E-commerce boom in South Africa predicted for 2013

SOUTH Africa will see a boom in e-commerce next year, according to Simon Leps, CEO of digital solutions provider Fontera Digital Works.

“We are at a very exciting time for e-commerce in South Africa. A lot of the big brands have started to take notice and have realised they could be left behind. Locally, we have plans for about 10-15 e-commerce sites to be launched next year for our clients,” Mr Leps says.

By global standards, the e-commerce platform in South Africa is small, but as the timidness of local shoppers fades, a growing number of time-poor and techno-savvy consumers are turning to the internet for retail therapy and bargain hunting.

Research by World Wide Worx, commissioned by Google, indicates that online retail is becoming increasingly popular in South Africa, growing at a rate of 30% a year.

Online shoppers continue to increase locally, with 58% of the country’s 8.5-million internet users shopping online, and with the industry consensus aiming for 40% growth this year the highest rate in almost a decade.

E-commerce start-up Zando recently landed an investment in the “three-digit million-rand” band from the asset management division of the global investment powerhouse JPMorgan. Zando is an online fashion store that sells local and international brands.

“Attracting such a reputable international investor to support our future growth shows commitment and confidence in our business. This investment will assist the business by supporting its vision and all of its operations,” Manuel Koser, joint MD and co-founder of Zando, says.

In order to gain market share from competitors Foschini‚ Woolworths and Truworths, fashion retailer Mr Price in July launched its online store‚ which allows shoppers to have their purchases delivered to their street address‚ post office or store for R35.

“An online selling capability will enable Mr Price to further strengthen relationships with our target customers‚ who are tech-savvy and require a convenient and secure way to get their fashion‚” Mr Price CEO Stuart Bird says.

Mr Price Home and Mr Price Sport are expected to follow with online stores next year.

Woolworths CEO Ian Moir says the group’s online store is going well. “We’re seeing significant growth, but from a small base. We’ve invested a lot in our digital strategy, we’ve replatformed the site; it has our entire catalogue on now.… We’ve invested in better solutions in terms of picking and packing from stores, the distribution to the customers — all of that’s got better and we’re certainly seeing nice growth,” Mr Moir says.

He says that faster and cheaper broadband will be the tipping point for e-commerce in South Africa.

“We are the biggest online retailer in the market place, but everybody is small and it won’t take off until broadband becomes cheaper and faster, and really I think that’s about four years off.

“When this happens and customers become more secure about buying online, e-commerce will take off,” he says.

The integration of a retailer’s offline and online presence is often referred to as a “bricks and clicks” or “clicks and mortar” business model. It has been easier for traditional retailers with extensive logistics and supply chains to implement this type of model than for start-up companies.

One of South Africa’s oldest online retailers, Kalahari.com, in September added new product categories to its offering, including baby, homeware, pets, outdoor, tools and appliances. Liz Hillock, head of marketing at Kalahari.com, says the company has seen “strong growth” in products such as high-value cameras and appliances.

At the recent South African Council of Shopping Centres annual congress in Durban, Daniel Levine‚ executive director of New York-based trends consultancy The Avant-Guide Institute, said the future of retail around the world‚ including in South Africa‚ was inextricably connected to technology and the internet.

Mr Levine said South African retailers would need to integrate their online operations and brick-and-mortar stores to attract customers and increase sales.

“Integrating web and bricks and mortar allows people to shop online, but pick up their goods in a retail location. It’s also very important for returns‚ to have that real place where people can bring goods back — especially in South Africa‚ where a lot of people are still not really feeling comfortable about paying online. It also eliminates shipping fees‚ while fulfilling that idea of an instant gratification‚” he said.

Edcon’s CNA division has also joined the online fray. About 3.9-million Edgars and Jet account holders are able to purchase music, books, games and movies from www.cna.co.za. The CNA website has about 10,000 e-books, with the focus on new book releases, Edcon says. Customers can also return products to a store and do not have to worry about the fuss of shipping back products.

By:  ZEENAT MOORAD of BusinessDay