5 e-commerce trends for 2018

By Hagen - Dec 2017

In the coming years, 2017 might be looked at as the year that e-commerce in South Africa finally reached main stream. For years now, South Africa has been lagging behind the rest of the world in terms of e-commerce adoption, but - to a large extent - no more.

Total e-commerce revenue in South Africa for 2017 is estimated at over R 37 billion by Statista.com and amongst our own clients, we've seen yet another year of +100% growth.

Smartphone penetration, #DataMustFall campaigns and a general acceptance of using one's credit card online have contributed to this. With the launch of iPay, we also now for the first time have an instant EFT payment option that isn't a complete shambles. Especially amongst websites catering for a lower LSM, EFT and Instant EFT are still exceptionally important as payment methods.

Below are five e-commerce trends we see continuing in 2018.

1) Delivery must be faster , cheaper & better

Delivery is one of the big final frontiers of e-commerce. If the barrier that is "delivery" can be torn down, there will be no stopping e-commerce. In more developed countries, this is already happening. It will probably be a while until we see drones delivering parcels in South Africa, but there is certainly a race amongst our local courier companies to provide a better service. At this stage, the delivery cost has not come down dramatically, but speed has improved, as well as the communication in terms of what day and now even time (more or less) a parcel will arrive. Pargo has also entered this space, positioning themselves between door-to-door delivery and Click and Collect. Some clients are even employing their own drivers (often on scooters) to deliver in main centers.

In 2018, expect to pay less for shipping and to get your items quicker.

2) Easier Payment Options

A quick history of credit card payment in South Africa goes like this: Credit Cards accepted online → Things work well, until fraudsters figure out that they can game the system → Banks panic → Enter 3D secure → E-commerce sites panic. Major drop-off in sales → Banks hold their ground → A few years pass → People deal with 3D secure and become comfortable with it → Sales recover.

However, there can be no denying that online payment can still be a major pain point. In the transaction logs of our customers, we can still see a significant percentage of failed transactions or retries. When delving into this it's often SMS' that didn't arrive, passwords that were forgotten, bank websites that weren't responsive etc.

To compound matters, on high traffic days such as Black Friday, the banks become the choke point. Their systems fall over, SMSs don't send, payment pages don't load etc.

The hope is that big retailers will start to put enough pressure on banks to make their internal systems more robust and less prone to error.

One trend we predict for 2018 in South Africa (and one that we will be employing with our clients) is to increasingly allow for one-click payments. The technology already exists and is provided by certain payment gateways such as Peach Payments. Essentially, a secure token of your credit card is stored (never the actual credit card) that can then be used to debit a specific amount. This means that once you have shopped at a site and trust it enough to have it store your details (even though those details are in actual fact stored by the payment provider), shopping will become exceptionally quick and easy. Those of us that have shopped on Amazon will be aware of how quick and painless shopping becomes once one click payment has been set up.

3) Scale, scale, scale

Takealot had a (another) nightmare on Black Friday. All the weeks of planning counted for nothing, when a "glitch" hit, taking down the site for most of the day. Amongst our own clients we also found ourselves, in the weeks leading up to Black Friday, preparing for the biggest amount of traffic we had ever seen. One of our websites achieved more than 2,000 concurrent users (and, we are pleased to say, still responded in under 200ms). With cutting edge technology such as Kubernetes, hosted on Google Cloud (this being our approach), there should be no reason at all for any website to fall over. Slow loading (or "non-loading") websites should be considered very "2017".

4) Loyalty will be rolled out at an eye-watering pace

2017 was the year of loyalty. Almost every retailer has either already rolled it out, is busy rolling it out, or at least, is thinking about rolling it out; primarily because a) they want to turn you into a repeat shopper and b) they want your data.

The race for your data is very much on. And shoppers are willing givers. If it results in a deal, why not share one's behaviour with the retailers. This is the contract (or deal with the devil?) that shoppers are making on a daily basis. Online obviously is exceptionally well suited to tracking behaviour (e.g which pages you visit before you purchase), what you buy, when you buy, where you are located. This can then all be fed back into the marketing funnel to make you buy more. Simple and effective. The major problem that retailers will have to solve is to figure out how to make their loyalty programme appealing so that as many as possible sign up.

So while the primary purpose of a loyalty system is to obtain shopper data in an offline environment, expect online to play a major part in retailer's loyalty programmes.

5) Deals, deals, deals

2017 was also the year of deals. Like never before, retailers have looked at providing "the biggest savings ever", specifically in an online environment. Many would say that this is a consequence of a low growth environment in SA, with the consumer under immense pressure. The thinking is that unless the deals are hot, the consumer will not shop (or shop dramatically less). The perception is also that users that shop online do so because of deals. Email marketing, which remains incredibly relevant and effective, is especially useful in pushing these deals. You would have noticed your inbox being absolutely flooded on Black Friday. More so than ever before, it's all about the deal and not just on Black Friday.

An interesting problem to solve will be how to get users to shop when not presented with deals. Another problem to solve is to avoid "deal fatigue". One can only see "biggest savings ever" so many times before disregarding said campaign.

Whereas in previous years, many of our brave clients were not making a whole lot of money online, justifying it as "investing in the future", finally, the time has arrived where money is being made with investments starting to pay off.

Roll on 2018!