Bad customer service costs local e-tailer sector dearly
SA’s e-tailer market has the potential to grow by 100% over the next two years, but poor customer experience (CX) is impeding this growth expectation by billions of rands.
This is the key finding of the third annual South African Digital Customer Experience Report. The report is based on an online survey of over 21 000 online South Africans and an analysis of their CX expectations, focusing on, among other things, e-tailers’ trustworthiness, ease-of-use, security, delivery service and after-sales support.
The report was commissioned by three industry experts: Charlie Stewart from digital marketing agency Rogerwilco, CX professional Julia Ahlfeldt, and research platform ovatoyou’s Amanda Reekie.
It found that 96% of respondents said they would spend more time shopping online if e-tailers’ CX was of a higher standard.
The report notes that SA’s online retail market, which is currently valued at R30 billion, has the potential to double, to make up 5.6% of the total retail market.
However, lack of trustworthiness, security issues, slow deliveries and less than ideal after-sales support cost e-tailers dearly – at least R11.95 billion in lost sales. This, coupled with an estimated R20.4 billion in loss attributed to frequent cart abandonment, adds up to a R30 billion missed opportunity, notes the report.
“The opportunity cost is pretty clear: consumers expect a higher level of experience from brands that they buy online from. This could, in part, be because they have become used to the CX of an Amazon or Takealot. These brands have set a high bar and local e-tailers need to up their online game if they are to convert the huge appetite among consumers for online shopping into rands and cents,” explains Stewart, CEO of Rogerwilco.
Online shopping has seen a sharp increase since the start of the pandemic and is one of the few sectors to find a silver lining from the crisis.
According to the Online Retail in South Africa 2021 report, by independent technology market research firm World Wide Worx, online retail sales in SA more than doubled from 2018, as a result of the explosion in consumer demand for online shopping and home deliveries, brought about by the COVID-19 pandemic in 2020.
This has democratised the sector’s user base, as the digital CX report reveals that 82% of respondents have made an online purchase, with 73% of those with a monthly household income of less than R10 000 per month now shopping online.
“This entrance of a whole new cohort of shoppers, coupled with an increase in the number of categories people are buying from, takes online shopping out of the niche that it was in,” adds Reekie.
Of significance, 32% of respondents said they’ve increased the number of online stores they buy from, 31% have made online shopping a part of their shopping routine, while 20% are shopping more through social media.
“With improved levels of connectivity and an abundance of online shopping options, there’s no good reason why South Africa should lag behind other markets such as the US and UK. Customer experience is well and truly holding it back,” asserts Ahlfeldt.
To capitalise on this online boom, e-tailers need to address issues of cart abandonment, given 76% said they failed to conclude their purchases, according to Ahlfeldt.
Over half of those polled (51%) indicated high shipping fees were also to blame, with 32% noting lengthy delivery timelines were a deterrent.
A further third complained there were too many steps in the purchase process – brands would do well to emulate Amazon’s famous one-click checkout – with slow websites and a lack of support being cited as other reasons for cart abandonment.
Regarding payment issues – either a complete failure in the processing of the transaction (cited by 26%) or an issue with a discount code (20%) – continue to be significant impediments to closing the sale, notes the report.