E-commerce skyrockets, physical retail plummets during Black Friday

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

South Africa’s e-commerce sector reported a dramatic uptick in sales during the Black Friday weekend, while brick-and-mortar sales plummeted, as shoppers avoided malls due to COVID-19 fears.

While consumer sentiment and spending patterns continue to reflect the economic downturn brought about by the effects of the COVID-19 crisis, local online payment platforms and banks told ITWeb that e-commerce retailers with a strong online presence were the big winners during this year’s Black Friday period.

Nedbank says it witnessed more than 60% growth in digital Black Friday transactions, versus the decline in traditional physical instore activity − clear evidence of a rapid shift from physical to digital consumption that is taking place around the world.

Mpho Sadiki, executive of card and payments acceptance at Nedbank, says the data gleaned from Nedbank’s various payment channels confirms this trend is also making inroads in reshaping retail trade in SA.

“Consumer spend by Nedbank clients across digital shopping channels has shown significantly higher growth levels than those of traditional (brick-and-mortar) channels, which not only points to changing consumer behaviour in general due to the pandemic, but also that more South Africans used digital channels specifically to do their Black Friday shopping this year.”

Nedbank has seen a growth rate of 100% in the use of card-not-present payments, both on a month-on-month and year-on-year (YOY) basis during 2020.

The total digital turnover (in terms of Nedbank-processed payments) across all enterprises increased by 52% YOY.

“While we acknowledge that much of this can be attributed to people’s fear of physical contact with payment devices due to the risk of COVID-19, we believe that after experiencing the convenience and safety of contactless payments, clients will continue to use contactless and digital as their preferred method of payment.”

He points out that similar growth has been evident in the use of QR code payments conducted via mobile devices, with these transactions by Nedbank customers rising by around 30% YOY.

While the pandemic has turbo-charged the shift online in SA, compared to last year, First National Bank (FNB) says behavioural shopping patterns still show a decline in consumer spending power – more consumers are opting for online shopping, but due to the tough economic climate, the rand value is less.

FNB says average e-commerce spend recorded on FNB merchant devices grew 30% YOY during the first half of 2020 compared to 2019.

Thokozani Dlamini, FNB Merchant Services CEO, explains: “Between Black Friday and today [Cyber Monday], the total number of e-commerce transactions processed through FNB’s merchant acquiring system increased by 17% compared to 2019.

“As expected, YOY transactions from a rand value perspective declined, due to the financial impact of COVID-19 and a tough economic environment.”

Bumper Black November

The economic ramifications of COVID-19 hit many household budgets, and this year retailers started to follow global trends which saw Black Friday deals commence as early as the beginning of November, which gained the term Black November. Game, for example, offered ‘28 Black Fridays’ from 2 to 29 November. Takealot’s Blue Dot Sale runs from 27 November to 3 December.

Online payment gateway PayFast says it processed a 283% increase in total payment volumes, compared to a normal peak period such as payday. The highest transaction for the day was just under R300 000.

“This year’s Black Friday spend surpassed the volumes we’ve seen in previous years. The rapid adoption of e-commerce over the course of 2020 has meant we’ve seen more people shopping online, especially amid fears of COVID-19 resurgence,” says Jonathan Smit, MD and founder of PayFast.

“Shoppers spent more per basket at R1 243, compared to the 2020 average basket value of R803. Alongside big-ticket items like TVs and gaming consoles, more purchases were made online for items that are traditionally brick-and-mortar, retail store-focused, like toiletries, cosmetics and essentials.”

True to buyer trends seen during lockdown, PayFast says 66% of purchases on its platform were made using a mobile device: “Smartphone usage means you can shop literally from anywhere, any time. We’re seeing merchants and payment methods better cater to the demand for mobile too,” notes Smit.

Global payments platform PayU notes Black Friday e-commerce payments across its wide network of retailers saw an increase of approximately 400% compared to a normal shopping day.

“95% of transactions were made by card, which is an increase of 11.9%, while EFT payments grew by a surprisingly low 1% this year by comparison to the year before. During lockdown, SA saw a huge shift to mobile transactions at 75% to 85% of online shopping transactions − but Black Friday saw mobile volumes average 60%,” says PayU.