Most of the debate about slow online shopping uptake and e-commerce development in South Africa concentrates on customers. But the main glitches may be on the supply side.
e-Commerce is a giant industry. The 2019 e-Commerce Report from World Wide Worx reported in November 2018 that total revenue from e-commerce sales in South Africa will have reached R14 billion. According to market research company Statista South Africa will have as many as 21,5-million online shoppers in 2019, that’s almost 40% of the population. But even though online shopping is beginning to go mainstream in South Africa, online retailers still make up a rather small proportion of overall retail.
There are 3 factors holding back the development of e-commerce in South Africa: Dealers have a restricted comprehension of how e-commerce works, there are not adequate payment selections and the distribution process is incompetent.
Regarding the first problem, merchants have been slow to come online, and smaller businesses haven’t always understood how to advertise themselves successfully. Many minor online sellers have come and gone. That is to be anticipated in a new industry, but we should learn the lessons. Customers are distrustful of poorly designed websites, so traders require spending time and money on specialized design facilities. This is one instance where extra cash on the frills does mean more money at the tills.
There have, of course, been some remarkable achievements like South African kitchen and homeware retailer YuppieChef, as well as flower delivery service company NetFlorist. When our huge, well-known merchants learn to be as nimble, effective and service-oriented as these online-only dealers, things can actually begin to take off.
The 2nd problem is the lack of suitable and dependable methods to pay. In the US, customers have an estimate of three to six credit cards each. In South Africa, it is less than two per household, and a huge percentage of customers don’t meet the requirements for credit cards. That is not going to alter anytime soon, so we need to be creative in providing customers other safe ways to pay.
A lot of new payment techniques have been developed with a lot of elaboration but have demonstrated to be undependable or short-lived. This has injured customer sureness in the entire industry.
Barriers to growth
According to tech analyst and commentator Arthur Goldstuck, mall culture is restricting the development of online shopping and because of this, some merchants still have the funds to disregard e-commerce networks.
At present, the retail market is extensively regarded as over-shopped if latest figures by property research company Urban Studies are anything to go by. According to property research company Urban Studies, South Africa has more than 2 000 shopping centres covering 23m square meters — equivalent to 163 Sandton City malls.
Frequently customers do their research online, but then go to a physical shop to make the sale — there are no delivery charges, and they can walk away with their article there and then. Effective e-commerce companies provide quick, dependable and low-cost delivery to make up for the loss of the in-person experience.
Service levels also count: It is important to let clients know when their packages have dispatched, give them a waybill number and allow them to track their delivery. Even though your clients may never meet you face to face they must be acknowledged and comforted during the course of the online purchasing process.
There are a lot of keen buyers. As sellers, we will succeed when we make the online shopping experience dependable, easy to get to and safe for everyone.
Source: By Hassan Khan Yousafza
This report studies the Online Beauty and Personal Care Products market. Online Beauty and Personal Care Products refers to Beauty and Personal Care Products sold through the online store.
The worldwide market for Online Beauty and Personal Care Products is expected to grow at a CAGR of roughly 19.5% over the next five years, will reach 74800 million US$ in 2023, from 25700 million US$ in 2017. consumers prefer shopping online at discounted rates and therefore increasingly adopt online shopping. Hair conditioners, hair styling gels,bath gels,and shower products are the commonly purchased beauty and personal care products online. Additionally, the wide range of products available on online platforms and the time-saving aspect of the medium are factors that have contributed to the rise of the online retail phenomenon. E-retailers offer better security features for online payments, customer-friendly services, easy-to-navigate shopping websites, and easy delivery, due to which the number of consumers using online shopping portals is anticipated to increase significantly in the next few years.
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The cosmetics industry is on the path to omni-channel integration, and the online channel will be transformed from a pure sales channel to a brand promotion platform: On the one hand, the online traffic effect is much greater than offline, and efficient brand promotion can be achieved and can be generated with consumers. Effective interaction. On the other hand, e-commerce channel can generate a large amount of customer behavior data, which is of great value for all aspects of the cosmetics industry chain, including the development of marketing strategies for offline channels, supply chain response, user relationship management, and new product development. In the long run, companies with strong control of channels and companies with supply chain integration capabilities will have more competitive advantages.
TEN of South Africa’s most visited online retailers are based in Cape Town. AP
Cape Town – The city is leading the e-commerce space in South Africa with 10 of the most visited online retailers based in the City.
Online retail is big business and is due to surpass the R14 billion mark by the end of the year as e-commerce goes mainstream. This was the key finding from the Online Retail in South Africa 2019 study by technology research organisation World Wide Worx.
