The rapid surge in online shopping across diverse demographics presents a compelling opportunity for adaptable retailers to venture into new markets, foster customer loyalty, and amplify their revenues. However, this trend also signifies heightened competition from retail establishments beyond their conventional catchment areas.
That’s according to Steven Heilbron, CEO of Capital Connect, who says that online shopping has been on a sharp upward trajectory in South Africa since the COVID-19 lockdowns of 2020. A study commissioned by Capital Connect, a leading fintech that provides frictionless opportunity capital to retailers in 24 hours, shows that online ecommerce retail sales are estimated to be about 7.2% of all retail sales.
Heilbron notes that research indicates over half of South Africa’s adult population has engaged in online shopping, with approximately three-quarters of online shoppers utilizing smartphones for their purchases. Forecasts anticipate a significant surge in online sales in the forthcoming years.
The study underscores that the expansion of online shoppers and retail value is propelled by increased smartphone ownership and internet accessibility among South Africans. Furthermore, the proliferation of debit card usage, heightened social media engagement, and a rising number of individuals receiving income from grants and other channels contribute to this growth.
Clothing and footwear sales represent approximately a quarter of online retail sales value, with Asian ecommerce giants like Temu and Shein intensifying competition for local retailers. Other prominent categories in online retail include electronics, digital devices, jewelry, leather goods, accessories, food and beverages, and household appliances.
Says Heilbron: “With the local launch of Amazon still on the cards, growing competition from Asian drop-shipping firms, and the rapid growth of home delivery services, the ecommerce market is heating up. Most retailers will need a strategic response to the rise of ecommerce.
“They have several options. For some, it might make business sense to double down on their in-store experience. By offering product demonstrations or workshops, a comfortable bistro or coffee shop, and great advice and service, they can offer customers a reason to shop in person rather than online.”
“Others might want to invest in an omnichannel environment. They can offer their clients options such as click-and-collect and home delivery, in addition to their brick-and-mortar store. Going online can offer them a way to reach new customers or even the possibility of diversifying their offering.”
To succeed in an omnichannel world, retailers will need an efficient logistics engine. For some, this might mean partnering with a courier or with a platform like MrDFood or Uber Eats. Others might want to invest in their own scooter or van to control the customer experience directly.
Retailers may find it necessary to reassess their product assortment to align with the preferences of online customers. Some could gain a competitive advantage by procuring goods in bulk to offer enticing online shopping promotions. Equally crucial is the provision of responsive and knowledgeable customer service across all communication channels.
Heilbron emphasizes, “Whether retailers aim to launch an online advertising campaign, invest in delivery vehicles or a fleet of scooters, explore new distribution channels, enhance in-store experiential shopping, or revamp their physical stores, swift and reliable financing is essential to execute these strategies and stay ahead of the competition.” With Capital Connect, retailers can conveniently apply for a retail loan of up to R5 million via an app, with funds deposited into their bank accounts within 24 hours, eliminating the hassle of furnishing audited financial statements.