Continued investment in e-commerce infrastructure will help accelerate growth of the industry in SA, says David Kusel, head of product at PayFast.
Kusel was speaking yesterday at the PayFast eCommerce Virtual Summit, hosted by the Insaka eCommerce Academy, and highlighted some of the ingredients needed to further grow the e-commerce industry in SA.
Like in the rest of the world, the COVID-19 crisis lit a fire under the local e-commerce space, leading online retailers to reap the benefits of this major shift in shopping trends.
A World Wide Worx study revealed SA’s e-commerce sales reached a tipping point in 2020, growing by 66% from 2018.
Last year’s Mastercard Economics Institute: 2022 Economic Outlook found South African consumers bought up to 30% more online in 2021, compared to the year before, with a significant surge in e-commerce subscriptions.
Unpacking whether SA has what it takes to match China’s e-commerce growth − which currently sees more than 50% of its retail sales taking place online − Kusel said the country must resolve the challenges around e-commerce, including infrastructure shortcomings.
“Infrastructure is the backbone for any commerce. For example, the Takealot Group’s marketplace has grown hugely…and I hope that they will continue to invest, along with many of the other retailers.
“Checkers Sixty60 is another prime example where a huge brick-and-mortar retailer has embraced online and helped bring the e-commerce industry to South Africans.”
The PayFast exec told the virtual audience that online retailers need to get creative in building their businesses to meet the needs of consumers, adding that solving challenges around delivery and logistics in the informal economy is necessary for local e-commerce growth.
“We need to get creative on how we solve this,” he advised. “There’s some great new technology…and other ideas out there that are starting to resolve this. We can’t unlock more than 50-60% of our economy to e-commerce unless we can solve this.
“E-commerce is here to stay in South Africa. If we can solve some of the challenges…I think we can get a lot closer to that 50% that China’s been able to achieve.”
At the same event, Toluse Akinlabi, retail account manager at Google, shared insights into SA’s online shopping trends.
Akinlabi indicated local shoppers have settled into a new normal and there’s no going back to the way they shopped before.
“Globally, more people than ever are shopping online, with 61% more shoppers buying online in the holiday period in 2021 versus 2019. With more people shopping online, differentiation is becoming key.
“Shoppers are using more online information to enhance their in-store experience, and touchpoints that would’ve normally been seen as awareness, engagement or education channels are becoming purchase channels as well. There’s a real convergence in terms of the shopping journey that we’ve never seen before.”
Referencing the findings of Google’s Smart Consumer Report, Akinlabi said in the wake of the COVID-19 period, online remains the preferred way of shopping in SA.
More than two-thirds of shoppers shopped online in 2021, a huge jump from 2020, she noted.
“The habits formed during the initial stages of the pandemic are here to stay. In fact, 87% of shoppers believe they’ll stick with their changed purchase behaviour going forward.”
Akinlabi indicated the report shows e-commerce is “consistently” on the rise in SA, even for fast-moving consumer goods.
“We’re seeing a huge increase in people buying online in the consumer electronics space, home and garden, and fashion. Food and groceries has seen the largest jump since 2020, with five times more people doing their shopping online versus instore.”
She further stated the main reasons people choose online shopping methods is for convenience and home delivery. Another reason is that it’s easier to make a choice and find a specific product.
Akinlabi pointed out that people are buying more on their smartphones, increasing mobile shopping. This trend is particularly seen in the food and groceries, and home and garden categories.
“Mobile shopping on apps is really high and people are used to buying these new categories on their phone.
“While mobile sites are still a key purchase channel, consumer preference is increasingly shifting more towards mobile apps. We’re seeing the shift towards app-purchases a little bit more so than mobile site purchases.”
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