The future of e-commerce looks promising for small businesses in South Africa. Research done by venture capital firm Kleiner Perkins Caufield & Byers showed that there are 20 million smartphone users in South Africa and almost 14 million internet users.
With these figures, consumers are adopting online trends quicker than ever – e-commerce being one of them.
Derek Engelbrecht, Consumer Products Leader for Africa at Ernst & Young, answers questions about e-commerce in South Africa:
Why should SMEs embrace e-commerce for business? What are some of the benefits/opportunities?
E-commerce is beneficial for three reasons: The barriers for entry are lower, meaning its an easier market to get into; it’s cost-effective so no significant investments are needed; and you have the opportunity to scale your business.
Why have South African business been slow to adopt e-commerce?
Retailers could be resistant to take the online route as it removes the impulse buying aspect that we get when shopping. When we are in a store physically we are more likely to purchase things we don’t need, but online, we are more precise with our purchases.
Another point is although online activity is rising in South Africa, markedly through mobile platforms, complex logistics is the reason few major retailers set up e-commerce functionality and the effect on the bottom line is yet to be seen.
“Since South Africa is a mobile-first country, we definitely need to dedicate enough time to mobile customers”
Why are the logistics so difficult? How can small business owners overcome this obstacle?
The cost of a single delivery could be substantial compared to the value of the order. For example, the food and beverage category continues to suffer from the underlying logistical inability, or extra-mile challenge, to consistently and reliably ensure that the product is delivered to the front door.
You have to take into account that there are some difficulties around logistics and the postal service is not the most reliable. What has held the process up is the supply side – retailers themselves have been relatively late to the party, but are speeding up.
A trend that we could adopt in the future to remedy this is perhaps completing your shopping and payments online, but instead of having it delivered, we pick it up from the retailer.
How does e-commerce in SA compare to the rest of the world?
South Africa compares quite favourably to the rest of the world, there is virtually no item or service we can’t buy online. There is no shortage that holds us back, it’s just the matter of being consistent when it comes to online purchasing.
And lastly, where do you think small business be focusing e-commerce efforts?
Since South Africa is a mobile-first country, we definitely need to dedicate enough time to mobile customers, and make the online shopping experience more user-friendly on a mobile screen as not all retailers will have an app available.