How brands can benefit from South Africa’s e-commerce boom

The beauty of e-commerce is that it levels the playing field and gives anyone with the right product the opportunity to build a business that can outperform the big retailers, simply because they have the right product and the agility to open the tap and let it run. I am constantly surprised by little known brands that cross our path only to discover they are driving seven figure revenues monthly – it astounds and excites me in equal measure because this is the opportunity that e-commerce presents. 

On the other hand, however, some of the larger retailers find it harder to compete as more players have entered the race, giving shoppers more choice – and choice challenges loyalty, as consumers can shop around for prices more easily online. Often larger retailers struggle to be agile and slow turnaround times paired with lengthy decision-making processes often means they miss opportunities. This is where smaller businesses can really make gains on their bigger competitors.  

It is also interesting to note that looking back over the past twelve months there isn’t really a single vertical in our business – covering homeware, tech, sportswear, apparel, fashion accessories, beauty, FMCG and travel – that is underperforming. This is despite a downturn in the economy and a return to in-store shopping post-pandemic. In fact, almost every retailer in our portfolio has seen consistently strong year-on-year growth, with 2022 proving to be a strong year with many of them delivering 25-35%+ year-on-year revenue lifts.

Regardless of the size of a brand, one thing is certain: if brands are serious about building an e-commerce business, a robust paid media strategy that includes all digital channels is not negotiable. Anyone who expects success from e-commerce without any significant investment in paid media might just as well build their next retail store in a field that has no road access. There is a misconception that online requires a much smaller level of investment, when really what you put in will absolutely determine what you get out. 

During 2023 we expect to see a pull back on TV advertising investment with a shift towards digital video, with YouTube emerging as a clear winner for the new year. Social media needs to remain a top priority for retailers who understand that they need to go where their customers are, and I anticipate an increased investment in TikTok as we progress through 2023.

For brands to succeed online they also need to make sure they are dealing with the reality of e-commerce in South Africa and not succumbing to myths about online consumers in the country. First off, we need to dispel the myth that e-commerce is only for the top end of the shopper base. An analysis of the shopper profile of many of our bigger retailers along with recent Black Friday online shopping behaviour proves that online is very much a part of every South African’s shopping journey. This also helps disprove the myth that cash is king. On the contrary, consumers have shown a dramatic shift towards cashless shopping with an increase in card not present usage.

What about heading into the future – what steps do retailers need to take to maximise their e-commerce wins? As we go into 2023, the retailers that are going to win the day will be those who have taken time to segment their customer base, who understand the value of personalisation and who are delivering the right content to the right consumer. A single ‘one-stop-shop’ message served to all is no longer sufficient and consumers are looking for brands to better understand their needs and not clutter their inboxes with irrelevant and untimely messaging. 

We can also expect to see more use of a one click checkout – a bit like the Amazon Prime solution – making transactions super quick and easy. Alongside that, there is likely to be an increase in subscription services, particularly across monthly staples. Onsite checkout and live shopping across social media platforms are also set to become more popular, meaning that customers never have to leave the channel they are on in order to transact. Another big shift to look out for over the next couple of years is the role of WhatsApp in e-commerce – especially where the mass market consumer is concerned.

But perhaps most importantly, for any business to succeed online, they need to ensure that they have the right brand safety and risk management measures in place. Yes, consumers are more comfortable shopping online, but as the e-commerce industry grows, so too does the opportunity for fraudsters. To protect their customer journey, their brand reputation and to safeguard their future viability, brands should steer all transactions through their payment gateways rather than permitting EFT payments that might result in fraudulent proof of payments.

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