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Online shopping captures SA’s kasi economy

Simnikiwe Mzekandaba
By Simnikiwe Mzekandaba, IT in government editor
Johannesburg, 22 Jun 2022

South Africa’s township e-commerce is growing exponentially, with more people making purchases online in 2022 compared to the previous year.

This is one of the findings in the 2022 South African Township Customer Experience (CX) Report, released this morning.

In 2021, the Township CX Report found 28% of respondents had purchased something online. Fast forward to 2022, 70% of the respondents revealed they made online purchases.

Now in its second year, the report has been produced by digital agency Rogerwilco, market research company Survey54and Marketing Mix Conferences, providing insights into township economic growth.

This year’s report represents the saving, spending and shopping behaviour of over 1 400 township residents across SA. The 29-question survey was distributed to Survey54’s panel of South Africans through its mobile and web apps, WhatsApp and promoted on social media platforms during the second quarter of 2022.

Speaking during the virtual launch of the report, Stephan Eyeson, CEO and co-founder of Survey54, said food delivery is really driving e-commerce in the townships.

“Township e-commerce usage has grown exponentially,” he stated, adding that habits formed during the pandemic, innovation on deliveries, etc, have majorly influenced the growth.

“Take-outs and food delivery are popular choices. Many still complain there is limited delivery in townships; companies mentioned this is due to demand. We are aiming to see much more growth in the next year.”

Since the outbreak of COVID-19, there’s been a massive shift to online shopping, with customers purchasing an array of goods and services online, including fast-food, groceries, liquor, clothing, electronics and certain types of medication.

A World Wide Worx study revealedSA’s e-commerce sales reached a tipping point in 2020, growing by 66% from 2018.

Similarly, FNB’s Merchant Services anticipates explosive growth in the local e-commerce market, saying it will reach more than R400 billion by 2025.

Mongezi Mtati, brand strategist at Rogerwilco, says this year’s research findings demonstrate the emergence of a holistic, self-sustaining ecosystem in the kasi economy, with many residents opting for home-grown brands that are trusted by the local community.

For example, 29% of respondents report having ordered online from small independent food outlets – the majority of which evolved out of the COVID-19 crisis, states Mtati.

“The kasi economy is alive and visible in townships across the country, where entrepreneurship is the lifeblood of these communities.

“This year’s findings show a leaning towards building and leveraging kasi brands, where township residents are looking more to their own for services and products – from the small fruit, vegetable and snacks stall, to the premium café.”

Inhibiting factors

The Township CX Report found several factors that contributed to the slightly slower e-commerce uptake witnessed last year.

It identifies banks using obscure payment terminology, lack of trust in terms of delivery and returns policies, and the danger of delivery vehicles being robbed of stock, among some of those factors.

Despite this, there seems to be change ahead, notes the report. “This year, 70% of our audience are making purchases online. The younger the audience, the higher the propensity is for online purchases.

“Interestingly, there is very little change to online purchasing numbers when the data is viewed through the filter of employment versus unemployment, with activity being the same across the board. At home WiFi is enjoyed by 48% of our respondents.”

A case for cheap data

In the report, it’s revealed that availability to data is one of the biggest contributing factors to online shopping.

Over the last few years, data has been getting cheaper, with some significant price reductions from the major service providers in the last 12 months.

The Independent Communications Authority of SA’s prepaid tariff analysis reportfound “salient” changes were made by all four major operators to the 30-day standard prepaid data bundles.

Data usage, especially on mobile, seems to be an as-and-when type scenario, states the Township CX Report.

“Small data bundles are still the order of the day, with 60% of the respondents purchasing R15 to R29 data bundles on a monthly basis from spaza shops.

“Tying back to our ecosystem of convenience, it becomes clear that a small amount of data purchased from a shop around the corner lends itself to completing small online tasks. Anything above R29 and the propensity to purchase becomes very low (6% will purchase R30-R59, 4% will purchase R60-R89).”

According to the report, the jump from 28% to 70% of respondents having made online purchases demonstrates the township economy is playing catch-up very quickly.

“Innovative entrepreneurs are smoothing over delivery issues, and marketers need to start focusing on digital marketing within the township, another area that is lagging behind,” it concludes.