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South African retail groups are investing heavily in their online presences as they wake up to the prospect of rising international competition as well as the growing pool of Internet-connected users ready to shop online.

This is according to Kevin Meltzer, business development executive of EOH Consology, who says the country’s e-commerce market has reached a tipping point, with millions of people who have been online for a number of years and who are now ready to use digital channels for a wider range of interactions and transactions.

“As models from the likes of World Wide Worx show, once users have been online for five years or more, they become ready to transact more on digital platforms,” says Meltzer. “We’re now at a point where we have enough of these mature online users in South Africa to justify heavy investment in the online channel by the country’s retailers.”

Meltzer says that 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, he adds. 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.

“That said, retailers still face a number of challenges,” says Meltzer.

“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 movies, e-books, music and software – 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, says Meltzer. 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,” Meltzer adds. “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, Meltzer says.

“All retail is online and online is now mobile,” he adds. “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.”

Meltzer says that the key for South African companies is to find some sort of local value that they can offer over competitors from abroad. For example, they should leverage branch infrastructure to offer support or look at offering turnaround times that no one shipping from overseas could meet.

They should also do a better job of harvesting and analysing data to offer more personalised service to clients.

“It’s pleasing to see the likes of Edcon, Mr Price and Woolworths get really serious about e-commerce,” says Meltzer. “The trends are clear: customers want the convenience of digital shopping and will embrace those retailers who can offer them a world-class online experience. Those that don’t begin to revamp their digital presence will be left behind by the market.”