Category Archives: eCommerce South Africa
Mobile, online-offline convergence and simpler payment methods paint the landscape for where e-commerce is headed in South Africa, according to Luke McKend, country director for Google South Africa. Speaking at the uAfrica eCommerce Conference in Sandton on Wednesday (11 September 2013), McKend presented the challenges of doing e-commerce in South Africa, and painted a picture of what the market will look like in the next few years, according to trends seen by Google. According to McKend, the key challenge faced by online stores in South Africa is to deliver on the promise of e-commerce – to gain loyal customers through meeting expectations and provide a stable, trustworthy and secure service. Looking at the South African e-commerce market, McKend highlighted that the country is projected to see 29.8 million Internet users by 2016, with a 25% increase in online spend anticipated this year. Notably, McKend noted that, in 2014, South Africa is expected to have 80% smartphone penetration as mobile operators such as Vodacom and MTN are working to bring “sophisticated” devices to more people at a more affordable price. “The web is mobile,” McKend said, stating that most people’s first interaction with the Internet in South Africa will be through a mobile phone – and Google SA stats reveal that there are more mobile searches than desktop searches in South Africa. The future of e-commerce Quoting data from World Wide Worx, uAfrica head Andy Higgins said that, in 2013, South Africans are projected to spend as much as R4.2 billion online – excluding air tickets – representing an estimated 25% growth in the market. According to McKend, the “store of the future” will a convergence between physical retail and online – where customers don’t discern between buying something online or offline, but view purchases and transactions as “I’m buying this from a store.” The gap between what is considered “commerce” and what is considered “e-commerce” is going to narrow, McKend said, and technology is going to be core to the transition. To this end, McKend said that all stores will need to make sure all their products are available online – if not for purchase, at least for review. “We need to make sure that all the inventory we actually have lives in the cloud,” he said, adding that users need to be able to see everything retailers have, online. Users who don’t see products online, assume it’s not available [...]
The South African market is adopting ecommerce at a rapid pace. With more and more consumers becoming comfortable with using online platforms to make purchases, It presents opportunities for businesses and brands especially in an environment of slowing retail sales, as reported by Statistics SA on Wednesday. According to Claude Hanan, Co-founder of design curated website Citymob.co.za, “Ecommerce in SA is quite a defensive industry at the moment. Even when broader macro trends point to muted consumer spending, the number of shoppers becoming online shoppers is growing faster than the decline in basket sizes as a result of falling disposable income.” We are still very far away from being in a position where all those who WANT to shop online, can and do shop online. If one takes a deeper look, South Africa has 3% ecommerce penetration (being the % of total population who shop online). This equates to about 1.5m people. This figure is expected to double by 2016 to 6% or 3 million people, but Hanan feels it will more than double. “ There are 13.2m internet users in SA currently. However, a measure we prefer looking at – which has been identified by Arthur Goldstuck, is the number of internet users who have been online for LONGER than a 5 year period. Currently this sits at 4.6m.” But a point Hanan is eager to make is that no-one is comparing the 1.5m currently active online shoppers to the 4.6m potential user base. If you do, you see that only 32% of people, who are ready to shop online, actually are shopping. Why is this? There are a number of reasons but top contributors are awareness, trust and quality of offering. The market is growing very quickly. Again, according to research by World Wide Worx, online retail is growing at 25-35% per year and is expected to reach R4.2bn in 2013. “It’s not a case of local online companies getting better in the next few years, they are getting better right now. It’s happening today. More users are online, shipping is faster, product offerings are better, client service is smoother. So the tailwinds in the industry are legitimate and we are benefiting massively from that and are hugely excited about the growth of ecommerce in SA over the next 5 years.” Citymob took advantage of the opportunity and have seen phenomenal growth across the board. “All KPI’s are [...]