Head of World Wide Worx Arthur Goldstuck presented the findings this week and said online retail represented 1.4% of South Africa’s total retail spend.
He said the growth for 2018, which represents 25% growth over 2017, comes as a surprise, given predictions that online retail growth would slow down to below 20% by 2018.
“Forecasts have been beaten as a result of massive investments in online retail, aggressive marketing and the rapid uptake of new shopping channels like mobile shopping and Instagram,” he said.
According to Goldstuck, there will be an increase in sales during the Black Friday event on November 23 when retailers offer large discounts on products.
“Will Black Friday increase that growth? No, it’s factored into that 25% growth, but there is expectation that Black Friday this year is going to see a massive increase compared to previous years’ spend and the weekend that follows that day. We’ll see a massive spike in online shopping,” said Goldstuck.
Last year, retailers saw an average increase of 624% in consumer activity on Black Friday compared to an ordinary day.
The forecasts by World Wide Worx from 2018 to 2020 show online retail sales more than doubling from 2016 to almost R20bn.
Online retailers in South Africa still make up a small proportion of overall retail, but for the first time there will be a broader range of businesses in terms of category, size, turnover and employee numbers.
Goldstuck said lack of reinvestment of profits by online retailers into their businesses was a hindrance of growth but did cite an example of good investment.
“Takealot had R1bn pumped into the business for online retail. That has to make a massive difference and it is propelling them to become by far the largest retail company in the country, but has also contributed to the increase in the growth rate.”
Yuppiechef are considered the “pioneers of e-commerce” in South Africa and won the e-commerce retailer of the year award from 2010 to 2015, and 2018.
Co-founder Andrew Smith said while online growth was encouraging, e-commerce in South Africa was difficult.
“We’re embracing opening stores.
“It’s difficult to grow online in South Africa, and while we’ve done well and grown every year, there are people who want to shop with us and don’t want to go online.
“It is hard to make profit online. I have not encountered many online retailers that are making profit,” said Smith. He said having a physical shop was still beneficial because of South Africa’s “mall culture”.
“We like going to a mall because it’s a lifestyle thing where you take your family on a Saturday and do your shopping, have something to eat and go to the movies.”
Brad Elliott, chief executive of digital company Platinum Seed, said Africa had the potential to use e-commerce to its advantage.
“The Nigerian company Jumia is Africa’s first unicorn – a unicorn is a company with a valuation of over a billion dollars.
They were the first to offer a cash-on-delivery option. That works great in Africa, because most countries don’t have a formal banking sector,” he said.
Source: email@example.com and www.iol.co.za
Marketplaces, e-commerce sites and classifieds will all gain momentum in 2019
This, according to Silvertree Internet Holdings Co-founder and MD, Manuel Koser. Having invested in and grown a number of highly successful South African brands, Silvertree’s management team sees several business opportunities set to grow exponentially over the coming decade.
Business opportunities in 2019:
Indigenous and ethical: personal and home care products:
2019 sees growing potential for personal care products – ‘Those with local and indigenous ingredients, ethical sourcing which is kind to nature and the body,’ Koser explains. ‘There is a lot of room to play in the African haircare market particularly, as it’s often overlooked by the major FMCG companies.’
The Silvertree MD also sees increasing room for innovative natural home cleaners as consumers become increasingly environmentally conscious. ‘Until now, it was all about the well-known cleaning products the major chemical manufacturers put on the shelves. Now, there’s increasing space for new, exciting entrants.’
‘Locally-sourced ingredients and an earth-first mindset will also play an increasing role in the consumer beverage market. Add to this the fact that major soft drink manufacturers will struggle to produce drinks for increasingly health-conscious consumers. They’re often just not quick enough to adjust to changing consumer tastes – particularly the tastes of millennials. Think less about a standard fizzy drink, but rather one that’s kind to the body, with natural ingredients. Non-alcoholic: water plus, say, cucumber, or another indigenous ingredient. The market for this will grow.’
Plant-based, vegan, ancient grains, ethical, protein-rich snacks – these are just some of the trends Koser sees dominating in the snack segment in 2019 and beyond. It’s about unique, tasty, functional foods that cater to the modern, time-starved consumer, Koser explains.
Buy, sell and compare online
In the technology space, marketplaces, e-commerce sites and classifieds will all gain momentum in 2019 and beyond. This encompasses aggregators as well as more unusual online businesses, which are increasingly able to find and reach consumers interested in niche products and services.
‘Consider an online ice-cream business. Once, something like that would have been unthinkable,’ Koser explains. ‘But as consumers demand greater choice, room for niche products like this grows.’
