The 5 Most Significant Consumer Trend that helped Ecommerce growth in South Africa

March 8, 2012 - PRLog -- 1. Growth in e-tailing
In South Africa, a survey of online retailers showed that only 7%, predicted growth of by 40% or less in 2011, whilst
77% believed that their growth would be between 41-60% (World Wide Worx, Online Retail in SA 2011/2012). This is a
critical indicator of confidence in the online retailer which is based on their belief and understanding of the growing trend
toward e-tailing. The table below shows that Online retail sales in South Africa is small relative to the total retail sales, its
growth rate is substantially higher (World Wide Worx, Online Retail in SA 2011,118).

2. Buying Apparel and Groceries online
The earliest growth experienced in online sales was in the arena of CD’s, books, flight tickets and electronic equipment.
3. Consumer shifts toward Mobile commerce
Studies show the growth of mobile commerce and their use as touch points and a consumer who seamlessly switches
between them to transact. The popularity of the smartphones and tablets is a big driver of a shift in consumer behaviour.
Number of Global Mobile Payment Transaction Types in Millions
By 2015, shoppers around the world are expected to spend about $119 bn on goods and services purchased via mobile
phones. This number represents about 8% of the total e-commerce market, according to ABI (Research.86).Mobile online
shopping is reaching critical mass, says senior analyst Mark Beccue. In the USA, mobile shopping rose from
$396m in 2008 to $1.2bn in 2009. A more than threefold increase in one year indicates significant consumer interest.”
These numbers, however, are dwarfed by mobile online shopping in Japan, which exceeded $10bn in 2009
In the past decade, the only serious category of business usage of mobile commerce in SA has been airtime purchase. With
ringtone and phone wallpaper purchases, this category resulted in the market passing the R2-bn mark in sales in 2004, from
R50m in 2000. Where making purchases in exchanging airtime for a logo for example, consumers do not realize the
transaction has financial value (World Wide Worx, Online Retail in SA 2011,49). A study at the end of 2010 shows 52% of those
using cellphone banking said they had purchased airtime via their phones. A minority claimed to have made
regular purchases using their phones: a mere 11%. Only 9% of cellphone bankers claimed to have purchased pre-paid
electricity via their cellphones, while 5% had used cellphone banking to make a once-off payment to a retail store (World
Wide Worx, Online Retail in SA 2011,50). While people do not intend directly buying from their phones, 10% to 15% of the
revenues from retail are expected to be influenced by mobile applications this year: amounting to as much as $340 billion in
total retail sales across the USA, France, Germany, and the UK (World Wide Worx, Online Retail in SA 2011,51).
Our interviews with large retailers in the USA, Canada and the UK produced varied feedback in that the North American
markets seems to show a slower adoption rate of mobile commerce than in Europe and the UK. Industry experts we met such
as Google Canada, Microsoft and solutions provider, Buddy Media supported the idea that developing countries like SA have a
unique opportunity to use Mobile commerce to leap frog the developed world, since it does not have the legacy of PC based
internet access models to the extent that the developed countries do. Retailers in these countries should be more readily able
to develop and drive growth in mobile without having to track through the full evolutionary cycle of e-commerce.
4. Multi-channel as a trend
Future Operating Model
The cross-channel challenges
To be truly cross-channel, says Verizon Business, retailers need to enable “buy and pick-up anywhere”, but pay once in
one channel. Verizon says that within this broad integration challenge: “Retailers are finding themselves in the
information business. To be competitive, it‘s important for them to know what motivates customers to buy and what
creates loyalty so that targeted marketing campaigns can be developed. The best weapon retailers have is their own
data. Ironically, capturing data across channels can help them better plan and target cross-channel strategies. They need
to analyze merchandise performance. Gaining important insights in areas like product demand, price and promotion,
category performance, and assortments, can help optimize product mix, forecast inventory swings, and even improve buying
positions with vendors. To realize full value of this data, they need to have it consolidated, integrated, and accessible,
however identifying, gathering, storing, and securing data requires a fair amount of overhead. IT investments are needed.
Inventory management has always taken an inordinate amount of effort. Accurate visibility and forecasts help reduce stockouts. Automating inventory and establishing visibility are just the first steps. Inventory systems must be integrated across
channels to provide product consistency in quantities and in price and description. The greatest improvement comes when
the supply chain is open and integrated with distributors, wholesalers, and suppliers” (Verizon Business, 2011).
Our interviews in the international markets showed a consistent focus on moving to multi-channel by large retailers.
Although the designs and approaches vary in some form, the underlying principle of selling to customers through channels
that they want to shop is prevalent. The common challenges both locally and internationally are to integrate customer data
in a useable and value adding way and to build flexible supply chains.

McKinsey touts the multi-channel retail strategy known as triple-play, a combined approach that integrates retail store
strategy with online and catalogue sales. They conclude:”Catalogues attract new customers, drive repeat business, and
coordinate product lines; the Web offers convenience, product information, and quick updates for pricing or promotions;
stores, by contrast, allow shoppers to handle and test goods before they buy them. The challenge for triple plays is to
understand how customers use each channel, to match products to that channel’s economics, and to create a consistent
customer experience across all of them. Add the contact centre, in a four-play strategy, as defined in this paper, and the
customer is provided with instant access to personal assistance, while the store has an opportunity to both increase the size
of the purchase and the level of customer satisfaction. While such four-way strategy is not tried and tested, and no data is
available on its success, it represents emerging strategic best practice.

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