This year saw a rise in online spending across the globe, with USA reporting a 20% increase in online shopping on Cyber Monday as shoppers snubbed physical retail stores in favour of missing out on the holiday queues. Locally we are coming to the party, with recent report showing that 9.5% of South Africans are planning on doing their festive shopping online in 2013. Picking up on this trend, Style36.co.za and 5rooms.com, two of SA’s leading online fashion and furniture retailers, proved that SA is indeed embracing online shopping by breaking their sales records in one day with the launch of their Cyber Monday campaign. Offering customer the opportunity to shop top local and international brands at up to 80% off for 24 hours only, the campaign not only showed that South Africans are shopping online but that they are willing to spend large amounts of money when given the right opportunity. Style36, SA’s ultimate online style destination, set a record number of sales, receiving over 5000 orders in just 24 hours. For the first time ever, the site received over 100 000 visits in one day, a clear indication that South Africans are curious and excited about the prospect of shopping online. Online furniture, homeware and lighting store, 5rooms, went on to record their biggest sale day since inception in 2012 with close to 1000 orders being placed in the 24 hours provided. In total South African consumers spent over R3 million shopping on these two online stores alone. “We are very pleased with the results of our first ever Cyber Monday campaign and judging from the results we achieved, South Africans from all over the country are embracing online shopping. The most positive aspect of the campaign are that we not only managed to give our already loyal shoppers what they want that being incredible deals but also increased our customer base by over 60% in just 24 hours, introducing an entirely new audience to online shopping,” says Remo Giovanni Abbondandolo, Head of Marketing at Style36 and 5Rooms. Cyber Monday in SA proved to be one of the biggest online events of year a promising indication as to where e-commerce is headed in this country. If companies like Style36 and 5rooms continue to set the standard locally, South Africa is sure to hit the big time on the world stage in coming years. This article was contributed to [...]
E-COMMERCE is going through an innovative phase of development as more individuals have access to the internet and more retailers take their businesses online. Internet users in South Africa reached 13.2-million in 2012, up from 11.2-million in 2011, according to World Wide Worx. “We are forecasting an increase of 2.7-million new internet users this year, 2-million of whom will be mobile users,” says MD Arthur Goldstuck. This figure does not include new tablet users who have typically had previous internet access using another type of device and are therefore included in the previous figures. The main online activity of mobile internet users is sending and receiving e-mails, followed by browsing and surfing for leisure, followed by online research, says Mr Goldstuck. He says in 2012 South Africa’s online shoppers spent a total of R3.38bn on purchasing traditional retail products — not including air tickets, accommodation and travel — reflecting a growth of 30% over 2011. “We are expecting a further 25% growth in online retail this year,” he adds. Mr Goldstuck says dominant new online shopping trends tend to emerge every two years. He says four or so years ago saw the rise of websites allowing rand purchases of products aggregated from overseas sites, particularly electronics goods, and two years ago group buying websites started making a major impact on the market. “More recently we are seeing a new category of high fashion websites such as Zando and City Mob emerge, which aggregate name brand clothing.” These online retailers differentiate themselves with low-cost delivery and the ability to return goods, whereby the courier waits while the customer tries on the clothing. Liz Hillock, head of marketing at Kalahari.com, says the highest conversion rate of internet users from browsing to buying is among tablet users. “Last December we sold three-and-a-half times more tablets than laptops, and these users have a higher propensity to shop online.” As a result, online retailers and other e-commerce oriented businesses are designing their websites to cater for tablets and other mobile devices, she says. She says the recently released 2013 annual Kalahari.com Mobile and Tablet Survey shows that 92% of online shoppers own a smartphone compared to 78% last year, and 68% have purchased items online using their phone. The survey also shows that 47% of respondents own a tablet compared to 34% last year. Ms Hillock says more experienced online shoppers are buying an increasingly [...]
Online shopping sites that offer an easy, convenient shopping experience attract loyal customers Tweet: #MasterCard Online Shopping survey reveals online retail trends in South Africa http://bit.ly/122NEFR Cape Town, South Africa – 27 June 2013 – The latest MasterCard Online Shopping Survey has revealed that a substantial 91% of South Africans who shop online are highly satisfied with their overall experience, a 4% increase from the 87% who said the same thing in the 2012 survey. A further indication of South Africans’ positive sentiment for online shopping is that 76% of respondents return to an online shopping site that they have used before and 74% expressed that they felt it was both easy and convenient to make online purchases. These figures show slight increases – 2% and 1% respectively – when compared to the previous survey’s results. Despite this positive sentiment towards shopping online, the number of South Africans accessing the Internet to shop online is down 4% from the previous survey, with 54% of respondents saying that they usually use the Internet for shopping. “While online shopping continues to be a regular Internet activity for more than half of South Africans who are actively online, there is a slight shift downwards in their online purchasing behaviour, which could be attributed to the slowdown recorded in the economy during the survey period,” says Philip Panaino, Division President, MasterCard, South Africa. “This is supported by The South African Reserve Bank noting in its fourth quarter review of 2012 that retail activity was disappointing as consumer spending was negatively affected by a pickup in inflation.” “There has been a rapid rise in the number of South Africans classified as active Internet users – those who fairly recently acquired regular access to the Internet – which means we are seeing a larger-than-ever base of users who have never shopped online before,” says Arthur Goldstuck, Managing Director of World Wide Worx. “These users add to South Africa’s population of more experienced Internet users – those who have been online for five years or more – which has increased significantly from under four million in 2012 to around 4.6 million this year. This means that even as the amount spent online keeps rising steadily – at more than 30% a year according to our data – the proportion of users shopping online is declining, which ties in with the decline MasterCard has recorded of active online [...]
