The Advantages of E-Commerce over Traditional Retail

E-commerce is by no means a new concept, although in South Africa it only truly began to take hold in 2005, when people started adopting ADSL.

by Georgia - June 2012

E-commerce is by no means a new concept, although in South Africa it only truly began to take hold in 2005, when people started adopting ADSL. Internationally, particularly in the US and Europe, widespread use of e-commerce goes back further than that. From our side, limited and often unaffordable internet access, coupled with lax implementation of security systems for making online payments and submitting sensitive information, were primary reasons for our delay in embracing e-commerce.

Fast-forward 7 years, and this is clearly no longer the case. South Africans are online more than ever, and they’re buying everything from socks and CDs to concert tickets and overseas holidays (and they aren't skimping either). Let’s take a look at some of the latest e-commerce stats:

  • In 2010, R2 billion was spent online in South Africa and this was expected to reach R2.8 billion in 2011
  • There were nearly 5.3 million users online in South Africa in 2011 and 17% of them made online purchases
  • Retail growth in 2010 for stores was 9%, while online retail growth was an impressive 30%
  • 46% of online retailers stated they were ‘very profitable’, while 19% said they broke even and only 1% reported a small loss

So without much further ado, let’s take a look at some of the primary benefits of an e-commerce site:

  • You have the opportunity to reach a much wider market.
    With a physical store, especially if it’s a flagship store, your audience is restricted to that area alone, or within the area that you’re able to service. With e-commerce, you have the ability to sell to people living in other countries or just down the road.
  • It’s cost effective.
    Sure, the initial outlay for an incredible e-commerce site may be costly, but generally these costs are recovered within a few months. Also, consider the fact that your overheads will be minimal, and will mainly include routine website maintenance and updating content. What you won’t be paying for is a physical store and all the costs that go with it. Marketing costs are also lowered, because internet marketing tasks, such as PPC advertising, cost less than print advertising and are highly targeted.
  • (Your) products/services are easier to source.
    Have you ever had to drive around from store to store trying to track down a particular product? E-commerce essentially eliminates that. If you run an online tool store, for instance, you’ll have products listed categorically. All users need to do is type the product into the search feature and they’ll find out immediately if you sell it or not.
  • You get to provide all the information you want about your products.
    That’s right. Each of your products (or services, for that matter) can have full details of what it is, how it works, user reviews, etc. Much better than explaining product or service specs to in-store customers over and over again, right?
  • Brand awareness and customer engagement are not just reserved for bricks and mortar stores; they follow through to e-commerce sites too.

Online, you have dozens of platforms from which to engage your clients and potential clients. In addition to this, if you have a solid SEO strategy in place, you can expect to rank highly in search engine searches, which means customers are able to find you faster. For example, if they type ‘rare coin dealers’ into a search engine and your site comes up, and they navigate through your site to find what they’re looking for, they’re going to be satisfied. It’s also likely that they’ll return at some stage, or tell their friends about your website, either in person or online. This way you get the benefit of direct word-of-mouth and e-word-of-mouth advertising.

In closing, it’s worth drawing attention to the fact that we are in no way implying that traditional retail doesn’t have a future. That’s far from true; traditional retail enjoys massive volumes, and even more so in parts of the world where e-commerce is inaccessible to many people. Rather, we’re starting to see a successful amalgamation of physical retail with e-commerce, which effectively targets both sides of a brand's audience: those who enjoy the physical in-store experience, and those who aren’t interested, or don’t have time to go out and make purchases. Either way, we can expect to see much more of this hybrid approach to retail.