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PayFast: Ecommerce Feels Logistics Pinch of COVID-19 Boom

The COVID-19 pandemic has spurred unprecedented growth in ecommerce, accelerating local adoption rates by as many as three to five years. However, as online shopping continues to boom, many online retailers have struggled to cope with the demand and disruptions to their supply chains. As internet and mobile penetration increases, businesses will need to embrace new tools and enhance existing processes to keep pace.

“Despite ecommerce making up a small sector of the economy, the pandemic has doubled adoption rates across the board. This is on trend with established ecommerce markets in the United States and other countries,” says Jonathan Smit, Managing Director and Founder of PayFast. “We’ve seen a 98% increase in total payment volumes processed from April to May alone. This is a month-on-month growth rate unlike we’ve ever seen in a 30 day period, including peak season shopping such as Black Friday.”

The current ecommerce boom has resulted in challenges for merchants, with some of the biggest local online retailers saying they have felt the brunt of extended lockdown on their supply chains, both locally and abroad. Similar challenges have been faced globally, but retailers that have managed to scale up their supply and delivery logistics amid the pandemic, have seen exponential growth in online purchases.

The SARS crisis in 2003 accelerated the growth of ecommerce in China, when many citizens were at home in quarantine. “Business maverick Jack Ma, pivoted Alibaba from a B2B company to one of the most competitive ecommerce platforms off the back of a pandemic,” says Smit. “In the same way, the COVID-19 pandemic will result in permanent change to shopping behaviour and ways of conducting business in South Africa and other developing countries.”

Smit offers some lockdown lessons for other ecommerce businesses to manage periods of unprecedented growth and spikes in customer demand:

  1. Automate your processes – invest in the right digital tools to help your business in peak periods and improve internal processes to make scaling easier. Initially setting up automated processes will take time and may require additional resources, but the long-term value that automation adds to growing your business sustainably, outweighs this short-term investment.
  2. Maintain good relationships with recruiters – to speed up the hiring process during peak times, have established relationships with recruiters who know your teams, brand and business. This will help you grow your staff complement with people best fit for the role.
  3. Balance stock levels – it is important to always have enough stock of your product to sustain a profitable business model. Maintain good relationships with your suppliers and couriers to ensure a healthy supply chain.
  4. Customers are your most valuable asset – improve customer service through open and transparent communication. If you are dealing with a high number of support queries due to an increase of demand for your product, be honest and explain why and how long customers can expect to wait for a response.

Smit assures merchants that PayFast is continuously reviewing their processes in an effort to adapt to the new normal as quickly as possible. “We are doing our best to support our merchants as they use this period to grow their businesses online.”

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