Four things South African retailers need to do better online

For a long time, people thought about online retailing in South Africa in terms of questions like “Is it a feasible model for the country?” But that kind of thinking is several years out of date. Online retailing is a real and growing trend, and the question now is, how do online retailers keep the growth coming?

There is plenty of evidence that online retailing is gaining traction in South Africa. A recent survey of 600 South African mobile phone users by marketing firm Jana found that two-thirds of South Africans reported shopping online at least some of the time (see chart). The MasterCard Worldwide Online Shopping Survey reported that the proportion of South Africans internet users shopping online grew to 58% in 2012, up from 53% in 2010 and 44% in 2009. A similar survey of internet users by the Digital Media and Marketing Association (DMMA) found that 52% of respondents reported shopping online, and that people who had spent at least 5 years using the internet were 50% more likely to do so, which is important because it means that the number of online shoppers will grow as more South African internet users spend longer online.

Although more than half of internet users shop online, online sales currently account for less than 1% of retail sales in South Africa, but they’re growing very rapidly – according to supermarket.co.za, online retail is growing at about 30% a year, compared to around 6% for traditional brick-and-mortar retailing. Indeed, Takealot.com predicts that online retailing in SA, currently worth about R2,5bn, could grow to account for 3-6% of total retail sales over the next few years, making the industry worth between R30bn and R60bn. The opportunity is thus significant.

Given that online retailing is a big opportunity, what can retailers do to boost their online sales? Looking over the research, the main issue is increasing internet penetration and growing the pool of shoppers, which isn’t something retailers can do – government needs to address this urgently if SA is going to grow economically. There are, however, four things online retailers can do to grow sales.

1. Make mobile work

Many, many South Africans access the internet over their mobile phones – according to the DMMA, the figure is 39% – and this group is set to grow as smartphone usage spreads. Designing a good mobile retail site is a challenge (Zando’s smartphone mobile site is pretty good), but getting this right can dramatically increase the potential pool of internet shoppers in South Africa, and boost sales.

2. Better delivery times

According to Jana, 38% of South Africans report that the biggest obstacle to online shopping is delivery times. This is in large part a reflection on the parlous state of South Africa’s road and postal infrastructure, and beyond the control of online retailers. However, they can use various tactics to improve the situation. In particular, they can use the data they collect about their clients to identify where most of their shoppers are, and work to locate warehouses closer to them (since most shoppers are probably in Joburg and Cape Town this should be easy enough – Amazon in the UK offers same day delivery to its London shoppers). Parcel tracking systems, smarter delivery vehicles (like the little Takealot three wheelers), and better inventory management could all help to speed up delivery, and encourage online shoppers.

3. Emphasise online security

South Africans are still anxious about the security of their online information. Happily, South Africa has a sophisticated banking system and there are plenty of online security tools that can be used to reassure shoppers that their data are safe. Perhaps the most important thing is education – sites should explain their security procedures, guarantee refunds if data are compromised, and use social media to improve their reputations by allowing shoppers to share their stories with friends and show that online shopping is safe.

4. Make the experience easy and intuitive

Globally, the secret to e-retail success has been making sites easy to navigate and intuitive to use. For clothing retailers, providing detail on sizing is crucial, while all sites should include customer reviews that allow people to share impressions of products and build confidence in the online experience. Recommendation systems (Amazon has patented its clever recommendation system which can certainly read me like a book) based on the large amounts of data online retailers can collect can help personalise the shopping experience, and give users a sense of relationship with the online retailer. Good integration with social networking sites helps here. Luckily for South African retailers, there are many successful sites around the world that they can look to for inspiration on best practice.

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Posted on May 17, 2013, in Other. Bookmark the permalink. Leave a comment.

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