Online shopping set for four-fold increase by 2021 in South Africa
Top online fashion retailer Spree is forecasting a fourfold increase in South African online sales within three years.
Currently retail sales in the country are around one per cent. Spree predicts online shopping’s share of total retail sales in South Africa will increase exponentially over the next three years, to 4 per cent by 2021.
Vincent Hoogduijn, CEO of e-commerce at Media24, the company that owns Spree, says growth figures have been exponential for their online fashion business. “In mid-2017, total sales at Spree were up 88 per cent year-on-year, sales on the shopping app more than doubled and daily transactions increased by 76 per cent. If this growth continues and is mirrored by other players we will see online retail gaining serious ground and growing market share measurably over the next couple of years.”
According to the Centre for Retail Research, Emarketer and Internetretailer, global online takes 11 per cent of all retail sales with China coming in well over 20 per cent and large markets such as the UK and Germany standing at 18 per cent and 11 per cent respectively.
South Africa has a population of 56 million, but there are more cellphones and 22.5 million of these mobile owners are online users, according to research by World Wide Worx, and many of them shop online using their cellphones.
These are Hoogduijn’s top reasons why online retail will see its potential realised in South Africa over the next few years.
1. Increased online access
New research from After Access shows that 55.5 per cent of South Africans now have a smartphone – and this figure is rising steadily. So the connectivity gap is no longer a major barrier. Many South Africans leapfrogged the desktop stage straight to mobile so the growing penetration of smartphones is likely to deliver a big boost for online retail.
2. New technology makes online shopping easy
Shopping is increasingly about personalisation, with machine learning building up a psychographic profile of every customer at a granular level and suggesting products accordingly. In 2017 Spree introduced a fashion image search feature that allows shoppers to upload a photo in the Spree app, which then suggests visually similar items.
3. Delivery times will get even faster
In the US, drone deliveries and smart distribution tech are already reducing a three-day delivery time to three hours. Next to faster and more accurate deliveries, we’re likely to see at least some local deliveries arriving by drones in 2021. And cheap delivery labour already ensures South Africans in big cities are some of the best served in the world.
4. The mall will embrace digital too
South Africans love a mall outing – it is part of our national DNA. As a result, South Africa has an oversupply of malls – 1,950 of the 2,082 shopping centres in Africa are in SA. More and more shops in malls will be shop fronts with limited stock – essentially more a brand presence than a store. See it instore, buyit on your mobile and it can be delivered that day.
5. Existing retail skill and knowledge will be transferred
Traditional industries will work with online retail and media. Firstly, by using its considerable distribution experience to offer a third-party e-commerce distribution service for online retailers. And secondly, by tapping into its decades-long understanding of consumers’ media consumption habits to help and improve brands such as Spree to cater for the best possible customer experience.