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
There is a general conception in South Africa that TV campaigns can only be used by big brands wanting to embark on expensive brand building campaigns.
Businesses in South Africa have a natural tendency to look to online media for their marketing as it is measurable. But online marketing can soon hit a plateau in terms of reach and generating returns. When this happens, it often makes sense to branch into offline media that can deliver a broader audience and higher reach. A general concern for businesses is how to measure ROI on the higher budgets needed for television. With the technological advances of attribution software, this is now possible in South Africa – allowing digital businesses to optimise TV campaigns on key KPIs, just like with online marketing.
The groundwork for a successful performance TV campaign begins long before booking your media. Here are some important factors to consider:
Defining your TV strategy and your goals. You need to identify your relevant target group. Understand the key drivers that will motivate them to take action (buying that product through your e-commerce shop). This will allow you to shape the messaging for your TV commercial creative.
Aligning your marketing channels. TV is only one piece of your overall marketing strategy. Online marketing plays a big role in capturing the new demand you are creating through your TV campaign. Not all new users will be coming to your website directly through your URL – some will be searching for keywords around your product. Make sure that your AdWords campaign are up and running and reflecting keywords used in your ad.
Performance thinking is an approach that DCMN applies to all our campaigns (test, learn, scale). The results of the Travelstart campaign prove that digital businesses can be just as ROI-driven with their offline marketing as they are with their online channels.
Businesses wanting to discover more about how performance TV works and how to get even more out of their TV budgets, can download a white paper containing knowledge from years of running TV campaigns for some of the fastest-growing digital brands in the world.
Source: By Irina Herf, General Manager of DCMN South Africa
South Africa is expected to spend about R63 billion online, according to Efi Dahan, General Manager for Russia, Turkey, Middle East & Africa at international online payment company, PayPal.
Dahan visited SA recently to deliver a keynote speech at this year’s Seamless Africa conference, held in Cape Town last week.
He told ITWeb Africa during an exclusive interview that the country is seeing massive growth in online purchases because many consumers are using mobile devices as wallets.
According to Dahan, South Africa leads the whole of Africa in online purchases, this is despite Nigeria being home to the most e-commerce ventures in Africa – 40%, according to the Afri-Shopping: Exploring the African E-commerce Start-up Ecosystem Report 2017 by Disrupt Africa.
Dahan said online payments in SA amounted to R37 billion only two years ago, “this is amazing growth and it will continue to grow.”
PayPal stated that more consumers in Sub-Saharan Africa are looking beyond their borders to source the products and services they need.
“In fact, according to a recent KPMG The Truth About Online Consumers 2018 Report, the African/Middle Eastern markets import 50% of all online purchases from other regions, making them the number one online importer worldwide,” PayPal states.
Dahan believes the continent’s e-commerce is growing much faster than a lot of mature markets.
“South Africa is one of the main markets, I think this is because of the mobile penetration happens much faster. Mobile is extremely important because people are starting to use their mobile phone not just to make calls or get WhatsApp messages or SMS; they use the mobile as a wallet,” said Dahan.
“This is the future because mobile is also more secure and payment platforms know more about the user’s behaviour.”
Dahan said the company operates in 50 countries across the continent, with SA, Kenya and Nigeria being the biggest.
Source: By Masibulele Lunika