Yet, dabble online and seamless execution and delivery become make-or-break factors. ‘Many South African consumers use services such as Google, Amazon, Uber and Spotify daily – world-class products that function on a global scale. You can call an Uber and wait for just two minutes before getting a ride,’ Koser explains. ‘It’s quick and totally seamless. Consumers have come to expect that level of service across the board. Aligned to this is the fact that the millennial wave is currently hitting Cape Town right now, and Joburg secondarily, meaning a number of opportunities are opening up. Go after products and services in the right space and consumers will follow.’
Reinvent the wheel – and make it better
The final type of business entrepreneurs should keep an eye on is those that currently have low Net Promoter Scores. ‘This means that very few people like them, or the services they provide are of very poor quality,’ Koser explains. ‘Think of postal service providers or telecoms companies. With any monopolistic or oligopolistic structures, the service is often terrible because the heavyweights hold so much power. There’s a huge gap here.’
An allied approach for entrepreneurs is to assess opportunities for automation, or cutting out the middleman with technology. ‘Once, many markets – such as real estate were opaque, meaning you needed a middleman to help you transact. However, as the capabilities of technology have grown, markets have become far more transparent – making it easier for buyers to match with sellers safely. Today, a lot of this is easy to automate services – think about connecting a homeowner to a prospective renter through a digital solution where renters can be qualified, for example, in terms of their finances, personal information and criminal records. Quick and simple. And no middleman.’
The biggest opportunities here centre around where consumers spend the greatest amounts of time and money, Koser notes. ‘Housing and rent are always major costs. In terms of where consumers spend their time, on the other hand, much of it is, on a mobile phone, or PC.’
However, entrepreneurial success is never down to anyone magic formula, Koser emphasises. Nor does Silvertree invest in prospective entrepreneurs solely on the basis of the product or service they offer. ‘It’s about passion, perseverance and tenacity as much as it is about the quality of the product.’
Silvertree Internet Holdings is an investment growth partner who aims to understand, grow and scale business, consumer and digital brands to unlock the brands’ exponential growth.
The “Online Retail in South Africa 2019” report:
Local online retail goes mainstream and is set to pass the R14-billion mark this year, marking 1.4% of total retail
Online retail in South Africa is due to pass the R14-billion mark in 2018 as e-commerce begins to go mainstream. This is a key finding of the Online Retail in South Africa 2019 study.
The 2018 figure, which represents 25% growth over 2017, comes as a surprise, given predictions that online retail growth would slow down to below 20% by 2018.
Forecasts have been beaten as a result of massive investments in online retail, aggressive marketing, and the rapid uptake of new shopping channels like mobile shopping and Instagram.
Further, most established online retailers have enhanced their digital presence, and refined their fulfilment models, while many traditional retailers are starting to see significant growth in their online offerings. It is not unusual to see growth rates of between 25% and 50% reported by individual online retailers, with slightly more tempered expectations for 2019 and 2020.
Key online shopping highlights:
Online Retail Growth Speeds Up
Growth in Apparel Accelerates
China Rules Global Online Retail
Customer Centricity Wins
Online tracking tool, Narratiive, has released its South African eCommerce report for 2018. The data is based on a survey of 7,909 South Africans between July and August 2018, with respondents asked questions focusing on their online purchasing frequency, their most commonly purchased products, and what stops them from shopping online.
The data showed that online shopping continues on an upward trend in the country, with 44% of offline shopper survey respondents saying that they anticipate making an online purchase in the next 12 months. In addition, 73% of online shoppers say that they’ve either maintained or increased their online shopping habit in the last 12 months.
What people are buying
The report found that books (10%), travel tickets (10%) and tickets for shows and sporting events (9%) were some of the most frequently bought items in the last 12 months.
Other popular purchases include:
- Clothes and accessories – 7%
Hotel reservations – 7%
DVDs, videos, and music (including CD, K7, MP3’s) – 6%
Health and beauty products – 5%
Software – 5%
When asked how much they spent on their last purchase, 22% said that they spent between R200 – R499, while 19% said that they spent between R500 – R999 and R1000 – R2999 respectively.
When asked how long it took for their last purchase to be delivered:
- 27% said between 3-5 working days
27% said that their delivery was instant
21% said between 1-2 working days
15% waited for longer than 10 days
10% said between 5-10 working days
While some consumers indicated that they were unsatisfied with these delivery times, the majority said that they were ‘very satisfied’ (61%) or ‘fairly satisfied’ (24%).
Part of this satisfaction is likely to stem from the fact that 58% of these customers were charged no fee for this delivery, while just 14% were charged a fee of R50 or more