur Goldstuck of World Wide Worx explains: “The key therefore lies not in the total number of internet users, but in the behavior of the experienced users and as the new user base gains experience and confidence in online activities, their propensity to shop should convert into a regular online shopping habit.” 

How long it takes to convert the remaining 8.4-million of internet users to e-shoppers will of course depend on a number of factors, not least the presence of proverbial retailers online. Once this transition has been made, however, retailers will have to unlearn/relearn certain lessons and be willing to invest in creating good consumer experiences in order to maintain ‘trusted brand’ status. With a lot of international websites offering free shipping and blogging as ways to set themselves up as authoritative brands in their relative industries, underdeveloped and furtive strategies simply won’t do in attempts to win over South African consumers, for whom word of mouth remains a fundamental method by which purchasing decisions are made.

Leading businesses appear all too comfortable fueling the misconception that shoppers are not ready to shop online but with evidence to the contrary, it is perhaps far more likely that it is traditional retailers themselves that are not innovative enough to explore potential. Of the nearly 900 known online retailers in South Africa, fewer than a dozen represent the established retail market. Most are still fixated on using their websites as catalogues, while few provide valuable content and underutilize the online market as a whole. 

Major retailers need to allow the transformation of their own mindsets as that of skeptical consumers. If these relatively new online retailers have managed to create brands strong enough to contribute to a $388-million (4-billion rand) industry in these uncertain economic times, it remains to be seen what proverbial brands can do to add to this growing economy. 

A great example of this innovation is clothing retailer, Mr. Price, which only having entered the online retail market in July 2012, saw significant growth and continues to reap rewards. Due to its popularity, Mr. Price is one of those shops in which long queues are an all too familiar sight and where it’s not unusual for a store to run out of sizes or colors on certain products. That product availability is indicated online and time saved, which alone makes a big difference in consumer experience. Its CEO, Stuart Bird obviously understood this well when launching online; “Our customers are incredibly tech-savvy and need a convenient and secure way to get their fashion”.

Using such brands as Mr. Price and Woolworths as a model of how traditional retailers can strike a balance between online and offline retail, one can conclude that the arrival of more brick and mortar retailers to the eCommerce arena would bring about positive growth to this sector. Popular retailers should enter the field not for the sake of having an online presence. They should employ strategic foresight by using their extensive experiences in customer service to keep up with current trends and increase brand credibility. As eCommerce gains momentum, their reluctance could lead to a loss of consumer loyalty to more daring newcomers who offer convenience, ease of use and more flexible fees. Above all, they should be cognizant of the fact that they have the potential to influence the market by converting a significant number of current internet users to a loyal base of online consumers thus boosting South Africa’s budding eCommerce sector while increasing their market share. Consumer confidence in no small part, lies largely in the hands of absent traditional retailers.

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Sirius Centauri

Sirius Centauri is founder and MD of Penoptic Press - a South African web development and content management company. She shares fresh insights on business, technology, culture and media.

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