There is no doubt that the pandemic provided explosive growth for e-commerce. With national lockdowns imposed, consumers worldwide turned to online shopping for convenience and accessibility.
This e-commerce trend has only continued to accelerate to the point where even grocery shopping is now commonly done from the palm of our hands and in the comfort of our homes.
According to FNB Merchant Services, the e-commerce market in South Africa has snowballed and is currently predicted to generate just under R200-billion per annum.
Yet, the e-commerce landscape in South Africa is in for another significant boost as Amazon launches in South Africa in early 2023. The expansion of Amazon into South Africa may cause potential competition to current local retail giant, Takealot, which not all players believe is a bad thing.
Speaking to how this expansion will impact the e-commerce space in South Africa, Mishaan Ratan, chief marketing officer at on-demand subscriptions platform Rentoza, says: “Amazon expanding to South Africa is great for the e-commerce space but even more beneficial for consumers. It will increase competition which forces everyone to rethink their business and how they deliver value online. In this process, consumers benefit from better value, pricing, and benefits from companies.”
This e-commerce revolution has led to the diversification of payment methods to accommodate shifting consumer needs and financial constraints. From digital wallets to buy-now-pay-later payment options, consumers are no longer limited to credit cards alone. In South Africa, many retailers have begun to allow customers to use credit options like Mobicred or zero-interest payment plans through options like Payflex, which Ratan says are rising in popularity at an incredibly rapid rate.
While these payment options are increasing accessibility, he warns the downsides come in the form of penalty fees and interest rates. For example, More¬Tyme has a late-payment penalty fee of R65 and charges 2% interest if payments are missed. Other providers may even charge more than R100 for every failed attempt to debit your account.
For a growing number of products, Ratan believes there is a more sensible payment option that has yet to breach the mainstream. “The subscription model offers consumers the convenience of selecting anything from the latest iPhone and modern air conditioners to your favourite gaming device, paying for it monthly, and unsubscribing whenever you feel like it.”
He believes subscription is the new horizon for consumer behavior in terms of accessibility and acquisition of a products like mobile phones, laptops, household appliances and more.
Ratan says the e-commerce space and subscription models will continue to grow. “We can expect to see the e-commerce space expand even more. I believe it will make up about 25% of the total retail value in the future. In the next five years, you will see a lot of new subscription models appearing both in service and product sectors,” he concludes.