The boom in e-commerce, at the height of the Covid-19 pandemic, was unprecedented. The International Trade Administration found that online sales in South Africa increased by almost 70% between 2019 and 2020, equating to over R30-billion.
According to Deloitte’s most recent Digital Commerce Acceleration report, ecommerce penetration in South Africa in 2020 was around 37%. A year later, 70% of survey respondents indicated that they make an online purchase at least once a month.
Based on findings such as this, forecasters predict that the e-commerce market in South Africa will grow by 44%, reaching 32-million users by 2024. While e-commerce currently makes up a relatively small portion (3%) of retail sales in SA, these growth forecasts could place the country on similar footing to international counterparts such the US’s e-commerce market, which represents 13% of all retail sales, a figure that has doubled in the past five years.
Leon Jacobs, CIO at RCS, observes these developments keenly. After reviewing key growth indicators and consumer data on the evolving behaviour of South African consumers, Jacobs agrees with the constituent of market analysts who see online shopping as a permanent, rapidly growing segment of the country’s retail sector.
Consumers going, thinking and shopping mobile
As industries prepare for the ramp up to Black Friday and the festive season, Jacobs asserts that leading e-commerce players adopt a mobile-first mindset. “The evidence is clear – local consumers are using their smartphones to shop. If retailers don’t invest time and resources into ensuring that their platforms are optimised for and responsive to mobile devices, they will be missing out on a massive opportunity,” Jacobs asserts.
Smartphone penetration in South Africa has seen one of the fastest growth rates in Africa, preceded only by Nigeria. GSMA Intelligence data put smartphone penetration at almost 180% of the South African population. And according to the latest GeoPoll study, 45% of South Africans browse the internet using their mobile phones for more than four hours a day. South Africa also has the highest share in the mobile commerce market when compared to the continent’s top five markets.
The rise of mobile banking, commerce and the convenience brought about by social media shopping has seen a parallel rise in mobile payment technology, with physical wallets and bank cards being replaced by digital payment solutions on smartphones. The Future of Retail Banking in South Africa (2022) report revealed that 86% of South Africans preferred to conduct day-to-day banking digitally. This has fueled a noticeable technology race – a competition amongst the largest industry players to launch innovative payment solutions that elevate their presence in the market alongside several emerging Fintech disruptors.
Innovation as a driver of business expansion
For RCS, these market developments piqued interest in what the future of mobile payments has to offer the evolving South African consumer base and was a powerful motivator to “take a more multi-dimensional approach to serving customers,” as Jacobs explains. This company-wide call to diversify its service offering led to this year’s acquisition of pioneering online credit provider, Mobicred.
This intuitive move to a more omni-channel retail landscape, underpinned by changing consumer demands for a wider level of choice, has provided RCS with an effective means by which to increase its footprint in the retail sector. In tandem with this expansion, RCS partnered with Superbalist, which is arguably one of the country’s largest and most ubiquitous fashion e-tailers.
“With competition in the sector set to increase dramatically over the next few years, we will undoubtedly see a number of customers experience innovations coming to the fore. Superbalist’s first-to-market launch of Fit Finder – an advanced sizing technology that helps shoppers to find fashion items in their right size – is a great example of how machine learning is improving online customer service and is making e-commerce more accessible, practical and ‘fail proof’ for consumers. These are exciting times for e-commerce in South Africa – and we are thrilled to have partnered with one of the country’s leaders in online retail,” explains Jacobs.
Further propelling the growth of e-commerce is the proliferation of online credit in the country. Innovators like Mobicred are making significant inroads into making the e-commerce space in South Africa more accessible and inclusive. In doing so, they are changing the face of credit by making it more affordable, more flexible and perhaps most importantly, more convenient.
“We know from experience that many South Africans were initially wary of mobile payment technology and online payment gateways due to the prevalence and steadily increasing rate of cybercrime. We also noted a surge in contactless payment solutions in response to the pandemic, with FNB reporting that its retail and commercial clients processed in excess of R4,2-billion in contactless payments in 2021, compared to just R640-million in 2020.
“While these contactless payment solutions solved the need of ‘no touch’ transactions, they raised pressing questions about their level of protection for consumers. However, rapid developments to intensify online security has made the market a safer and more secure space. More South Africans are realising this and spreading the word,” explains Jacobs.
Online shoppers calling the shots
Expanding on the future of e-commerce in South Africa, Jacobs concludes that industry stakeholders and retailers need to prioritise customer experience. As he asserts, “Online customer service can serve as a powerful point of differentiation and the cornerstone of a retailer’s unique selling proposition.
With the move into the digital space, South Africans expect more – more convenience, faster response times, more efficient customer assistance and efficiency in the systems that facilitate returns and refunds.”