E-com­merce

Finweek English Edition - - FEATURE -

For many South African businesses, whether they are f ledgl ing start-ups, SMMEs or es­tab­lished cor­po­rate jug­ger­nauts, the grow­ing op­por­tu­nity pre­sented by e-com­merce – in its var­i­ous forms – is be­com­ing hard to ig­nore.

E-com­merce (elec­tronic com­merce), the term most com­monly used to de­scribe the buy­ing and sell­ing of goods and ser­vices on­line, is al­ready firmly en­trenched in de­vel­oped mar­kets such as the US where it re­port­edly ac­counts for around 8% of to­tal re­tail sales (and is ex­pected to out­pace sales growth at bricks-and­mor­tar stores over the next five years).

In South Africa, the con­cept is still fairly new – the to­tal por­tion of re­tail sales is hov­er­ing around 2% – and take-up has been limited mostly due to the rel­a­tively low rate of In­ter­net pen­e­tra­tion (when com­pared to de­vel­oped mar­kets) and a lin­ger­ing re­luc­tance among con­sumers to ven­ture on­line.

How­ever, with the price of broad­band steadily com­ing down, and more South Africans gain­ing ac­cess to smart­phones (the coun­try is pro­jected to reach 80% smart­phone pen­e­tra­tion this year), shop­ping on­line is fast be­com­ing more at­trac­tive – and fea­si­ble – for many South Africans. ROCKET-FU­ELLED GROWTH Ac­cord­ing to Arthur Gold­stuck, MD of IT con­sul­tancy World Wide Worx, South Africans spent R4.4bn on­line in 2013 – ex­clud­ing air tick­ets – rep­re­sent­ing an es­ti­mated 25% growth in the lo­cal e-com­merce mar­ket.

“2013 was a pow­er­ful year in terms of growth, with the in­creas­ing num­ber of ex­pe­ri­enced In­ter­net users be­ing a ma­jor fac­tor,” ex­plains Gold­stuck. “In ad­di­tion, there are many more in­no­va­tive on­line re­tail­ers mak­ing their move in the SA mar­ket.”

He says that fash­ion re­tail­ers are so far prov­ing to be the most in­no­va­tive and for­ward think­ing in their dig­i­tal strate­gies, by “push­ing the en­ve­lope in terms of busi­ness mod­els and mar­ket­ing”. Gold­stuck points to sev­eral on­line fash­ion re­tail­ers such as Zando, Su­per­bal­ist and Spree, that have “taken up the slack that’s been left by the ma­jor cloth­ing re­tail­ers such as Ed­con and Stuttafords”.

On­line fash­ion re­tailer Zando is un­doubt­edly one of the lo­cal stand­outs, at­tract­ing more than 1.5m South Africans to its web­site ev­ery month, ac­cord­ing to man­ag­ing di­rec­tor Sascah Breuss. Zando, which l aunched i n Jan­uary 2012 with fund­ing from Ger- many-based in­cu­ba­tor Rocket In­ter­net, has quickly made its name as an on­line fash­ion and footwear des­ti­na­tion. DIF­FER­ENT PLAY­ING FIELD There are key lessons to be learned f rom Zando’s ap­proach to mak­ing the grade on­line. For one, as Breuss em­pha­sised i n an i nter view with Fin­week, businesses have to un­der­stand up­front that bricks-and-mor­tar re­tail is “com­pletely dif­fer­ent” to e-com­merce.

“Zando’s core com­pe­ten­cies are lo­gis­tics and IT/se­cu­rity… from the very be­gin­ning, we made it a pri­or­ity to be re­ally strong in these ar­eas and to con­trol the sup­ply chain from end to end,” ex­plains Breuss. “This is your only chance to get the cus­tomer ex­pe­ri­ence right, and 98.5% of our parcels ar­rive on or ahead of time.”

He adds: “Com­pa­nies t end to un­der­es­ti­mate the dif­fer­ence be­tween bricks-and-mor­tar re­tail and e-com­merce, and it can be very hard for [tra­di­tional re­tail­ers] to adapt… there are only one or two core com­pe­ten­cies that re­ally over­lap.”

Both t ypes of re­tail­ers need to be

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