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Why e-commerce growth in South Africa is behind market expectations

Date: January 9, 2022

E-commerce in South Africa will become more appealing to buyers if it places a greater emphasis on the offline experience of customers.

Every online shopper in South Africa has experienced the frustration of waiting for a courier to arrive.
The package could arrive right now, right now, or right now-now — that's about as precise as your delivery time information will be.
Why would you want to sit around for hours waiting for a package when you have a shopping mall right around the corner?

This is the realm of offline user experience, and it explains a lot about why South Africa's e-commerce growth is lagging market expectations.
According to statistics from World Wide Worx and Euromonitor, e-commerce penetration in South Africa lags behind many peer countries, with only R6 billion in online retail spending projected for 2016 — in a total retail market worth about R950 billion.
By 2021, online retail is expected to be worth R18 billion, but it will still be a small part of the overall retail market, which is expected to be worth R1.5 trillion.

Digital retailers in South Africa must work harder than their counterparts in China or Eastern Europe to persuade shoppers to go online because of the country's high retail density and mature shopping environment.
South African shoppers are spoiled for choice, with 32 shopping malls per million people and the world's second highest retail space density.

To entice customers, online retailers must go above and beyond in terms of their online and offline user experiences.
Though many South African online retailers excel at their online user experience — from user interface to product selection — the industry still has a long way to go in terms of improving the offline user experience.
We simply need to make online shopping more convenient.

Offline UX elements

Delivery, returns, payments, refunds, and customer service are all important aspects of the offline user experience.
We see delivery and returns as one of the most significant challenges we face as we work to improve our customer experience across Spree.co.za.
It's a lot easier to say than it is to do:
South Africa is characterised by vast geographic distances, low population density in many areas, and a fragmented courier and logistics industry.

Customers should not have to wait at home for a package that might or might not arrive.
They should be able to pick up their goods whenever they want or schedule a delivery time that works for them.
We want to give customers far more flexibility in accepting deliveries and returning goods by using crowdsourcing models.

To make life easier for our customers, we're considering using collection points and offering three-hour delivery and collection slots.
We'll start with the Johannesburg, Pretoria, and Cape Town metro areas, which account for about 75% of South Africa's retail market.
Given that customers sometimes need to return clothing after trying it on, we think returns and refunds are especially important.
It's all about speed, accuracy, and communication when it comes to delivery or collection.

New payment options are now available.

When it comes to payments, many consumers are still hesitant to use their credit cards to purchase goods online.
This is surprising, given credit card fraud insurance and the strong security provided by MasterCard and Visa's 3D-Secure standards.
We do, however, recognise that consumers prefer to be able to pay in a variety of ways.

As a result, services like SnapScan and card payment at delivery make sense.
Rather than e-commerce companies failing, this is an area where consumers require education.
There are signs, however, that the picture is starting to change and that consumer confidence is increasing.

South Africa has a viable market for online retail, with 5 million broadband subscriptions and 32 million mobile Internet subscribers, as well as 7,5 million people earning more than R100,000 per year.
Pure players and traditional retailers, on the other hand, must invest in improving the e-commerce customer experience.
When it's as simple to order online, receive delivery, and return items as it is to drive five minutes to the nearest shopping mall, we'll see explosive growth.

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