From bricks to clicks
By Anton Vukic, Sales Director at Phoenix Distribution
South Africa’s internet economy has shown steady growth, and locally we are seeing an increase in online shopping volumes as South Africans are progressively becoming more familiar with making purchases in cyberspace. World Wide Worx recently reported that the Internet economy contributes two percent to South Africa’s GDP, rising by approximately 0.1 percent a year. The analyst firm also reports that Internet users in South Africa reached 13.2-million in 2012, up from 11.2-million in 2011.
Online shopping is a global consumer trend, and the increasing Internet penetration figures are contributing to the development of e-commerce activities locally. This has been facilitated by a variety of factors that include the expansion of local Internet usage, the proliferation of smart phones and tablets, and enhancements in Internet-based payment methods and the web-based commercial experience.
And it’s not just in South Africa that we are seeing an increase in online shopping sites and online shoppers – the International Telecommunication Union (ITU) says that e-commerce activities have expanded in Nigeria, South Africa and Kenya due to the proliferation of mobile phones and availability of faster Internet networks. In South Africa, 51 percent of individuals with Internet access shop online. In Kenya, 18-24 percent make online purchases. In Nigeria approximately 28 percent of the population has internet access according to the ITU figures.
According to Forrester, e-commerce in the US is expected to overtake sales growth of brick-and-mortar stores over the next five years. While South Africa has not reached the same volumes, a growing generation of young, Internet-savvy individuals has embraced new, online technology. Retailers are aware of this and are starting to tap into the growth offered by this market.
This “perfect storm” is changing the retail and distribution environments. While many people have predicted that big brands like Amazon and Kalahari have left no space for competition, new local stores are coming online every month.
Zando is a great example of the success e-tailers can achieve locally. This new online fashion retailer attracts 200 000 unique visitors a month. Traditional fashion retailers are also jumping on the bandwagon, with Mr Price launching an online offering, Woolworths boasting a full online store, and Truworths and Edgars having slightly more limited online services.
Those of us in the technology sector have been playing in this space for years, and the fashion retailers are starting to catch up. Consumers are now used to shopping on Kalahari, Takealot or Amazon and they are looking for new offerings.
This offers an opportunity for all links in the channel chain to re-evaluate how and where they fit into the e-commerce food chain. With online sales growing at an estimated 30%, this makes the 6% growth in traditional retail sales look pale in comparison. Faced with infinite choice, most consumers look towards the brands and stores that they are used to shopping with to offer the products they need. Bigger brands and established retailers need to make sure they have a mobile strategy as well as an e-commerce strategy in place, or risk being left behind.
Not too many years ago most people shopped in their local stores complete with parking and weather problems, long lines, and wobbly shopping carts. Even when online shopping was available, people felt uncomfortable using their credit cards and giving their personal information to cyber-shops. That has all changed. The channel has to change too.