After a few years hovering around the 1% mark, Spree predicts online shopping’s share of total retail sales in South Africa will increase exponentially over the next three years, rising to about 4% by 2021.
Barriers to entry such as lack of internet access and limited online payment methods are being overcome. There are also improvements in the experience and convenience of online shopping that will draw shoppers online.
In mid-2017, total sales at Spree were up 88% year-on- year, sales on the shopping app more than doubled and daily transactions increased by 76%. If this growth continues and is mirrored by other players we will see online retail gaining serious ground and growing market share measurably over the next couple of years.
Globally, online retail currently stands at 11% of all retail sales with China coming in well over 20% and large markets such as the UK and Germany standing at 18% and 11% respectively. This is according to the Centre for Retail Research, Emarketer and Internetretailer.
Barriers have fallen
New research from #AfterAccess showed that 55.5% of South Africans now have a smartphone – and this figure is rising steadily. The connectivity gap is no longer a major barrier. Many South Africans leapfrogged the desktop stage straight to mobile so the growing penetration of smartphones is likely to deliver a big boost for online retail. Technological advancements and our increasingly digital lifestyle also help to break down barriers such as lack of trust in delivery and payment, as multiple digital payment options (and even digital credit) are now being offered.
Shopping is increasingly about personalisation, with machine learning building up a psychographic profile of every customer at a granular level and suggesting products accordingly. Media24’s Spree has already led the way locally with the introduction of a fashion image search feature. This functionality allows shoppers to upload a photo in the Spree app, which then suggests visually similar items.
Essentially, machine learning serves customers looks they will love. Once shoppers get used to this feature they’ll grow impatient with the shop-to- shop mall walk quickly. This technology, along with improved online search functionality through voice (think Alexa), will extend beyond clothing and will help shoppers find the best possible skincare products as well as other items such as homeware, sportswear and even groceries.
Faster delivery time
In the US, drone deliveries and smart distribution tech are already reducing a three-day delivery time to three hours. Next to faster and more accurate deliveries, we’re likely to see at least some local deliveries arriving by drones in 2021.
Since South Africans have a penchant for instant gratification, faster delivery times are likely to speed up the uptake of online shopping as shoppers know that their purchases will arrive very soon after the order is placed. There is a huge correlation between speed to customer and revenue growth.
Malls will embrace digital
South Africans love a mall outing – it is part of our national DNA. As a result, South Africa has an oversupply of malls – 1 950 of the 2 082 shopping centres in Africa are in SA, according to Dion Chang’s Flux Trends Report. Based on this, we know the mall will still be alive and well in two years’ time, but the way we shop there is likely to evolve as physical and online shops increasingly work in tandem. More and more shops in malls will be shop fronts with limited stock – essentially more a brand presence than a store. Shoppers will browse there but want to buy online. This will mean that even mall shoppers will be making purchases online, demystifying the process. Soon they may no longer feel the need to go to the mall at all.
Vincent Hoogduijn is the CEO of e-commerce at Media24.