E-Commerce in South Africa

By the Editor In E-Commerce 14 Comments

E-commerce has been bubbling for several years in South Africa and the committed early adopters who have done things properly have certainly made a huge success out of it. Most of these adopters are larger companies who were able to get through the limitations of online transacting faced in South Africa. The playing fields have changed though and launching an E-commerce website is becoming far easier than it ever was. This enables smaller parties to jump into the limelight and grab their percentage of the market share.

Statistics published by Mastercard and reported on Tech Central, by Craig Wilson show that South Africans are still apprehensive, but that hasn’t stopped South Africans from spending R3,3bn online in 2012!

These statistics certainly are encouraging:

  • South Africans spent R3.3bn shopping line during 2012.
  • 2013 should see South Africans spending closer to R4.4bn in 2013.
  • 91% of South Africans who shop online are “highly satisfied”.
  • The most active market segment is South African men aged 35 to 44.
  • Plane, movie and theatre tickets remain the most popular purchases by South Africans.
  • Website retention rates are high, acquiring new customers is the challenge.
  • Only 12% of South African shoppers have purchased online via their mobile devices.
  • Secure payment facilities and convenient payment methods are the most important considerations.
  • The public have asked for delivery charges to be reduced and less additional costs involved.

The only strange entity in that mix is the low adoption of online spending via mobile devices. That being said, this depends on the access to smart devices as well as retailers having websites that are mobile responsive or the likes – this opens up a gap for those retailers who are brave enough to venture into the mobile space.

As a bit of inspiration, or at least to get an idea of who the leaders in the market are, these sites were awarded in last year’s E-Commerce Awards ceremony:

  • yuppiechef (Best eCommerce Store)
  • bidorbuy (Best eCommerce Services Website)
  • Groupon (Best Group Buying Website)
  • property24 (Best Classified Website)
  • TravelGround (Best Design, Standards and Ease of use)
  • HomeChoice (Public’s Favourite eCommerce Website)

Other notable mentions were given to TakeALot, Kalahari, SafariNow, OLX, Sarie and Zando.

The 2013 E-Commerce awards opened on June 11 and you’re still able to participate – the winners will be announced on September 11, 2013. If you do nominate a company, you could stand the chance to win an Apple iPad.

Whenever there is online spending, courier companies come up in the discussion. We reached out to Adept Software, creators of courier & freight management software, Parcel Perfect™ for some insight:

“We have noticed quite a surge in requests to integrate courier systems (freight data as well as billing) into ecommerce sites. More and more companies are setting up online stores as the technology becomes readily available. Already we are seeing ecommerce platforms being used and sold like WordPress skins, so almost any company can now set one up themselves. However there needs to be a strong WMS/OMS/CMS behind these ecommerce sites in order to bring live notifications/tracking and integrity around any item bought online and delivered to the customers door.

The requirement to integrate to make life easier for the courier/distributor is a necessity these days and we are inundated with these requests which means the ecomm industry in South Africa is taking off.”

This is certainly encouraging to hear.

Despite there being some market leaders who are, in our opinion, dominating the online shopping space, there is still room for companies to set up shop and capture a good stake in the market. There are still a number of hinderances in South Africa when it comes to getting set up. These hinderances include start up costs, clear understanding of objectives, lack of online marketing, credit card processing limitations and maintenance. These 5 areas have become less of a problem over the past few years, but will continue to remain a problem until the right education is provided:

  1. Start Up Costs – Despite there being a wealth of templates, shopping plugins and the likes, putting together an e-commerce website takes a great deal of work and requires the assistance of a professional in our opinion. Although you’re able to purchase a WordPress template, for example and bolt it onto an E-commerce plugin, the set up of hosting, shipping classes, website tweaks and the likes are a job for someone who is familiar with the Internet and said requirements. Due to there being anxiety around shopping online, it is crucial to ensure that the correct bits and pieces exist on the website and are designed to show trust from the retailer. A fundamental aspect to remember is that you should look at your E-Commerce website as you would if it were an offline shop. You would invest time and money into making your shop amazing, you wouldn’t do all the building yourself nor would you tackle all the light fittings and such. In the same regard, investing in a professional to get your website perfect is a good strategic move. This also gives you time to focus on your requirements, payment gateways and price points.
  2. Understanding Objectives – It’s easy to say that the objective is to merely sell product, but as anyone who’s run a business knows, there’s a lot more to it than that. Defining your marketing plan, selecting your products, updating your accounting packages, defining a shipping strategy and the likes are all essential aspects of running an online shop. These aspects need to be carefully thought about and a clear plan should be put in place. Without a clear plan, there are a number of things that could happen: you could launch your website and nobody would visit, you could have a burst of sales and no system to track or ship them on time.
  3. Online Marketing – When last did you perform a Google search for something and see nothing? Never. Every time you search for a product or a service you’ll see a lot of results, at least 10 normal results, perhaps 7 or 8 paid results and then there’s a chance of maps appearing and/or product photographs. If you’re not in that mixture, you can bet that your competitors are. Open up Google and search for “buy microwave online” – you’ll see just how many results there are on the first page of results. Without a strong online marketing strategy or an experienced supplier you’re going to struggle to capture market share. Services such as Paid Search, Search Engine Optimisation, Newsletters, Social Media and the likes are no longer a nice-to-have, but rather an essential part of your marketing plan.
  4. Credit Card Processing – Fortunately, this hinderance is becoming less of a hinderance as the South African providers are upping their game and providing solutions that are less complicated. When choosing a payment processor, don’t rush the decision, rather spend time reading about all the options – specifically, what costs are involved, which banks they’re aligned with and what they require from you to get a merchant account. Time spent making the correct choice will save a huge amount of time and money down the line! There are lots of options: PayPal, MyGate, PayGate, iVeri, VCS, PayFast and the list goes on.
  5. Maintenance – One of the biggest problems we’ve run into over the years is meeting with companies that rushed into having an E-Commerce website built and now lie in a position where the website is giving problems or they want to add features but can’t. This is incredibly common and unfortunately it’s something that comes with the territory unless a professional is hired to build the website. Companies that decide to purchase a theme and use an E-Commerce plugin have problems when upgrades are released or additional features are required. Furthermore, approaching a web design company for assistance will result in a large cost as the company will need time to go through the website and determine exactly what’s what, and what’s possible. Companies who go the cheap direction and hire a company to put together an E-Commerce site quickly will face similar problems moving forwards. Truth be told, the web industry does not warm up to website maintenance or tweaks, so investing well from the beginning is our opinion of a wise move.

Here are some tips from us if you’re thinking of launching an online shop:

  • Use credible web companies who have built E-Commerce websites before.
  • Look for creative ways to include social media.
  • Use coupons, loyalty points and such to capture new customers.
  • Pick a niche and stick with it.
  • Engage with your customers.
  • Create a content strategy around the shop.
  • Use an inbound marketer / web strategist to help you understand your customers’ actions.
  • Send out regular newsletters to customers, but ensure that they’re useful!
  • Have a social presence on Facebook and Twitter for your customers and potential customers.
  • Select your payment gateway, courier company and accounting system carefully.

There’s huge growth taking place with a lot of the local market still being wide open for the taking, now’s the time to invest in E-Commerce, if you jump in now, execute well and stick with it, the rewards will be large.

Please don’t hesitate to contact us should you have any questions or need assistance with taking your business online.