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E-commerce in South Africa: a snapshot in August 2020

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A look at the current state of e-commerce in South Africa, including the challenges and opportunities in the face of a pandemic.

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E-commerce in South Africa: a snapshot in August 2020

  1. 1. E-COMMERCE IN SOUTH AFRICA TRENDS REPORT | AUGUST 2020 Running an online store requires a strategic communications approach that is considerate of a customer’s accessibility, wants and needs, and finding digital and social opportunities to create meaningful engagement, while selling a product or service.
  2. 2. OVERVIEW OF THE CURRENT E-COMMERCE LANDSCAPE 20% 50%1.4% SA's online retail accounts for just 1.4% of total retail sales. Rise in online spending compared to the previous year. Online retail in USA and China of total retail. “South African e-commerce market is an untapped billion-dollar industry, and this is an opportunity for the Government to create a policy and regulatory environment that enables a localised, innovative, inclusive, e-commerce model that uses existing logistics systems to drive the industry.” - Alison Gillward, ICT Africa.
  3. 3. This is set to consistently rise as more and more bargain-seekers are heading online to buy technical consumer goods such as cell phones, electronics, and home appliances. HIGH MOBILE PENETRATION SECURE PAYMENT OPTIONS CHANGING SPENDING HABITS GROWTH IS STRONG THANKS TO Claim they made an online purchase after seeing the product in-store. 48% 103.5  million  mobile connections in South Africa
  4. 4. Credit card 41% Bank transfer 20% E-wallet 17% Cash 11% Other 11% 18 - 24 years 25 - 34 years 35 -44 years 45 - 54 years 55 - 65 years 40% 30% 20% 10% 0% 17% South Africa's preferred online retail payment methods 2020 Users by age 2020 12% Female market Male market As of January 2020, it was found that 12% of the female and 17% of the male market, aged 15 years and above, had made online transactions. These transactions include mobile money accounts, online purchases or bill payment and others. Being aware of your audience demographic and spending methods play a large role in crafting your online communication strategy. 
  5. 5. WHO IS CONNECTED? Internet users in South Africa There are 36.54 million internet users in South Africa  The number of internet users in South Africa increased by 1.1 million (+3.1%) between 2019 and 2020 Internet penetration 62%  Social media users in South Africa 22 million social media users in South Africa  Users increased by 3.5 million (+19%) between April 2019 and January 2020
  6. 6. 43% INCREASED IN SHOPPING APPS USAGE Global reattributions of shopping app increased by 43% month-on-month in April 2020.* *Where a user has returned to an app due to a retargeting campaign
  7. 7. CHALLENGES FOR E-COMMERCE IN SOUTH AFRICA There is a digital divide and people not having access to credit cards to make online purchases. Warrick Kernes, founder of Insaka eCommerce Academy, said the “increased access to smartphones and alternative payment options like Scode from PayFast allow a larger portion of the population to shop online and then pay in-store at Checkers, Shoprite or hundreds of other retailers”. Lack of e-commerce tools and understanding for small business owners. Security being a major issue in SA where people are concerned to purchase online. 58% the fear of missing a delivery or waiting around all day high delivery cost lack of appropriate address of people who have not shopped online agree on having: 63% South Africans said they prefer to make purchases at a mall. * 76% South Africans visit a mall at least once a week.* *Before the Covid-19 pandemic
  8. 8. THE IMPACT OF COVID-19 ON THE LANDSCAPE “E-commerce in the country has been accelerated by 3-5 years, which will bring South Africa closer to international levels.” - OneCart CEO, Lynton Peters "Since the start of the lockdown period we’ve seen a 40% increase in page views per user and a 15% increase in basket sizes,” says Laurian Venter, director of online retailer OneDayOnly. “I think that is the nature of Covid-19, you do not have a choice; it’s either you adapt or you die.” - General manager of marketing retail and procurement for the company, Batya Bricker. Global WebIndex’s ninth release of its coronavirus research has revealed that nearly half of global consumers do not expect to resume shopping in brick-and-mortar shops for ‘some time’ or ‘a long time’ once lockdowns eases.
  9. 9. CONSUMER DEMAND HAS CHANGED "In economic downturns, consumer demand for 'nice-to-have' products goes down as buyers focus on their more basic needs. Health, wellness and safety – products that fit into the lower parts of Maslow’s Hierarchy of Needs – become the top priority." - Lucas DiPietrantonio, CEO of Darkroom With Millennials, 'Generation Greta' and the 'Coronials' holding future-buying power, businesses have no choice but to align their products accordingly. "While the pandemic has certainly been humbling and thought-provoking in our role and responsibility as humans, there has been an increased awareness and demand for environmentally sound products pre-Covid." - Michaela Gabriel 50% Projected unemployment rate post Covid-19. Groceries Alcohol Electronics Clothing & shoes Household supplies Home entertainment Type of goods that will become normal as online purchases: As people move down the hierachy of needs, their buying behaviour will significantly change.
  10. 10. CHANGE IN SENTIMENT "Things will never be the same,“ "There will be no more normal," "We shouldn't want to go back to the way things were." With fear and uncertainty created by the pandemic for everything to change in order to survive (physically, mentally, economically), and taking into consideration South Africans tend to be more conservative – driven by culture and tradition – the impact of Covid-19 was so great it managed to push people outside of their comfort zone to find a resolution. As a result, the sentiment towards online shopping has significantly changed as it is now embraced as the answer to not only continue commerce safely, but to keep the economy going.
  11. 11. SO, WHAT DOES THIS MEAN FOR MY BUSINESS? There's no need to reinvent the wheel. It’s about readjusting budgets for new resources, while still putting the client first in all solutions. Now is the time to explore new avenues with the help from digital & communication experts and together use your business/brand to lead the way for the rest. “What we will ultimately need to accompany the years of thought that have been put into the economic story of us is for someone to take the lead and not fear making the mistakes that naturally come with it. There's opportunity in crisis.” - Ron Derby is the editor of Fin24.
