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