E-commerce: Why Shein and Amazon are thriving and how SA platforms need to catch up

There’s nothing more convenient than shopping while lounging on your couch in your comfy pants – which is why e-commerce has grown its market share stealthily over the last few years.

This is precisely why there are thriving global giants such as Shein and Amazon that operate exclusively in the e-commerce arena.

According to Capital Connect, a fintech company, Shein’s sales exceeded $24 billion in 2023 – a considerable amount of that coming in from South Africa.

Amazon is expected to enter the South African market later this year and also take over from local competitors such as Takealot, in the way Shein has done so with Superbalist and many actual in-store retailers.

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CEO of Capital Connect, Steven Heilbron says South African retailers should sharpen their customer offerings and create compelling omni-channel experiences to grow their market share or risk losing more and more business to these international giants.

He said that understanding precisely what makes these e-commerce platforms so successful is vital and would help South African e-commerce platforms to identify ways to up their game.

E-commerce’s reigning queen: Shein

Shein has quietly and rapidly built a massive presence in the apparel market and has become one of the most downloaded apps in South Africa.

According to a Marketing All Product Survey (MAPS) survey, about 250,000 South Africans are already shopping on Shein.

By December 2022, Shein officially became the largest fashion retailer in the world, with sales in more than 150 countries.

It was an SEO expert himself, known as Chris Yu, who created the online retailer in 2008.

Shein’s success is deeply rooted in its understanding of algorithms (using data to introduce about 2,800 new styles to its website every week) and its utilisation of social media. The brand boasts more than 26 million followers on Facebook and 24 million on Instagram.

It has also tapped into the use of social media influencers.

Shein is also successful worldwide due to its competitive pricing strategy and top-notch customer service offering.

How can South African retailers compete on e-commerce platforms?

Fortunately, Heilbron says, trends show that the apparel market is evolving and becoming more competitive.  Which is good news for SME retailers.

“It’s also an opportunity for them to grow by exploring new channels to market. Those that can be agile in every aspect of their business model, from their pricing through to their product range, will thrive,” he said.

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“Those that are investing in growth strategies will be able to outsmart their competition and thrive in a fast-changing market,” he adds.

Heilbron notes there are some interesting dynamics at play in the market. One of those is the emphasis on proximity in the supply chain, where the convenience of sourcing products closer to the customer not only enhances operational efficiency but also ensures prompt delivery.

Amazon vs Takealot

Based on the feedback provided in the comments section of Takealot’s social media post, it appears that there is a significant need for improvement in Takealot’s customer service.

Many of Takealot’s customers are now looking to Amazon to fulfil the e-commerce platform’s shortcomings.

The market continues to speculate about Amazon’s plans for South Africa. For its part, Amazon has not yet publicly discussed its plans for direct sales to the South African public. It has, however, confirmed that it will be bringing its marketplace to South Africa to “provide independent sellers throughout the country an opportunity to rapidly launch, grow and scale their businesses while leveraging the innovative capabilities provided by Amazon”.

Heilbron says that the ‘Amazon effect’ is forcing local retailers to up their game.

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“Retailers that want to win e-commerce business will need to ensure their online platforms and logistics are up to scratch,” he said. That is essentially what Amazon is strong in.

He also said that brick-and-mortar businesses that can integrate the digital and physical experience with options like collect-in-store or browse-in-store with order-online. But, the main way to get an edge, he says, is to focus on personalised customer experiences and especially so advice — this is where online retailers often fall short.

“Those that get it right will be able to maintain their current customer bases, while also benefitting from a surge in interest in e-commerce among local consumers,” he said.