Brands shift marketing budgets, with more focus on e-commerce

E-commerce has grown at record rates during the Covid-19 pandemic, with the United States recording non-store sales growth of around 40% by the end of 2020.

Between July and September last year consumers in the US spent just under $200 billion (about R2.9 trillion) online. In South Africa, e-commerce only represented around 2% of retail spend by the end of 2019.

Yet, according to a report published by Research and Markets, the pandemic saw 40% in online retail by September last year.

Lockdown and the accelerated roll-out of fibre and high-speed internet all worked together to fuel an expected sustained level of double-digit growth.

Payment gateway and e-commerce provider Netcash has seen similar growth in online transacting, recording a 35% growth in volume, with values catapulted into the stratosphere as some sectors saw spend increases of up triple digits, up to 600%.

Retailers and brands have not let the grass grow under their feet. “We have seen a huge number of brands launching online platforms, from boutique small businesses to larger retail brands,” says Steven Howard, product manager at Netcash.

“There have also been substantial upgrades and improvements to existing e-commerce sites, paired with an increase in digital marketing across the board.

“South Africans have been given a bump in the right direction and the knock-on effect is exciting. Having had many interesting conversations with the local suppliers of international brands, their marketing budgets have been shifted and the brand strategy revised with much more focus on e-commerce.”

The Research and Markets report notes that trends suggest further growth but that this is offset against less spend at physical stores. Due to the demand for rapid deployment of an online presence or, for that matter, redefining of digital strategy, there have been some bumps in the road as e-commerce made its giant leap forward last year.

“We have seen some of our larger retailers launch e-commerce platforms piecemeal, sans appropriate depth or investing in e-commerce experts to advise on the best technical solutions, user design and digital strategy,” says Howard. “Consequently, the initial online user experience for many has been somewhat unpleasant, leaving customers disappointed and disillusioned.

“Conversely, brands like Takealot, Superbalist, Woolworths and Mr Price deliver a user-friendly interface, simple returns policy and fast customer service to resolve queries and answer questions.”

“Beyond product user experience is the most critical aspect of any online retail venture,” says retail and franchising specialist Manny Nichas. “Whether it is food, beverages, groceries or clothing, the journey starts at the first click and ends with last mile fulfilment, all fine-tuned.”

Nichas transformed restaurant group Mozambik during lockdown by taking the business online, adding groceries to its offering and yielding substantial results.

“Innovation, reimagining products and services and finding your true place in the value chain is important. E-commerce will continue to grow and surge business ahead in South Africa,” says Howard.

“We have seen a substantial uptake in clothing, digital or downloadable goods, online education and of course food and beverage.”

Nichas says more independent retailers will join the online fray.

“As the value chain develops and opportunity cost stabilises, I anticipate that owner-run, or independent retailers and restaurants, will diversify and build their own online presence.”

This is not to say there will be a move away from marketplaces or collective food delivery services, but rather an opportunity for entrepreneurs to fill additional gaps and market and sell their products and services digitally.

“I believe we will see double-digit growth for the foreseeable future as more and more people gain access to the internet and trust develops with consumers,” adds Nichas.

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