South Africa’s big ecommerce problem is supply, not demand

Most of the discussion about the slow growth of e-commerce in South Africa focuses on consumers. But the biggest problems may be on the supply side.

We hear the same old arguments all the time. Consumers take a long time to feel comfortable about shopping online, South Africans like to touch and feel before buying, and so on. But instead of focussing on what we think is wrong with consumers, maybe we in the industry should focus on how we can serve them better instead.

There are three issues holding back the growth of ecommerce in South Africa: Merchants have a limited understanding of how e-commerce works, there aren’t enough payment choices and the delivery process is inefficient.

On the first problem, major retailers have been slow to come online, and smaller players haven’t always understood how to market themselves effectively. “Many, many small online retailers have come and gone. That’s to be expected in a new industry, but we should learn the lessons. Consumers are suspicious of poorly designed websites, so merchants need to invest time and money on professional design services. This is one case where more money on the frills does mean more money at the tills.”

There have, of course, been some spectacular successes like YuppieChef. When our big, established retailers finally learn to be as nimble, effective and service-oriented as these online-only retailers, things can really start to take off.

The second problem is a lack of convenient and reliable ways to pay. In the US, consumers have an average of three to six credit cards each. In South Africa, it’s less than two per household, and a large proportion of consumers don’t qualify for credit cards. That isn’t going to change anytime soon, so we need to be innovative in offering consumers other secure ways to pay.

Many new payment methods have been launched with a lot of fanfare but have proved to be unreliable or short-lived. This has damaged consumer confidence in the whole industry.

Finally, delivery is still often inefficient and costly. Online retailers who offer free delivery tend to do a lot better, especially as consumers become more cost-conscious. Often consumers do their research online, but then go to a physical store to make the purchase — there are no delivery fees, and they can walk away with their item there and then. Successful ecommerce players offer fast, reliable and low-cost delivery to make up for the loss of the in-person experience.

Service levels also count: It’s absolutely essential to let customers know when their parcels have shipped and to give them a waybill number and contact details for how to arrange delivery. Even though your customers may never meet you face to face they need to be recognised and reassured throughout the online purchasing process.

The big message is that we need to be innovative in our approach to online business. There are many willing buyers: As merchants, we will win when when we make the online shopping experience reliable, accessible and secure for everyone.