  12. 12. WHAT CUSTOMERS WANT Your money is safely transferred, your identity and details are secured, your package is safely distributed. Always-on communication driven by ‘live tracking’ function and detailed delivery information – who is delivering your goods, when, where, exactly. A clear message and guarantee of security. Physical money currently acts as a vector for the virus’ spread whereas technology makes payments possible and safe. Governments and startups across Africa are implementing measures to shift payment transactions toward mobile money and away from cash, as recommended by the World Health Organisation. An increase in artificial intelligence (AI) can mean an increase in drone deliveries and automation of warehouse processes, as well as the monitoring of emerging trends that human analysis would miss. Reduced store time Quick turnaround times Cashless payments
  13. 13. The single most critical factor in the success of online retail activities is customer service. #1 CUSTOMER SERVICE 75% of respondents to the Global WebIndex’ survey regarded customer service as highly significant. 23% said it is somewhat important. Other major factors include security, privacy, and delivery.
  14. 14. Pick n Pay, launched its Collect Direct email ordering service which lets customers email their shopping list to their nearest participating store for collection. Other South African companies like Zulzi, Yebo Fresh, Netflorist, andhave also adapted to serve the growing online FMCG market in South Africa. OneCart offers a concierge shopping service where customers can choose products from their favourite stores, and select their delivery date and time. Woolworths launched a drive-through Click and Collect option, allowing customers to order online then drive to a designated parking spot where Woolworths staff conveniently place the shopping straight into the boot. Exclusive Books said even if shops are open, there are customers who are reluctant to go out to shop because the virus is still lurking somewhere. People can now order books over the phone, on their website and through UberEats. SA BUSINESSES WHO ARE GETTING IT RIGHT All of them putting the customer first.
  15. 15. SOCIAL PLATFORMS ARE ADAPTING TO HELP BUSINESSES Facebook and Instagram are adding 'Shops' to let businesses sell products through the social network, in addition to the existing Marketplace where individuals can trade among each other. This excludes buying ad space for product and service catalogues on Facebook, Instagram and Pinterest. Selling via your social media pages is a great way to be closer to your customer with fast response time, and they can increase your share of voice with the share and reaction functions.
  16. 16. With a targeted approach, your new venture into the world of e-commerce can be effectively communicated via your social media pages, directly with the audience you want in your virtual store. Using a combination of paid ads, organic, and online shop fronts (catalogues listed on Facebook, Instagram, and Pinterest) you can create a holistic approach to boosting sales and building a list of loyal customers. Rewarding customers is easier with digital coupons and offerings such as free delivery, etc. Keeping a real store is still a plus as you can combine the shopping and marketing experience. Take it further with QR code scans in-store to unlock rewards while building valuable client lists. There may even be a rise in popup stores in the future to satisfy the need to see a product in real life but have it paid and organise delivery via an online space. This can be combined with launch events (virtual or not) and compact digital campaigns to drive feet in stores. LET SOCIAL MEDIA BE A KEY DRIVER FOR SUCCESS
  17. 17. THE SOLUTION TO INFOBESITY  IS HYPER-PERSONALISATION There is a major shift from infobesity (being bombarded with too much information, promotions, and news from all kinds of sources) to hyper-personalisation. Audience and potential customers are liking, following, and engaging with brands that share their values and that check as many boxes as possible when it comes to online shopping and experience. Targeting campaigns can drive the right message to the right audience. Now, more than ever, people are spending time to follow and unfollow brands that meet their needs as well as contribute to their online/offline personas. (and too many choices) I think subscribe, therefore I am.
  18. 18. MOVING FORWARD Mobile commerce is shaping the future of e-commerce in South Africa. Therefore, mobile optimisation and a great mobile buying experience are a must-have for all growth-minded online sellers. Localised & targeted marketing, as well as SEO campaigns will drive traffic. Transitioning or extending your business into e-commerce is the perfect opportunity to revive brand messaging, remind audience of the main offering and should be accompanied with a holistic (digital and traditional) campaign to reach your existing and new audience. Let's have a virtual coffee and discuss your new brand strategy: fleishmanhillard.co.za +271-1-548-2033
  19. 19. Mail & Guardian: E-commerce will assist economy World Economic Forum: These charts show how COVID-19 has changed consumer spending around the world MyBroadband: The coronavirus has pushed South African ecommerce forward many years Pargo: The rise of South African e-commerce. Statista: South Africa preferred online retail payment methods 2020 Datareportal: Digital South Africa 2020 Accenture: Rethinking the ecommerce opportunity in South Africa Daily Maverick: E-commerce restrictions put a question mark over government’s commitment to getting the economy back on track News 24: Ron Derby: Economic crisis an opportunity for fearless leadership News 24: Adriaan Basson: The revolution inside and hope's enduring ambition News 24: Isaah Mhlanga: Blue sky thinking needed to re-imagine and rebuild the economy Entrepreneur: What COVID-19 Means for Ecommerce Startups Ecoconsultancy: Stats roundup: coronavirus impact on marketing, ecommerce & advertising WorldWideIndex: Online Retail in South Africa 2019 Bizcommunity: E-commerce AC19: How Covid-19 is speeding up digital transformation in SA Business Insider: Facebook is adding 'Shops' to let businesses sell products through the social network REFERENCES

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