Black Friday to ‘turbo-charge’ e-commerce spend in SA

Sibahle Malinga
By Sibahle Malinga, ITWeb senior news journalist.
Johannesburg, 01 Oct 2020

Local online retailers and payment platforms are expecting a bumper sales period over November’s Black Friday and Cyber Monday period this year, as shoppers avoid malls due to COVID-19 fears.

South Africa’s e-commerce sector has been reporting a dramatic uptick in sales since government lifted the lockdown restrictions on online shopping in May, while brick-and-mortar retail sales for April plummeted to the largest decline on record, with sales down 50.4%, according to Stats SA.

While consumer sentiment and spending patterns continue to reflect the economic downturn due to the effects of the COVID-19 crisis, with spending patterns shifting to more essential items, industry pundits believe e-commerce players and retailers with a strong online presence will be the big winners during the Black Friday period, which starts on Friday, 27 November.

Retailers are also expected to significantly drop prices this year and offer a wider variety of non-essentials to get rid of old unsold non-essential stock.

Derek Cikes, commercial director at payments fintech firm Payflex, says the COVID-led shift in e-commerce shopping behaviour in SA is expected to continue on an upward trajectory beyond the pandemic.

“The pandemic has turbo-charged the shift online in SA. Online retail sales grew by around 40% during lockdown, with some industries such as the alcohol sector having seen growth of over 100%.

“The number of new shoppers online will almost certainly flow into the Black Friday period, which I think in itself will drive even more adoption as people are still wary of being in crowded spaces and are likely to choose online Black Friday sales rather than go instore.”

While SA’s e-commerce uptake still lagged behind the rest of the world, accounting for only 1.6% of South African retail sales in 2019, the current online shopping trends are a sign that the local e-commerce ecosystem is beginning to mature, “ushering organisations toward a more profitable digital landscape,” according to Cikes.

Massive opportunity

While Black Friday, historically, has always had a positive impact on sales across the board, this year, the advice from e-commerce expert Warrick Kernes is for brick-and-mortar stores to prepare for an online surge instead.

“Over the past decade, Black Friday deals have seen sales skyrocket for both brick-and-mortar retailers and their e-commerce counterparts. This year, online retailers can expect an increase, as shoppers avoid physical retail stores and shopping malls over COVID-19 fears. Many cash-strapped South Africans will also be looking to capitalise on welcome specials and pre-Christmas deals over the period,” notes Kernes.

This represents a massive opportunity for online sellers in SA to step up and deliver to a market which, until the recent surge in online spending, was sitting at just 1.4% of total retail sales in 2018, according to World Wide Worx’s Online Retail in South Africa 2019 study, advises Kernes.

Peter Harvey, MD of payment gateways, DPO South Africa, believes the bleak economy and the dented disposable income presented by the COVID-19 crisis will take its toll on consumers’ buying power during the Black Friday period.

“This year we think the total Black Friday spend will be down across the board, but we see e-commerce sales matching 2019 numbers. The lack of disposable income will be countered by the newfound comfort in online shopping, with lockdown driving first-time digital shopping experiences,” Harvey predicts.

Looking at the basket breakdown, Harvey says it is reasonable to assume the product mix from shoppers will be different this year.

“Baskets may include fewer big-ticket items, and DIY and home improvement products could receive a boost this year with shoppers having spent a good deal of time at home over the past few months.

“Apart from the home improvement sector, the travel and tourism sector is one to watch this year and we can expect a jump in experiential purchases as people look to feed their desire to get out of the house and into the world,” concludesHarvey.