With more South African shoppers expected to use online channels this Black Friday (25 November), e-tailers with no load-shedding contingency plans in place may be the biggest losers this year.
This was the sentiment shared by panellists during a roundtable discussion hosted by communications platform provider Infobip in Johannesburg yesterday.
Despite tough economic conditions, such as surging inflation and the rising cost of living forcing consumers to tighten their belts, South African e-tailers are preparing to cash in on the busiest shopping period of the year for retail sales – Black Friday weekend.
However, experts warn inflationary pressures and much more informed and savvy consumers will likely force online retailers to take a more pragmatic approach to Black Friday, as market uncertainty and lower disposable income are negatively impacting consumer spending.
This means retailers will have to fight tooth and nail for every sale this year, especially in a crowded and competitive online marketplace. This will force companies to evaluate their offers more critically and adopt strategies that will enable them to stand out from competitors, they noted.
They also highlighted the potential pitfalls that could sabotage unprepared e-tailers’ plans, such as load-shedding and the high cost of fuel – factors which should never compromise customer experience during this peak trading season, they warned.
Kabelo Ngwane, head of customer success at Infobip, explained: “Load-shedding becomes a much bigger problem year by year. And if we are going to have rolling blackouts on Black Friday, you can imagine the disruptions across online platforms, and the delivery services that rely on apps.
“And it's not only e-commerce but businesses across the board which don't have generators that will be affected, so it does bring a huge problem, which requires a national solution.”
Many retailers have introduced extended periods to run their discounts for the entire month of what is dubbed ‘Black November’.
Despite the tough economic climate, more South Africans are expected to take to online shopping channels this year than on previous Black Friday periods, as a result of a significant increase in the number of customers adopting and embracing digital platforms, noted Ngwane.
Last year, figures released by South African banks showed a significant uptick in digital transactions during the busiest shopping period of the year.
Last mile delivery chaos
According to figures released by the Bureau of Market Research on behalf of Capital Connect, load-shedding could cost both online and brick-and-mortar retailers in SA over R5.4 billion in lost Black Friday revenue.
Oreditse Molebaloa, Infobip regional sales engineering manager for Africa, pointed out many local e-tailers host most of their infrastructure on cloud computing platforms, which are often supported by large data centres that have alternative power sources. However, the smaller businesses and app-based courier services that rely on connectivity may be the hardest hit.
“The biggest problem that will come out of load-shedding from an e-commerce perspective is the last mile delivery. The last mile fulfilment services can be disrupted by signal issues during load-shedding, in the same way as e-hailing drivers are disrupted when diving through an area with limited connectivity, due to load-shedding,” explained Molebaloa.
Load-shedding makes it impossible, or difficult, to use courier service apps in any area experiencing scheduled power outages, as it leads to network outages and intermittent internet connectivity, due to cellphone towers being stripped of their power supply. This leaves little time to charge the backup batteries installed in the base stations.
In terms of the impact of the high cost of petrol on last mile deliveries, Jeremy Osborne, regional GTM manager at Infobip, pointed out retailers could consider deploying the services of affordable third-party informal traders, instead of running this service in-house.
Other options are to use affordable courier services, such as PEP’s Paxi store-to-store parcel delivery service, which allows online shoppers to collect their purchases from PEP stores.
“The secret is brands should integrate almost like a downstream in operations and look more into the informal trading market for delivery services. It may be easier for informal couriers to do what they are good at – and that’s the last mile distribution.
Brands must focus on the quality of customer service they offer, so they can attract investors, and an opportunity that will allow the business to growth further – to one day be able to run an efficient internal delivery department cost-efficiently,” noted Osborne.
He also advised businesses that have the budget to consider becoming greener and introduce electric modes of transport, in order to save on fuel costs in the long-term.
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