South Africa: What's Holding Back E-Commerce in South Africa?

Most of the debate about slow online shopping uptake and e-commerce development in South Africa concentrates on customers. But the main glitches may be on the supply side.

e-Commerce is a giant industry. The 2019 e-Commerce Report from World Wide Worx reported in November 2018 that total revenue from e-commerce sales in South Africa will have reached R14 billion. According to market research company Statista South Africa will have as many as 21,5-million online shoppers in 2019, that's almost 40% of the population. But even though online shopping is beginning to go mainstream in South Africa, online retailers still make up a rather small proportion of overall retail.

We hear the same old debates all the time. Customers take a long time to feel okay regarding shopping online, South Africans like to touch and feel prior to purchasing, and so on. But in place of concentrating on what we think is wrong with consumers, perhaps we in the industry should concentrate on how we can serve them in a better way instead.

There are three factors holding back the development of e-commerce in South Africa: Dealers have a restricted comprehension of how e-commerce works, there are not adequate payment selections and the distribution process is incompetent.

Regarding the first problem, merchants have been slow to come online, and smaller businesses haven't always understood how to advertise themselves successfully. Many minor online sellers have come and gone. That is to be anticipated in a new industry, but we should learn the lessons. Customers are distrustful of poorly designed websites, so traders require spending time and money on specialized design facilities. This is one instance where extra cash on the frills does mean more money at the tills.

There have, of course, been some remarkable achievements like South African kitchen and homeware retailer YuppieChef, as well as flower delivery service company NetFlorist. When our huge, well-known merchants learn to be as nimble, effective and service-oriented as these online-only dealers, things can actually begin to take off.

The second problem is the lack of suitable and dependable methods to pay. In the US, customers have an estimate of three to six credit cards each. In South Africa, it is less than two per household, and a huge percentage of customers don't meet the requirements for credit cards. That is not going to alter anytime soon, so we need to be creative in providing customers other safe ways to pay.

A lot of new payment techniques have been developed with a lot of elaboration but have demonstrated to be undependable or short-lived. This has injured customer sureness in the entire industry.

Barriers to growth

According to tech analyst and commentator Arthur Goldstuck, mall culture is restricting the development of online shopping and because of this, some merchants still have the funds to disregard e-commerce networks.

At present, the retail market is extensively regarded as over-shopped if latest figures by property research company Urban Studies are anything to go by. According to property research company Urban Studies, South Africa has more than 2 000 shopping centres covering 23m square meters -- equivalent to 163 Sandton City malls.

Two other chief troubles still constraining the infiltration of online shopping is a restricted entree to the Internet and the price of broadband, states Vuyo Mpako, the head of digital networks and e-commerce at Standard Bank. Even though access to fibre networks is growing in homes across the nation, Mpako says the high price of internet access limits the broader spread of online shopping across most customer income groups.

Mpako says other aspects holding back e-commerce is the lack of trust in online portals and the belief that you need a credit card to purchase online. "The voyage for online buying is not direct. We are observing a lot of clients look and browse online but don't make the genuine sales online, but rather elect to go offline to make the purchases," he says.

Frequently customers do their research online, but then go to a physical shop to make the sale -- there are no delivery charges, and they can walk away with their article there and then. Effective e-commerce companies provide quick, dependable and low-cost delivery to make up for the loss of the in-person experience.

Service levels also count: It is important to let clients know when their packages have dispatched, give them a waybill number and allow them to track their delivery. Even though your clients may never meet you face to face they must be acknowledged and comforted during the course of the online purchasing process.

There are a lot of keen buyers. As sellers, we will succeed when we make the online shopping experience dependable, easy to get to and safe for everyone.

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