E-Santa makes a killing

New technology, a greater emphasis on customer service and product fulfillment, and an expansive industry history from which to learn what not to do left most e-commerce companies laughing all the way to the bank this festive season.

The approach adopted over the 2000 Christmas period was pretty standard - step up advertising promotions, increase storefront functionality, ensure stock availability, and perhaps most importantly, guarantee prompt delivery of goods.

Very basic lessons indeed, which is why it`s such a wonder that they`ve taken South African e-tailers almost two years to master. The complacent silence from the ranks of consumers and industry commentators lends strength to the conclusion that the business-to-consumer e-commerce star is most definitely on the rise.

This festive season offered a number of heretofore average performing e-tailers a chance at the dangling dot-com profit carrot that enticed numerous start-ups into the e-commerce industry in the first place.

One company that rose to the challenge is Kalahari.net. The site based its initial business model on selling books; in the intervening months, it diversified its product offering and relaunched at the end of 1999.

This year, the e-tailer reports a successful festive season, delivering 100% of orders promised and exceeding R2 million turnover for the period beginning November to end December.

Page impressions increased from 400 000 in October to 660 000 in November, remaining at a similar level for December. Number of orders also increased by 44% over the period, with an average of two items purchased per order. The most popular items this Christmas were books (constituting 66% of all products sold), followed by DVDs (11%) and music (10%).

Hein Pretorius, GM of Kalahari.net, attributes this success to a focus on customer service. "We internalised the lessons learned last Christmas and not only offered products at the right price but, most importantly, we delivered on time, enabled by our investment in establishing real-time links with suppliers," he says.

"Our strategy included encouraging customers to buy early, promising that all orders received before 15 December would be delivered before Christmas. By mid-December, over 20 000 products had been dispatched on time."

Veritable ancients in this field also reported increased site activity and revenue generation - something they ascribe to the number of return customers who`ve remained loyal to the sites.

MegaShopper, one of the original early adopters, is still going strong. Site traffic during November and December was up 10% on average monthly traffic, with a high of 75 000 user sessions off 586 000 page impressions.

Jan-Louis Pretorius, the site`s marketing manager, says there was a 5% increase on average orders over that period - an overall 200% increase over figures recorded during the same period in 1999.

Key to holiday season success, says Pretorius, are the improvements to site functionality. "MegaShopper added the eBucks.com payment system, and upgraded many personalisation features. A recent database upgrade also resulted in higher quality data and substantially increased download speeds."

Appliances, groceries, PC and PlayStation games and flowers proved to be the most popular products, while the most active consumers were high-income Gauteng-based women aged between 28 and 35.

The human interface still counts for a big part of the shopping experience.

Garin Toren, marketing and sales director, DigitalMall.com

DigitalMall.com also reported better than expected performance figures - as marketing and sales director Garin Toren comments: "We had our best month ever by about 45%, and were 700% up on last year, over the period 18 November to 24 December."

Toren says the increases are the result of various preparations made specifically for the festive season. "A number of our retailers ran Christmas specials, either reduced pricing, free delivery or other such promotions. We launched our dial-up deal with World Online during November to encourage registrations. We created a Christmas-specific gift centre within DigitalMall.com, and through our relationships with IOL, iAfrica, WorldOnline and MSN Shopping, we put out about two million Christmas page, banner and button impressions."

New technology implemented in November also featured quite strongly in the new approach. Toren says the site can now register every consumer that reaches the shopping basket, regardless of whether he or she checks out.

"By calling those people who did not check out, we managed to convert over 70% to a sale. The bottom line - the human interface still counts for a big part of the shopping experience. Our new 'Livehelp` system from eContact was also hugely successful, further reiterating this point."

Several new entrants in the e-commerce industry also prospered. Inthebag, an initiative between Wooltru and Woolworths offering leading branded goods, was launched at the beginning of October.

Haydn Townsend, inthebag brand manager, discusses the decision to expand into the gifting range: "The gifting offer was introduced in December and has grown to account for approximately 15% of our business in just one month. This bodes well for the continued development of our 'Buy yourself some time` proposition."

The approach of taking trusted brand names online has worked for inthebag in much the same way as it has for others.