In early 2013, the Boston Consulting Group published ‘Ten Things to Know About African Consumers’. Seven out of ten of these continent-wide trends are likely to boost online retail growth and B2C e-commerce in Africa. I’ve listed the brief below. Optimism about the Future – African’s, with the exception of Northern African nations are exceptionally positive about future economic developments. By and large, Africans are very entrepreneurial. Partially due to a lack of established career paths and an inadequate formal education structure, ambitious individuals tend towards creating new opportunities. Techno- Freaks – There is wild craze for all things digital and the speed and scale the internet and technology uptake is driving major change and economic opportunities. From football clubs to soft drinks, the African continent loves the international brand. This is a big selling point for international players with a serious brand appeal of value add. Massive discrepancies are often found in official market data and real markets, which include parallel and informal sector sales, can often be much higher and reflect greater opportunities. Quality sells. Despite higher prices, a better value-add and long-term investment coupled with higher prices can conquer market share. Look at the Toyota brand, but there are many other examples to back this up. Successful, modern retail outlets, greater varieties and cheaper products drive the cognizant African consumer. The evolving retail preferences on the continent imply that if online retail can offer convenience as well as opportunities for cost-saving, then it has a bright future in the coming years. While online retail has a ways to go, more affluent markets in Africa are ready for the practice and as the rapidly growing economies begin to stabilize it is expected that a massive wave of online e-commerce will follow. Africa may be lagging in online stores and e-commerce, but with growing wealth and broadband availability a massive spike is expected of the 3-7 year period with growth of between 20-25% in the next 3 years leading up to it. For more see: www.bcgperspectives.com and for Online Retail Solutions & e-Commerce Author: Jonathan D. Novotny is an e-commerce evangelist and co-founder of the CloudShop/CloudSales online retail franchise.
The South African market is going to be in a competitive space as larger players and international retailers and service providers continue to penetrate the market and seek to absorb sectors currently dominated by SMEs. How can the average business ensure sustainable growth in 2014? One word: Online. Everything, and I mean everything, is moving online. Plumbers see the need to promote themselves online and so do seedling growers, vehicle manufacturers and paper mills. Accounts, orders, communication, storage and recruiting are more efficient online and the list goes on and on. Every year, a percentage of the established markets of both offline advertising and traditional retail are siphoned off by the internet. This is what is growing global e-Commerce at over 20% per annum. While the e-market is growing organically, it’s mainly hijacking existing offline revenues. Despite this, it might seem “safer” to adopt a “wait and see” approach to investments, but it is clear that those pursuing disruptive innovation through leveraging customer relations and efficiencies online are reaping the results. (Just check out some of the market share and brand equity FNB acquired by being a first mover in innovative online consumer engagement.) 2013 is the year to prepare one’s online partners (retail, strategy and media) and draft a serious online investment strategy. I’m not talking about putting up GoogleAds, but seriously considering ways to undercut the competition and offer more value to your clients in 2014 through online efficiencies, portals, information and retail channels. If you’re not, someone else will be. Taking the Pain While some have been burned by over-investing in a limited online market, the majority of innovative internet-launched initiatives are reaping a great ROI. But to avoid painful expenditures and misdirection of online marketing, the business should keep in mind: 1. The Internet = NOT Magic. What doesn’t work, sell or attract offline, probably won’t work, sell or attract online. 2. Is it needed? Is the facility of service being offered online really needed? a. How much time does it same the client? b. How easy is it for the client to do? (If it takes more than 5 seconds for them to figure out the flow, dump the idea.) c. How many current clients do you have that would benefit from this? Don’t expect to triple market-share just because of an online gadget. 3. Is there a way to Test the Market with your approach, [...]
It seems as if the whole world has recognized the need for responsive sites and nowhere should that acceptance be more evident than in emerging markets such as South Africa, where most of the new online data consumers (and the next generation of online retail consumers) first got online via a mobile device. Yet established players are hesitant to switch systems and seem to hoping all those pesky small devices are just going to go away. The good news is: “They’re not!” According to both predictions and sales reports, tablets are not the future, tablets are the NOW. T-Commerce (online sales made via tablet devices) grew by almost 100% in 2012 and I’m curious how 2013 will shape up. While I think Microsoft may have been a bit early with an immersive, mobile-oriented OS, it is plain to see that if the largest software developer is creating flagship products targeting mobile devices, than perhaps we should too. The mobile trend is here to stay and it is only a matter of time until the till becomes the tablet. Romero, of bitesizebschool.com says: ”Mobile/social/wireless communication is what people are buying, not desktops. Laptops, tablets, phones and peripherals will work better together in the months to come. Cables are and will continue to disappear.” Author: Jonathan Novotny Jonathan Novotny is Author, Speaker and Social Entrepreneur in Africa. He currently heads up www.changetheworld.org.za and is co-founder of www.cloudsales.co.za .
