Business Maverick

BUSINESS MAVERICK

E-commerce restrictions put a question mark over government’s commitment to getting the economy back on track

Illustrative image | source: South African currency. (Photo: Gallo images) / hiclipart.com

E-commerce is flourishing all over the world, even during lockdown, but in South Africa, online retailers are still not being allowed to operate despite increased demand for their services.

When President Cyril Ramaphosa announced the State of National Disaster on 15 March 2020, followed a week later by the imposition of a Level 5 lockdown, the government’s primary aim was to prevent the uncontrolled spread of Covid-19. 

It has managed to delay the spread of the virus and has bought the healthcare sector some valuable time. However, this has come at enormous economic and social costs.  

Research company Intellidex estimates that 1.7 million people will lose their livelihoods and the economy will contract by about 10% in 2020/21. Of concern is the fact that this economic contraction may become permanent – in other words, SA’s economy may permanently produce less, employ fewer people and contribute less to the fiscus. 

With social need expanding every day, this is a real and present threat to the political stability that SA currently enjoys.  

The imposition of Level 4 is the government’s attempt to get the economy back to work while ensuring that physical distancing remains fully fixed in place to prevent an upward spike in the transmission of the virus.

Which is why the continued restriction on e-commerce companies makes absolutely no sense.

On Saturday, 25 April 2020, Trade and Industry Minister Ebrahim Patel turned down requests by online traders to allow unfettered e-commerce in South Africa. 

His reason for doing so? This would be construed as “unfair competition” he told media on the conference call.

Pardon?

Surely managing the spread of the virus is a health issue? One that has economic consequences that need to be managed with creativity and agility. Releasing the economy from the suffocating grip of lockdown should have nothing to do with what is fair or not fair. Nothing about the spread of Covid-19 and its containment is “fair”.

Government policy on whether companies can go back to work is apparently guided by four principles. 

These include whether it will help or hinder the risk of transmission of the virus; whether it will have a positive impact on the sector; whether it will have a positive impact on the economy; and whether it will promote community wellbeing.

“E-commerce ticks all of those boxes,” says Kim Reid, CEO of online distributor and retailer Takealot. 

“South Africa is the only country in the world where e-commerce is not being used to support social distancing measures. Even India, which cut back to essentials has now opened up fully.”

E-commerce, Reid says, can be used to get supply chains moving; to enable the physical retailers who are currently locked out of the economy to trade and to support SMEs. 

“We have many small businesses who market their products off the Takealot platform.”

If the issue is concern over transmission at warehouses, or at the point of delivery, there are measures that can be taken to protect employees from transmission and contraction, he says.

There is no doubt that the lockdown has accelerated the adoption of the digital economy in the country and this is something that should be celebrated. 

South Africans from all walks of life are grappling with the digital economy as they try to walk their children through the online tasks set for them by teachers from Atteridgeville to Upington; find online exercise classes for confined spaces or Google the word epidemiologist.

So why not online shopping?

“Since the start of the lockdown period, we’ve seen a 40% increase in page views per user and a 15% increase in basket sizes,” says Laurian Venter, director of online retailer OneDayOnly.  

Aside from Covid-19-related essential items like hand sanitiser, gloves and masks, customers are purchasing fitness gear and homeware for a post-lockdown world. 

“We’ve seen a spike in demand for activity trackers and watches, treadmills and other fitness equipment, as well as homeware products like beds and blogging lights.

“From this, we can deduce that many people are using their time in lockdown to either work on themselves, their living space and even a part-time blogging gig,” she says.

Like many other online retailers in South Africa, OneDayOnly has turned its business around to focus on the delivery of essential items during this time.

Others like UberEats and Bottles (the on-demand alcohol delivery app), have rejigged their business models and are delivering essential items for supermarkets which have been inundated by demand. It was that or go bust.

Bottles co-founders Vincent Viviers and Enrico Ferigolli leveraged their partnership with Pick n Pay Liquor to create an on-demand, same-day grocery essentials delivery service.

Four days into lockdown, they had integrated into the retailer’s stock management, invoicing and reconciliation systems to pilot the grocery service. The proof of concept was small, using two stores to offer a limited basket of 150 items. 

From here, the service was scaled up across 90 Pick n Pay stores in Johannesburg, Pretoria, Durban, Cape Town and Bloemfontein. There are plans to expand into smaller cities in the next four weeks.

Covid-19 has in the space of a few weeks accelerated the e-commerce adoption curve by several years, says Viviers. Retail partner Jessica Knight, head of Online at Pick n Pay, agrees. “We have seen unprecedented demand for our same-day service.”

With lockdown restrictions expected to continue for some time, coupled with the need to keep people safe at home and falling data prices, it could be a good time for these e-commerce platforms.

“We need to open up areas of the economy that can be considered safe,” says Venter. 

Many brick and mortar retailers have e-commerce sites that could enable their businesses to gain some traction during the lockdown, she adds. And those that don’t can use platforms like OneDayOnly or Takealot to sell their products. If the government will let them. DM/BM

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