Let's be honest. E-commerce in South Africa, in 2014, is still in its infancy. Compared to the rest of the world, we aren't even close yet. So what's the holdup? What is preventing e-commerce from exploding the way that it has in the rest of the world? Having done some consumer research on this in 2014, it was enlightening how amongst the many thousands of consumers polled, the concerns were very much the same. In no particular order, they were:
- Delivery charges are prohibitive. Consumers would rather go into a store than spend on delivery.
- Consumers are under the impression that if they don't have a credit card, they can't shop online (even though most stores offer at least EFT as an alternative).
- Consumers are (still) worried about security, specifically related to credit card fraud.
- Consumers are worried about size and fit (if clothing is sold) and are not sure about how they would go about returning items.
- Where site content is thin, consumers feel unsure about purchasing and would rather go in-store to get advice.
These perceptions, whether true or false, have hindered e-commerce growth in South Africa.
So is it all doom and gloom? No! It doesn't take a rocket scientist to figure out ways to address each of these issues. Maybe part of the problem is that through the relative fast growth in terms of number of new e-commerce sites, some very poor ones have been launched. These low budget sites usually make use of an off the shelf product, with an off the shelf theme, with little thought given to content and UX (user experience) - with owners being very surprised when the sales don't go through the roof after day one.
Conversely, there are many in South Africa doing it right. To sound like a stuck record, everyone's favourite e-commerce site (Yuppiechef) probably does this best of all. They might not have the financial clout of a Takealot (given its 100 Million USD investment from Tiger Global), but with regards to UX and addressing the issues mentioned above, they are leagues ahead of their competitors. If you go through the above list, you will see how Yuppiechef (knowingly or unknowingly) address each of those issues.
So where does it leave the rest of us? (And with us, I refer to retailers looking to enter the e-commerce space or looking to grow their e-commerce offering*).
It's very much not doom and gloom. Retailers have a few strong competitive advantages that boutique e-commerce stores (Spree, Takealot, Yuppiechef, etc.) do not have (or have to work hard to get).
- Retailers can rely on their brand to give a sense of legitimacy and security (assuming the site has been well designed and built).
- Retailers can rely on their existing backend infrastructure to facilitate e-commerce (from sourcing and managing stock, warehousing, invoicing).
- Retailers can create visibility around their e-commerce offering via the marketing that they already do and via instore placement of advertising material.
- E-commerce is still fairly cost effective and does not require large spend in the same way that other expansions might.
One of the key points for retailers in 2014 would be to give e-commerce the attention it deserves.
While e-commerce might not have exploded for most retailers yet, sales figures are on the rise, almost every month. Consumers are becoming more comfortable with e-commerce and while it has not exploded yet, it surely will, given that South Africa inevitably does follow the technology trends of the rest of the world (albeit a few years later).
Further advice would be to make sure that you conceptualise and design a world class site that is NOT cookie cutter, but very much unique to you and aligned to your brand. Focus on the back office to make sure that orders arrive timeously and communicate with your consumers at each step of the order fulfilment process (and yes, a hand written card with some sweets as per Yuppiechef does also help).
Via e-commerce, South African retailers are uniquely positioned to grow earnings and expand their reach in a very cost effective way. While this hasn’t happened yet in 2014, we can surely not be too far off. Now is the time to get going.
* On a side note, this article is mainly aimed at retailers and not the "man in the street". My opinion (which I'm sure is controversial) is that your average man in the street will struggle very much to launch a successful e-commerce store. Getting a beautiful site built is just half the battle won. There is so much more to it. From requiring marketing budget to compete with the Naspers' and Takealots of the world in order to build your brand, to having to pay fairly hefty courier fees, developing content and keeping product and stock fresh, e-commerce is more complex than most people give it credit for. I have personally seen too many "small shops" fail. Being the e-commerce partners for established retailers is also our bread & butter, so please forgive me for any sense of exclusion that might be felt.