According to Townsend, orders were on the increase until about 22 December; the site was reaching figures of between 50 and 70 orders a day.

"There was an interesting dip after the 22^nd, that was explained by the fact that so many people were away from their computers and homes. January has seen us rebound to close on our pre-22 December figures.

"This was our first Christmas season and we`ll be exploring this phenomenon and see if it becomes a trend. We strongly suspect that as mobile commerce becomes more of a reality, ordering will not be PC-bound, and will alleviate this slump."

StopQ.com, a direct response e-commerce company launched in November, is another such newcomer. Incubated within the AfriCam group, StopQ.com is one of a handful of e-commerce ventures run by Tanua Technologies, a subsidiary of Tanua Holdings.

It offers consumers big-ticket appliances, and high-end technology and outdoor equipment through its Web-based storefront at prices below that of national retailers.

Customers can also purchase products through a national call centre. Both avenues of trade were advertised extensively in the mainstream press and on television, and the traditional media approach taken at such a sensitive time of year appears to have paid off.

Predictably, the company`s registered user base increased. It was the jump in revenue that exceeded all expectations; products on average cost R1 500 each, and most customers purchased up to three products at a time.

30% of clients opted to pay by direct cash deposit.

Marc Ackerman, CEO, StopQ.com

Marc Ackermann, CEO of StopQ.com, says the call centre fielded over 4 000 phone calls over the three weeks preceding Christmas - contributing about 55% of the company`s revenue for the period. "We were doing over 100 deliveries a day, and our three-day delivery cycle held up well."

Ackermann believes South African consumers are displaying more confidence in fulfillment than their counterparts in the US, who allowed a week more for delivery. "Our busiest days were the 18^th and 19^th of December."

The additional option of allowing customers to pay for goods by cash deposit also opened the e-commerce avenue to a number of consumers operating sans credit card. About 30% of StopQ.com`s clients opted for this approach.

Most major South African banks now have an electronic banking side to their services. However, only two groups - FirstRand`s eBucks.com and Stanbic`s Bluebean.com - have ventured into the consumer shopping aspect of e-commerce.

Michael Jordaan, eBucks.com CEO, says he was pleasantly surprised at the amount of activity on the shopping section over December.

"There is a selection of stores to choose from, but it`s by no means comprehensive. We`ve signed more than 40 merchants, which we`ll be adding to the site, but we`re not necessarily convinced that the number of stores is that important; it matters more to ensure quality."

The stores were added over November and December, and Jordaan notes, the volume of traffic and transactions increased on an almost day-to-day basis. The average transaction value was about R500, he says. Jordaan attributes the increase in the amount of new shoppers to the eBucks initial registration freebie - eB250.

Between us and Bluebean, we`ve gone a long way in educating the consumer.

Michael Jordaan, CEO, eBucks.com

What`s encouraging, he says, is that shoppers who registered on that basis have begun returning.

Jordaan says in addition to marketing the new options open to consumers, the next challenge is boosting internal education, and rising to the challenge of a more competitive marketplace. He cites Bluebean.com`s impending joint venture with Liberty Life e-services site, MyLife.co.za, as being one such competitive force.

"We welcome it - between eBucks and Bluebean, we`ve gone a long way in educating the consumer," says Jordaan.

Bluebean.com was one of over 100 e-tailers surveyed in Acuity Media Africa`s recently conducted Holiday 2000 E-commerce Retail Survey. It revealed that online retail had surpassed expectations by as much as 50% for the period 15 November to 24 December.

But it wasn`t all plain sailing for local e-tailers.

"The big names arrived on the Web with a splash towards the end of the year, but they made strategic errors which prevented them from taking the lead in online retail," says Arthur Goldstuck, MD of Acuity Media Africa.

"The likes of Musica and Bluebean.com may have integrated Web site marketing into their overall marketing strategies, but they lost the impetus due to poor navigation on their sites."

As consumer acceptance grows, almost all these e-tailers have tricks up their sleeves to win more market share this year. Plans include signing partnership agreements with portals, improving on supply chain management, stepping up marketing campaigns, and in some cases, expanding out of the country into Southern Africa.

Whatever happens next, it`s clear that e-commerce works, and e-tailers are here to stay.