By 2025 the value of ecommerce transactions in SA is expected to reach R225bn as reported by IOL. The market itself is estimated to reach R400bn the same year, facilitated by more than 1 billion transactions annually, pushed by the ‘convenience factor’ as consumers found their fit during the long days of lockdown. Add to this growing basket the recent announcement that Amazon will be setting up South African headquarters in 2023; Amazon Web Services (AWS) creating a presence in Kenya in the same year and talk of expansion into Nigeria – there is no doubt that the industry can expect some dramatic shifts and disruptions to retail markets.
As the growth of ecommerce exploded around the world and into Africa, this type of expansion is inevitable. The so-called Amazon Effect, a familiar term associated with Amazon’s dominate role in the ecommerce marketplace, has plans to make their mark in new territories that not only include Africa but also South America, and Europe. A move that makes sense, as their year-on-year growth in net sales lost traction from 44% in Q1 in 2021 to 7% in Q1 2022 – the slowest in the company’s history.
Closer to home, BizNews recently reported that South Africa is an excellent choice for Amazon. It is Africa’s most advanced economy with an already strong local presence with their AWS office in Cape Town and another opening in Johannesburg. That said, the company is set to establish its own marketplace, with local online retailers like Takealot.com, Superbalist and Mr D Food impacted and at risk of losing market share. Brand owners and the sector at large will certainly face challenges when fast tracking their businesses online, as the hot breath of the world’s largest online retailer sets temperatures rising. Fantastic for consumers but a concern for local brands.
Christine Chokossa, a consultant at Euromonitor International when asked on IOL for her take on the expansion of the South African retail ecommerce market said, “Our data indicates consumer spending grew by over 40% in 2021, and we project a further 39% growth this year, however the South African online landscape remains under-penetrated. As a result, investment in omnichannel strategies is expected to remain key factors in consolidating demand.” CX consultant Julia Ahlfeldt co-author of the ‘2022 SA Digital Customer Experience Report’ added, “It’s a dog-eat-dog world, which is why local brands must up their ante to guarantee that they can stand-up against or alongside international apps and offer a seamless customer experience.”
Apropos this, as ecommerce gears to notably shift in South Africa – a local partnership with global clout saw Smollan recently announcing their investment in eComplete, a company that creates turnkey end-to-end ecommerce solutions to help brands. This will accelerate ecommerce growth trajectories for many brands and retailers in South Africa and beyond, along with the possibilities that lie in blending omnichannel experiences.
Focusing on the next chapter with 2023 already peering over our shoulders, the following trend observations should be considered as ecommerce strategies continue to evolve (courtesy of www.itnewsafrica.com):
The growth of mcommerce, with Statista reporting that some 78.6% of South Africans access the internet with a mobile device – means that well-designed modular mobile friendly websites and apps with effective secure handling of transactions will continue to enable businesses to modify and grow their features for an enhanced user experience.
AI and web automation will be key to maximise efficiency and customer satisfaction as well as take the monotonous and time-intensive tasks away from employees who are then freed up to attend to more important functions.
Progressive web apps offer key functionality, allowing businesses to seamlessly synergise updates between their website and mobile apps without affecting information, functionality, and page layout.
Social media advertising will have trusted influencers making a significant impact on consumer spending habits with GlobalWebIndex reporting that 27% of young people are using social media to find things to buy. A powerful platform for connecting on a more personal level.