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Discovery commerce is ‘goldmine’ for SA’s e-shopping market

Sibahle Malinga
By Sibahle Malinga, ITWeb senior news journalist.
Johannesburg, 28 May 2021

Discovery commerce, a growing frontier in SA’s e-commerce sector, is resetting the rules of engagement in online shopping, helping retailers increase their revenues while empowering consumers.

This was the word from Elizma Nolte, head of marketing for Facebook Africa, speaking at the recent E-commerce Virtual Summit spearheaded by PayFast and Insaka eCommerce Academy.

Discussing SA’s online shopping trends, as the COVID-19 crisis continues to drive more traffic to e-commerce sites, Nolte pointed out that investment in discovery commerce could potentially be a goldmine for SA’s online retail market, helping traders leverage the huge untapped potential in the sector.

Discovery commerce is an online sales method which emphasises the browsing aspects of the shopping experience, by guiding buyers towards a product which they are not specifically looking for, but are open to exploring or even buying.

Using sophisticated algorithms to identify consumer needs, discovery commerce challenges traditional marketing stereotypes which focus on “consumers looking for a product”, rather enforcing new ways of the “product to look for the consumer”, she noted.

“E-commerce was about people finding products; discovery commerce is about products finding people. Think of it as engineered serendipity – that moment of prediction that anticipates what people want, before they even know they want it.

“In the digital economy, more people are shopping spontaneously and impulsively, and they’re spending more money online – a behaviour that we’re seeing more of here in SA and globally. This means the marketing funnel is starting to collapse. What we’re seeing now is that shopping with intent is only a small part of the wider funnel because intent doesn’t increase demand.”

Elizma Nolte, head of marketing for Facebook Africa.
Elizma Nolte, head of marketing for Facebook Africa.

South Africans are spending a staggering amount of five hours a day on their mobile phones, which accounts for a big majority of their screen time, she added. As the use of the Internet and social media significantly increased over the last few years, TV has been on the decline – presenting a tremendous opportunity for businesses to grow their online presence.

Discovery commerce has been touted as a game-changer in the online retail space, helping many international online retailers increase their turnover.

Last year, e-commerce reached a tipping point in SA, with total online retail revenue of R30.2 billion, according to research findings by World Wide Worx.

Businesses, according to Nolte, are in the golden age of the digital economy, and marketing has never been as exciting as it is currently, with the COVID-19 pandemic presenting significant shifts, leading to the “democratisation of commerce” as smaller stores and SMEs digitise to challenge the likes of big players Amazon, Jumia and Takealot.

Threat to Internet privacy

The e-commerce sector globally is forecast to be worth $4.2 trillion by the end of this year, while the entire commerce sector is at $65.5 trillion globally, according to the Adobe Digital Economy Index.

“The entire commerce is worth 15 times what we see people spending on e-commerce, so this means there is a lot of demand that online retailers could be capturing and may not be capturing with traditional marketing approaches.

“Around 80% of people consuming content on Netflix watch it because Netflix is telling them to watch it based on their behaviour. Similarly with Spotify. For many years, the music streaming app has been lending music to users based on their previous likes, and this has driven 2.30 billion hours of discovered music over the past five years,” Nolte stated.

Last year, Facebook introduced its discovery commerce offering, which leverages data and machine learning to help businesses on its platforms drive visibility by connecting products to customers.

Explaining how discovery commerce works, Nolte explained that sophisticated technologies are deployed to cleverly identify people who may be interested in a particular product. These use “signals” − information collected from customers mainly through Web tracking conducted through the use of cookies.

With privacy becoming increasingly important, the use of cookies has over the years been the centre of global debate, with some privacy watchdogs raising concerns around the threat it poses to user privacy, while some businesses believe it provides better ways for users to browse the Internet, helping them easily find what they are looking for.

“We don’t believe that protecting privacy and serving personalised adverts need to be at odds; we can do both in a way that benefits the consumer, if businesses are sending them relevant content that serves their need because they know what they want and they enjoy advertising. Businesses are looking at more ways to ensure consumers are protected, by allowing them to be able to opt out for those options and control what signals they send to marketers,” said Nolte.

As government legislation across the globe becomes more stringent, most Web browsers will gradually stop supporting cookies, with the use of cookies lasting from 30 days to being minimised to only one day, and soon after that there will be no cookies at all on some browsers, she went on to say.

“That will be a challenge for marketers, but there are other ways in which businesses can get signals from customers, such as loyalty programmes and rewards cards, or by interfacing directly on digital platforms.”