Digital retail in SA ready for liftoff

South Africa has been a slow starter in the booming online retail world but reports by those in the know say that SA is on the verge of closing the gap fast.
Many of the roadblocks to e-commerce have fallen by the wayside over the past few years. New payment mechanisms such as mobile money and debit cards mean that online shopping is no longer only for those who qualify for credit cards. What’s more, consumers are better educated and informed about how to transact online securely, which has increased their confidence in digital commerce, says Kevin Metzner on Gadget.co.za. Of course, rising quality and falling prices of mobile and fixed-line broadband have also helped to drive the growth of online shopping in South Africa.
“The biggest impediment to online retail in SA has been low Internet penetration. This is changing fast. In the five years to 2012 the number of ADSL broadband lines jumped from 520000 to 875000 and, more importantly, mobile broadband users soared from 794000 to 6,42m, says Arthur Goldstuck. MD of World Wide Worx.
It takes about five years before a new Internet user ventures into online shopping, says Goldstuck. “New Internet users added over the past five years will soon start kicking in in a big way,” he says. In particular, he sees rising smartphone use having a “significant positive impact on online shopping”.
“Online retail sales in SA have grown at 30%/year over the past five years. It looks impressive but still leaves the channel making up at most 1% of total retail sales, way off levels of 13% in the UK, 7% in China and 6% in the US.” Reports Stafford Thomas in the Financial mail. SA’s low Internet access has forced it to become the world leader in the mobile space and some say that this is where they expect to see the greatest developments locally.
The challenge of the new breed of online retailer is taken seriously by Mr Price which, in July 2012, launched a conventional and mobile online store offering its full apparel range. The same year Mr Price became the most searched retail brand on Google SA. Pick n Pay is also taking the online channel seriously, as is Woolworths who have spent a lot of money in creating a world-class online platform.
That said, retailers still face a number of challenges. One of the immediate issues many of them must confront is how they will compete with multinational players such as Amazon. Those that sell goods that could be turned into virtual products (like books) are especially threatened by international competition.
Even companies who fancy themselves immune to international competition will find themselves benchmarked against the best practices and customer experiences of the top global players. Customers will expect flexible return policies, excellent self-care backed up by responsive customer support, and rich value-added features such as recommendation engines.
Most local e-commerce players will need to make considerable investment into their user interfaces and their digital channel features and functionality to compare. The tricky part is getting the right balance between cost and customer experience. Can local retailers afford the generous returns policies of their international counterparts, for example?”
Another challenge South African retailers must address is how they will map best practices to the mobile-first and mobile-only reality of many of their customers. All retail is online and online is now mobile.
We need to be thinking about the opportunities of location-aware functionality, augmented reality, and other mobile features that add new dimensions to online transactions. Those that don’t begin to revamp their digital presence will be left behind by the market.

Online retail in SA prepares for take-off by Stafford Thomas, 31 October 2013

SA digital retail at tipping point 23 Oct 2013 by Kevin Meltzer