Lockdown in 2020 probably marked the year in which the internet changed the way consumers in SA shopped.
Forced to be homebound because of the Covid-19-related lockdown, some consumers embraced online shopping, which also helped them to avoid shopping malls for fear of contracting the virus.
Despite this shift, online shopping in SA is probably still small. It was last measured by independent technology market research group World Wide Worx to account for just 1.4% of total sales in 2018. Online shopping was forecast to grow to 2% by 2022.
The lockdown has forced many retailers — especially those selling groceries — to invest in their e-commerce platforms to improve the customer experience. But there have also been investments in back-end functions that make online shopping possible, such as payment processing technology and delivery infrastructure.
Among the companies that have seen an explosion of growth since the lockdown was implemented by the government in March 2020 are point-of-sale payments provider Yoco and e-commerce logistics specialist Parcelninja.
Yoco has provided small businesses point-of-sale machines to process card payments since 2015. In April 2020, Yoco diversified into online payments, launching a platform that helps businesses accept online payments from customers. After all, a cashless society — one that doesn’t always use coins and banknotes for transactions — is becoming more important during Covid-19 times as people are required to physically distance and refrain from touching one another or exchange physical money.
‘Massive’ lockdown impact
Speaking to Business Maverick associate editor Sasha Planting during a webinar on Wednesday, 10 March, Yoco co-founder Lungisa Matshoba said the online payment platform had been launched because many businesses were restricted from trading due to strict lockdown regulations. With their doors shut, many businesses could not process sales.
“We have seen growth in the online payment space. Every month, we are taking new businesses online. Brick-and-mortar customers are now moving online. The Covid-19 pandemic has had a massive impact,” said Matshoba.
Justin Drennan, the co-founder of Parcelninja, has observed a similar trend.
“We have seen a big shift to e-commerce, especially when it comes to grocery deliveries. Everyone is doing better online, but it is a competitive market. Those that invested online a few years ago are now reaping the rewards,” said Drennan, who participated in the same webinar.
Parcelninja helps online shops pack, store and courier packages. It packs more than 18,000 items for about 3,000 orders a day, and its 6,100m² warehouse in Johannesburg hosts upwards of half a million items on behalf of online shops across South Africa. About the impact of the lockdown on Parcelninja, Drennan said: “We have seen four times growth in the number of items we shipped from our warehouse.”
In February 2021, Parcelninja received the backing of logistics and supply chain group Imperial Logistics, which acquired a 60% stake in the company for an undisclosed amount.
Future of e-commerce
Matshoba and Drennan believe that e-commerce will expand in SA despite challenges that would ordinarily hobble growth such as expensive internet, supply chain problems (limited delivery reach across the country) and high delivery costs.
Yoco’s Matshoba said more businesses were recognising the importance of e-commerce and offering customers the option of online payments.
“On the other side, we are seeing a rise of business owners who don’t have physical stores, but are using our [online payments] platform to facilitate payments. This is becoming a viable way to do e-commerce for small and large businesses,” he said.
Drennan said a big trend to watch would be large businesses that hadn’t embraced e-commerce, didn’t have the capabilities to make this shift, but would start collaborating with “agile” small businesses that already operated in the online realm. He pointed to SA’s large grocery retailers as an example.
Checkers successfully built and launched the Sixty60 mobile app, which promises to deliver groceries and other goods in 60 minutes. Instead of building an e-commerce platform from scratch, Pick n Pay opted to partner with and later acquire a mobile liquor app called Bottles. The Bottles mobile app morphed from a liquor store into a Pick n Pay outlet when the sale of liquor was prohibited under hard lockdown, offering delivery of groceries within several minutes.
“Partnering with small businesses is the way to go. If the big guys partner with small companies, it can help the small guys to scale up,” said Drennan. DM/BM
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