One of the ways South African businesses are managing to weather the economic tornado that has been Covid-19 – and more recently, unprecedented civil unrest – is by aligning with consumers’ digital buying patterns.
Lockdowns brought on by the coronavirus have considerably altered the landscape as more people work from home and are confined indoors.
A survey commissioned by Deloitte Africa, the results of which were released earlier this year, found that an astonishing 22-million South Africans shopped online in 2020, with 70% of respondents shopping online at least once a month.
Deloitte Africa estimates that the number is expected to grow by 44% to 32 million users by 2024.
According to global management and consulting company McKinsey, the change to online buying has meant that businesses not only have to reposition their brands, but also rethink customer experiences, value propositions, go-to-market strategies and operations.
In a recent webinar, McKinsey senior partners Brian Gregg and Kelly Underman explained that the pandemic crisis had provided impetus for companies to reimagine their business models and quickly adapt operations to temporary conditions like lockdowns and workplace closures.
“Similarly, leaders can reconsider where new sources of growth might be found, beyond their current offerings,” they say.
An important concept in this process is what is called “virtual agility”, that is, companies are “rewiring for speed and agility”, implementing changes quickly where previously these processes would have taken months or even years.
South African businesses, perhaps more than most, know exactly what it takes to be adaptable in an extremely challenging environment.
Just when there were signs of recovery and businesses were returning to some sense of normality, the country was hit by a third wave of the coronavirus, necessitating harder lockdowns were once again introduced.
And then the riots happened.
Scenes of extreme violence not seen since the dawn of democracy in 1994 played out in KwaZulu-Natal and Gauteng, causing about R50-billion in losses to the country. People were killed, shops were looted and destroyed and entire cities shut down for more than a week.
The government estimated that 40,000 formal businesses were affected either directly or indirectly, not to mention hundreds of thousands in the informal sector.
For business owners, it has been an economic war on two fronts, yet South Africans are also famously resilient. This innate resilience has been aided considerably by their ability to tap into online commerce.
Craig Lubbe, the CEO of South African internet auction and online marketplace bidorbuy, says while physical retailers have continued to experience growth pressure in South Africa because of Covid and unrest, those which have invested within digital distribution channels have benefitted from more than 60% e-commerce growth in South Africa in the past year.
“Many large players within the industry have outperformed this. Several well-known brands which maintain stores on bidorbuy also have proprietary ecommerce offerings. In this way, they can achieve additional exposure and reach customers beyond their traditional brand-loyal audiences,” Lubbe says.
“Some examples would be Samsung, Verimark, Loot and Readers Warehouse. The length of time they have listed with bidorbuy varies, but in some cases is over 10 years.” Lubbe says.
To put ecommerce acceleration into context, in 2018 online stores sold R14-billion worth of goods in South Africa. In 2020, that figure shot to R30-billion.
Given the scale and severity of the looting in KwaZulu-Natal and Gauteng, many businesses in these two provinces have been left counting the costs of the destruction as well as trade days lost. Accordingly, it is almost inevitable that they will be turning to online avenues going forward.
“There are benefits to doing this, including the fact that sellers do not need to rent retail space and hire shop staff,” Lubbe says.
“Stock can be stored securely elsewhere, which mitigates risks and can lower insurance costs. Many sellers also choose to work from home, which means no commute – and more quality family time.”
Perhaps most importantly, an online presence can work for a seller “24/7, 365 days a year” and is accessible to buyers nationwide.
“Goods therefore are not just those within easy travelling distance of a physical store. This means that a seller can potentially reach an audience of millions, and removes geography as a limiting factor in the growth of their business.”
An additional advantage is selling on a marketplace involves very little in the way of upfront costs.
Lubbe explains that marketplace sites typically offer all the tools that sellers need – including payment options, shipping options and marketing – and many of the basic administration functions are automated.
“It is also important to remember that online marketplaces and traditional physical stores are not mutually exclusive. There is nothing to stop a seller running both alongside one another to maximise their potential revenue.”
The key to online commerce, just as it has been on traditional trade platforms, is to stand out from the competition.
“The fundamentals still matter – excellent customer service always gets sellers noticed. In our experience, it’s perhaps the greatest single differentiator,” Lubbe says.
“In an online context, being available counts for a lot. Sellers that always respond promptly to potential buyers tend to do well. Shipping on time and offering value-adds like free shipping are also excellent ways for a seller to set themselves apart.
“Sellers also need a good eye for popular or on-trend items, and need to be financially astute enough to manage their margins so that they can offer great deals and achieve excellent exposure for their listings. High-quality images and accurate, detailed descriptions will help move stock.”