The number of Web users in South Africa is growing at a steady pace and, quite significantly, the number of users who have been online for five years or longer is growing too – making a solid case for businesses in this country to begin seriously considering an e-commerce strategy to remain current in a changing market.
This is according to Pete Flynn, MD of White Wall Web, who says that the growth in the number of users who understand and trust the Internet equates to a target market that is happy to transact online.
"South Africa is still around four years behind the rest of the world in terms of online transacting and we’ll probably never completely close this gap but we will continue to follow quite steadily,” he says. “E-commerce is an inevitable progression for South African businesses especially when you consider online giant, Amazon.com, which records more online turnover than our two main local competitors, Pick ‘n Pay and Shoprite, combined.”
Andrew Smith, co-founder of Live Alchemy, says that while the rest of the world’s traditional retailers often supplement their brick and mortar business quite successfully online, South African businesses are seemingly reticent to follow suit.
He says Telkom and the lack of Internet access have taken the blame for slow e-commerce uptake for far too long.
“If you walked around a shopping centre today you’d find that almost everyone there has access to high-speed, always-on Internet, be it at home or work,” he says. “The reality of the situation is that traditional retailers simply don’t know where to start with their online efforts. They think ‘e-commerce’ and see ‘high-tech’ and become intimidated by the unknown.”
Flynn agrees, saying e-commerce is a cloudy concept for many South African business owners and says the perception is that it is expensive, difficult to get right and only for the technically-savvy younger generation.
“These perceptions are slowly changing due, in point, to the number of examples of successful companies operating in this field today, like Kalahari and Yuppie Chef," he says.
Live Alchemy's Smith says: “Big name retailer, Game, has yet to dip its toes in the water and, while Woolworths and Pick n Pay have made treads online, they don’t offer a national footprint.
“This has opened the door for specialist online brands like Yuppie Chef, Kalahari, eDreams and the like and, while turnover is still tiny compared to their offline counterparts, business is growing at a rate of 30% a year and it’s going to be difficult for latecomers to compete with them.”
Smith says that buying online requires a big leap of faith for South African consumers but that once trust has been solidified, it will be near impossible for late entry competitors to win existing online consumers over.
White Wall Web’s Flynn says the Web has grown up, users are more experienced, standards have begun to take shape and Web-based solutions for eCommerce are more affordable – all of which has laid the groundwork making the online market an increasingly attractive.
E-commerce isn’t necessarily for everyone, Flynn warns. “Like any marketing and distribution method, some implementations and conditions around the implementation are better than others, which directly affects the bottom line.
“But e-commerce does offer several advantages over traditional, including not having to stock products before selling them, not needing expensive retail space and being able to showcase products to an international market as opposed to just a market local to specific stores.”