Online buying behaviour among consumers is shifting. Growth doesn’t lie in increasing demand, but by catering for a broader set of shopper preferences.
In its Statistical Release for Retail Trade Sales for January 2024, Stats SA reported that total retail for 2023 had reached R1.153 trillion.
According to the Online Retail in South Africa 2024 report, released by World Wide Worx in partnership with Mastercard, Peach Payments and Ask Afrika earlier this year, online sales have now comfortably passed the 5% mark of contribution to total retail.
Yet this growth is not being driven by demand, but by ecommerce businesses catering for a broader set of shopper preferences. As the World Wide Worx report stated, ‘Customer service is paramount to online retail success, with 73,9% [of study respondents] emphasising its importance.’
Consumer preference is a major part of this growth. There is a steady rush on electronics like cellphones and laptops. Significantly, with South Africa’s electricity uncertainties still very much front of mind, the marketplace also sees solar panels and batteries featuring among its top ten sellers.
Bob Group Head of Marketplace, Craig Lubbe, has also picked up on a trend of consumers being far more value-conscious than they were previously. ‘We’ve seen more frequent, smaller orders being placed with the sellers on our platform,’ he said.
Another trend is an increase in interest for cross-border imports on the platform. While these products often attract longer lead times, they are often not readily available in South Africa.
For ecommerce businesses, it has become crucial to respond quickly and effectively to changing buying preferences. As Bob Group Managing Director, Andy Higgins, explained, ecommerce businesses must prioritise delivering exceptional value to their customers by streamlining their supply chains and sourcing products directly from suppliers where possible. This could involve importing directly from manufacturers to minimise intermediaries, thereby reducing costs.
‘Additionally, it is vitally important for merchants to provide a wide array of payment methods and delivery options, empowering customers with greater flexibility and choice throughout their purchasing journey,’ Higgins said.
While surpassing the 5% of total retail milestone is significant, he points out that South Africa still has a lot of catching up to do compared to other emerging markets like Brazil and India, where the 10% mark has long been breached.
The good news, he said, is there is now movement in the right direction. ‘Consumers are embracing ecommerce more as they realise the benefits of price, variety and convenience that shopping online has to offer,’ he said.
‘This is being driven by multiple factors, including the adoption of on-demand grocery shopping, increased investment in South Africa from local and International competitors, as well as more ubiquitous payment and delivery options for consumers.
‘Out-of-home deliveries such as smart parcel lockers and counters will also contribute to further growth, especially by providing more convenient and cost-effective deliveries to the broader South African population, such as people living in townships and outer-lying areas.’
This is a salient point. Returning to the World Wide Worx report, it shows that in 2022, individuals from the highest economic level showed the greatest propensity to shop online. However, in 2023 there was a notable decline in the percentage of shoppers in this economic bracket making online purchases (from 71.2% to 63.4%). This is attributed to these individuals returning to in-store shopping.
Conversely, shopping habits among people of lower economic standing remained stable (41%-47%). This led World Wide Worx to suggest that ‘shoppers in lower socio-economic levels recognise the economic benefits of saving money by shopping online’.
The upshot is that offering discounts with purchases made online, for example, is resonating with the broader South African market, again illustrating the value of catering to customer preferences.
BOB GROUP
https://www.bob.co.za/
