This is why eCommerce trends in South Africa show enormous potential

In the past few years, online transactions have grown substantially in South Africa.

April 25, 2014

“In the past few years, online transactions have grown substantially in South Africa, proving that consumers are becoming more familiar with online processes, and are feeling more comfortable to engage in an interactive online space,” says Brian Andrew, General Manager for RS Components.

Brian Andrew

Brian Andrew

RS Components is a market leader in the distribution of electrical, electronic, mechanical and industrial products and tools, with a large percentage of customers purchasing online. “eCommerce is at the heart of our business strategy,” says Andrew, “with 57% of global revenues being generated online.”

The company has one of the most advanced B2B transactional websites, with advanced e-procurement features. Recently developed electronic design software is accessible to engineers through the company’s DesignSpark site and free to download. The combination of the easy-to- use site and tools for engineers makes customers’ online experiences far more effective and enjoyable.

Using eCommerce as a growth strategy enabled RS Components to increase new product introductions from 5,000 per year to 5,000 per month.

“We’ve also developed innovative ways to display our products in a digital catalogue. This remains a key element of our multi-channel business model that evolves in line with our customers’ needs,” explains Andrew.

Andrew believes eCommerce can provide more information to consumers than some traditional methods, boost access to a wider range of products, provide tailor-made services to customers’ needs, and can lead to efficiency gains.

According to the MasterCard Worldwide Online Shopping Survey, South Africa’s online shoppers grew by 58% in 2012, up from 53% in 2010 and 44% in 2009. According to their research in 2013, eCommerce makes up about 2% of the total retail market in South Africa.

A similar survey by the Digital Media and Marketing Association (DMMA) found people who are accustomed to the internet – already using it for a couple of years – were 59% more likely to shop online, which means, as internet browsers increase in future, so will online shoppers.

A report published in July 2013 by the Organisation for Economic Cooperation and Development (OECD) notes that Commerce is an efficient economic engine that boosts revenue and market reach.

“Our growth in recent years is inextricably linked to online shopping convenience, as our customers have all the information they need at their fingertips. They don’t have to look for parking, or stand in queues and jostling crowds. By buying online they have access to 500 000 products from 2500 leading brands, and can complete their transactions instantly and safely,” Andrew says.

For the online retailer, eCommerce benefits are wide-ranging. Online ordering frees time and resources that can be better used to improve other important strategic tasks within the business.

To find the right product at the right price is often one of procurement’s biggest challenges. Online ordering assists in this process, as the sourcing of products is improved through the wide availability of online information.

Andrew says: “More benefits for online retailers include better coordination with suppliers, reaching customers in tricky geographic areas, higher labour productivity, less time spent on admin tasks, reduced business and transactional costs, and finance departments accurately tracking processes at all times.”

An online ordering system that allows automated repeat ordering improves process efficiency even further. “With online ordering, approval and ordering is automated, saving a significant amount of time. One can also add additional value if such a system lists previously ordered items, and automatically suggests complementary products.”

Labour productivity is an important component of any profitable business,” stresses Andrew. “eCommerce executes tasks quicker and requires less human labour, therefore contributing to increased sales volume and higher profits. Time really is money”.

According to eCommerce experts, the online retail trend that will impact South African businesses and consumers the most is the integration of web retailing with mobile eCommerce, allowing impulse purchases anywhere, anytime.
Andrew’s advice to retailers is that “if you want to make the most of easy online ordering, information about all products or services must be quickly accessible and easy to search for. Technical information, catalogues, pictures, videos, articles and other product-related content should be available and accessible.”

South Africans only recently began harnessing the benefits of this platform in significant numbers, but from the outset one can see they are sophisticated consumers who have high expectations and insist on interacting and doing business efficiently.

“At the same time they want technical advancements and features that provide increased functionality and flexibility without hassles,” says Andrew.

“Lack of broadband penetration and lack of trust in online payments still hinder online shoppers in South Africa. However, if retailers have a unique product or service offering that draws attention over the clutter, which is critical for survival, then they can reap enormous benefits easily and frequently,” concludes Andrew.