Online shopping growing in popularity in SA, but lags global pace

In 2016, online retail in South Africa passed the one percent mark of total retail, according to research from World Wide Worx. While this number may seem uninspiring, it was actually a significant milestone and reflected the continuous growth of e-commerce in the country.

In fact, since the turn of the century, South African e-commerce has seen growth of over 20% every year. In 2015, South Africa recorded growth of 26%, taking online retail to R7.5 billion, and it was expected in 2016 to surpass R9 billion. The accelerated rate of internet penetration in the country has contributed significantly to the increase in e-commerce, as has mobile usage. One online retailer, Spree, saw a 72% increase in mobile traffic and a 93% increase in orders placed via mobile year-on-year (Oct – Dec period).

Still lagging behind international markets

Despite these impressive stats, the market still lags behind its international counterparts. In the US, e-commerce accounts for 13% of overall retail and in China the figure sits at 15%.

There are no shortage of players in the South African e-commerce space, ranging from multi-faceted online stores such as Takealot.com to niche offerings like online fashion retailer Superbalist.com. The 2017 Euromonitor International research report, Internet Retailing in South Africa, cited the below as the top 12 online shops in South Africa, based on market share:

Takealot is the clear market leader, with a reported over one million shoppers browsing millions of products across 21 departments, including lifestyle essentials such as laptops, cellphones and kitchen appliances, books and beauty products, a huge range of toys and baby products, and big-ticket items like TVs.

Asked why it has such a competitive advantage, Julie-Anne Walsh, chief marketing officer for the group, said, “It is our mission to be the most-customer centric shopping destination in South Africa. Convenience is key and customers have the option to shop anytime, from anywhere, via the Takealot.com app and to choose from a variety of payment methods. Free delivery is offered for the first order, and delivery spans anywhere in South Africa, thanks to an in-house logistics network, the Takealot Delivery Team (formerly Mr D Courier).”

Vincent Hoogduijn, CEO of Media24 Ecommerce, comments, “There is only a small number of serious online players, but as the growth still comes from a small base, it tends to be crowded. With the strong e-commerce growth expectations, the market will probably open up for additional players. The expected growth will also be driven by traditional brick and mortar retailers taking a strong omnichannel approach – making them part of the pool of online players.”

The story of Spree’s numbers

Like Takealot, Spree has also seen a rise in the number of consumers visiting its platform. The retailer recorded a 58% increase in the number of total orders and a 41% rise in total traffic to the site (both Y/Y Oct – Dec period).

“Given that Spree is a pure fashion player, our relentless focus on the customer experience has made our platform one of the most convenient and aspirational shopping destination in our market. Innovation is an integral important part of that customer experience and we’re constantly releasing new functionality in that space. Only recently, Spree launched visual search, allowing visitors to find similar products or styles based on an uploaded image,” explains Hoogduijn.

Gifting and floral service

One of the most popular online retailers for gifts and purchases for loved ones is NetFlorist. Ryan Bacher, managing director of the group, says the company goes beyond just providing a product or service.

“Our customers aren’t merely having a gift delivered, they’ve tasked us with the responsibility of delivering their well wishes and conveying their emotions. For this reason, it’s imperative that we deliver the correct gift to the correct person at the correct time,” says Bacher.

This is one of the ways NetFlorist sets itself apart from other online retailers. NetFlorist also prides itself on same day delivery with Bacher stressing, “The need for a gift can arise in the moment. A close friend may have been rushed to hospital, a loved one may have unexpectedly passed away or an anniversary may have been forgotten”.

An in-house delivery team makes this easier for NetFlorist as most other e-commerce companies outsource their deliveries. “Having control over our logistics team makes managing our cold chain processes so much easier, allowing us to deliver the best quality gifts and flowers”, says Bacher.

With trends moving more towards personal and more thoughtful gifting, NetFlorist’s wide range of gifts that can be personalised to include your loved ones name and/or a special message has seen growth of over 300% since the range went live two years ago. The range includes but isn’t limited to personalised socks, wallets, purses, wine crates, babygrows, jewellery, stationery and so much more.

NetFlorist receives around 2 000 orders per day, but like most online retailers, these increase dramatically on and around special days. For example, on Valentine’s Day NetFlorist receives 15 times as many orders just on the day.

Key trends for 2018

People buying data, rather than airtime, so they can shop online is a trend that has been seen by the industry. Mobile will continue to be a driver of this space during 2018 and adaptive configurations of mobile sites will be key for players. Diversifying services on offer is another recommendation in order to stand out in an increasingly crowded market.

Cybersecurity concerns persist

While the future is bright for e-commerce in South Africa, there are still obstacles that need to be overcome. Many consumers worry about cybercrime and are reluctant to provide their banking information to online retailers. NetFlorist got around this problem by offering various payment options that wouldn’t jeopardise the security of their customers. This includes, EFTs, using your Edgars account card and even your loyalty points from eBucks or Discovery Miles.

Ensuring they have enough servers to cope with traffic volumes is another challenge for online retailers. Site crashes on Black Friday last year illustrated that many were ill prepared for the number of shoppers that came flooding to the sites. On the flip side, the running costs of more servers need to be managed.

Problems don’t just exist in the digital world for these retailers. More incidences of van hijackings, where purchased items on their way to customers are stolen, are being reported. The future looks bright for e-commerce in South Africa, with advances in technology and customer convenience boosting this industry. It will be interesting to see what creative developments arise during the course of the year and what the next big innovation in this space will be.

Michael Bratt is a multimedia journalist at Wag the Dog Publishers, publishers of The Media Online and The Media. Follow him on Twitter @MichaelBratt8