ShowMe South Africa

A hunger for E-Commerce

Words: Nic Robertson. This article appeared in the April/May issue of Your Business.

South African businesses and consumers alike have a growing appetite for online sales

E-commerceIt is an extremely exciting time for e-commerce in South Africa. The growth and adoption of online shopping have seen exponential growth in the last couple of years, with Google reporting that e-commerce related queries grew by 37% in South Africa in 2014.

An internal analysis conducted by e-commerce fulfillment provider Efinity revealed that their top 25 local e-commerce sites saw approximately 55% year-on-year growth since 2012, which all points to businesses becoming more enthusiastic about e-commerce, and consumers becoming more comfortable shopping online. With only 1% of total product retail sales taking place online, there is still a huge amount of potential left on the table. This is particularly exciting for small businesses, which are often better positioned to take advantage of this growth, as they are more flexible than corporates who need to adopt online processes to their pre-existing systems. This is a trend that has been witnessed worldwide, with SMEs grabbing large portions of market share from traditional players merely because they can move, adapt and change to suit the needs of their customers far more effectively.

Survival of the quickest

The trick is to not overthink e-commerce. Try to set up an online offering quickly in a lean manner, testing the business case and adapting it to suit the needs of your customer thereafter. E-commerce is about learning and iterative optimisation – you will not get it perfect next time, but you can learn a lot by trying something quickly. The barriers to entry are extremely low, so you are able to trial a solution in a cost-efficient and time-effective manner.

It’s important to remember that e-commerce has many elements – marketing, payments, fulfillment, distribution etc; so you need to figure out a plan of action in order to be able to focus on your core areas of success. Small business owners tend to be very hands-on and struggle to relinquish control of certain elements of their businesses, which is fair enough, but outsourcing certain activities can ease the burden and maximise your overall effectiveness. Work out what is feasible to do in-house and then select relevant service providers to fill in the gaps – there are many specialists operating in this arena who can provide the expertise you need to develop a thriving e-commerce platform. Good luck!

Nic Robertson is the Head of New Business Development at Efinity, an e-commerce fulfillment service.

 E-commerce penetration in South Africa is still relatively low by global standards. However, the number of online shoppers is expected to nearly triple in South Africa, making the country a significant e-commerce force in the region.

 – Efi Dahan, Regional Director for Africa and Israel at PayPal, speaking at the E-Commerce Africa Confex.

Are you ready?

If you’re thinking of launching an online business, you’ll want to consider the following:

You’ll need to double your infrastructure: This applies to both manpower and stock. You might not have a physical shop, but your virtual shop still needs staff to both procure and control your stock. Most likely, you will also require additional equipment to support your online business, as well as a warehouse in which to keep your stock. Think of it as investing in an additional shop, albeit virtual.

Dealing with fraud can be costly:

It is an unfortunate reality that online fraud and security can be a problem and you – the merchant – will have to shoulder the costs. For example, if someone orders a product from your online business and it turns out that the transaction was fraudulent, the cost will come from your pocket. It is like a virtual form of shoplifting.

Take care of legalities:

E-commerce sites in most cases need to apply for a merchant account and register with a payment gateway in order to trade online. It’s also essential to ensure your business complies with the Consumer Protection Act. It’s worthwhile consulting a lawyer to ensure that all the legalities are covered.

Logistics can be complicated: Shipping logistics require an intricate infrastructure in order to run smoothly from dispatch, to tracking, to delivery, to refunds. Sites such as Yuppiechef and Takealot have shipping logistics down to a fine art. This means consumers have high expectations when it comes to product delivery, yet it’s difficult for smaller e-commerce sites to compete with that kind of infrastructure and service delivery.

Retail is not dead:

Real shops are still popular – and we don’t envisage them disappearing any time soon.

Even companies like Apple and Samsung still do most of their trade via physical stores. Research has shown that consumers, although they research products online, still prefer buying goods in a physical shop, if you are leaning towards e-commerce, best to do the necessary market research: is there a demand for your product online?

Marketing design:  A successful e-commerce site has to be supported by an effective marketing campaign. Good design is equally important: once someone has visited your virtual shop, will they be enticed to purchase, or will the poor user experience drive them away?

Myron Salant is Web Service Product Manager at Webafrica, your one-stop webshop. From web design to world-class internet (ADSL and VDSL, business and home, prepaid and post) to easy hosting and water-tight security, Webafrica covers the web.

The power of flowers…

NetFlorist is South Africa’s largest same-day gifting service, and the country’s longest-standing e-commerce store, having sold its first floral bouquet nearly 16 years ago. Founder and MD Ryan Bacher share his memories and insights…

NetFlorist started as a testing site for a client.

Our current directors had to prove to Makro that they had what it took to build a fully functional site. As a test, they decided to create a website that offered flowers and emailed a base promoting the site. An hour later they had numerous orders that they referred to existing offline florists to fulfill. NetFlorist now owns five of its own warehouses, over 40 vehicles, and employs more than 200 people. It works on exactly the same premise though – after an order is placed it is referred to a local florist in the area; it is then made up and delivered the same day (if ordered before noon). We also sell things like perfumes, gourmet hampers, personalised gowns, branded jewellery, and baked cakes and cupcakes.

Google Analytics is a crucial tool for our business.

It’s essential to look at and respond to key data – just looking at it is useless. Monitoring bounce rates and conversion rates of landing pages (daily) help us to define what is working and what isn’t. Google Adwords is an important part of our digital strategy. Google probably accounts for about 50% of any website’s traffic (SEO and pay-per-click), but then it’s about analysing the data to ensure that you’re generating the right traffic; people who will purchase from your site.

We have a mixed promotional strategy.

In addition to Google Adwords, we also rely strongly on promotional emails and Facebook adverts as part of our digital strategy. We also have an affiliates and partners programme that is critical to our business. Above-the-line marketing has been very successful for us; you can’t measure it but brand building is essential. Unfortunately, it’s expensive and not an option for many small businesses.

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