The Yuppiechef success story has been well documented, but until now, no one has been able to explain exactly how the kitchen utensils e-tailer has managed to evoke the type of fervent support that has catapulted the Cape Town company well into cult territory. Yes, cult. Exhibit A: a Pinterest page dedicated to customers who have submitted photos of their pets in Yuppiechef packaging. The running theory is that Yuppiechef has mastered the art of customer service. It’s a strong hypothesis. Yuppiechef boasts 99% positive feedback — read worship — on customer service watchdog Hellopeter, as well as a consistent stream of accolades awarded on the basis of irreproachable customer service. Consider then that 60% of Yuppiechef purchases are from repeat customers and it seems an open and shut case — Yuppiechef is indeed a “customer service business who happens to sell kitchen tools”. Yes, perhaps being extra courteous and efficiently dealing with customer queries can explain the 300% year on year revenue Yuppiechef recorded in 2011. In 2012, Yuppiechef added to its staff of 16, reaching 54 by the start of 2013 — perhaps free delivery of its select product range, strong social media engagement and the handwritten thank you cards that accompany every purchase grew Yuppiechef’s revenue enough to sustain 38 new employees. Perhaps. A reliable source revealed to Ventureburn that Yuppiechef is currently recording gross annual revenue of R80-million with a 20-30% profit margin. When we approached the stealthy kitchen utensils e-tailer for comment, Yuppiechef marketing director and part owner, Paul Galatis, opted to keep the company’s figures private. Yuppiechef is not at liberty to discuss its financials, but then again, the company’s culture doesn’t particularly lend itself to that kind of thing anyway. “We don’t celebrate or measure our financial results. Instead we celebrate the constant stream of positive customer feedback that customers send to us and post online and we share it on a daily basis within our team,” Galatis told Ventureburn. We remain intrigued to have not received a flat out denial of the rumour, however. In 2011 Galatis revealed that Yuppiechef was “verging on profitability.” Given this knowledge, Yuppiechef’s confirmed 100% year on year growth in 2012 and the reliability of our source, we started exploring an alternative theory for the company’s apparent surge. Yuppiechef is a quiet overnight success, six years in the making. Today, the company boasts social numbers such as [...]
The best online shopping stores: When it comes to tech startups, ecommerce is at once an easy and tricky space to play in. It’s easy, because to get going all you really need is something to sell, a good design and the right plugins. It’s tricky because people are trusting you with their money. You have to make sure you have the right security, and can guarantee delivery. It’s also not easy to stand out in a market like South Africa where broadband penetration remains comparatively low, forcing you to compete for place in a crowded space. There are a few that have done so well. They sell a wide variety of products, but generally occupy specific niches. The South African ecommerce awards recognises these sites on an annual basis. This year’s winners included sites owned by mega-corporations, while others are more independent. 1. Best ecommerce store — YuppieChef This online store claims it is “dedicated to making the world’s best kitchen tools available to South Africans”. According to the awards’ judging panel: The Yuppiechef website is a pleasure to use with fast, accurate search results and crisp clear images. The site is informative and the ordering process is streamlined and efficient. The delivery experience is incredible, ensuring satisfied customers. Customer service is responsive and attentive whether it’s over the phone, email or online chat. We loved the mobile site. 2. Best ecommerce services website — Bidorbuy The online auction site is an ecommerce stalwart in South Africa, having been around since 1999. In early 2011, it bought group-buying site UbuntuDeal “We enjoyed the fast and secure online shopping, an awesome mobile site and timely responses to customer queries,” said the judging panel. 3. Best group-buying site — Groupon SA The company might not be faring so well internationally, but the SA franchise maintains that it’s in it for the long-haul. With the like of Naspers’ Dealify and Avusa’s Zappon out of the game, it definitely had less competition for this award than it would have a year ago. “The website is easy to navigate with a wide range of deals of which the ordering process was extremely quick and straightforward,” say the judges. 4. Best classifieds website — Property 24 The online classifieds game is seriously hotting up, around the world as well as in South Africa. Some think they might even be the thing that finally kills off newspapers. According to the judges, the Naspers-owned [...]