Learning from other mobile-dominated markets
South African digital retail is the biggest in Africa - ahead of Egypt, Kenya and Nigeria - and is in 33rd position in the global rankings. It is said to be the fourth-fastest growing digital economy in the world, after China, Malaysia and Thailand.
So found the MasterCard Digital Evolution Index of late 2014, and now 18 months on, the growth is holding true. At the eCommerce MoneyAfrica Confex held in Cape Town last month, focus was on the latest consumer trends, buying patterns and retail behaviour of Africa's burgeoning digital market.
While much can be learned from other mobile-dominated markets around the world, there are five critical lessons that sub-Saharan digital retailers would do well to follow, the delegates heard.
There is an enormous market in South Africa that is completely underserved by online retailers, largely because of customers' digital immaturity and the lack of cost-effective Internet access. The main focus of companies needs to be on trying to reach the mass market, and on ensuring that market can purchase online easily and effectively.
"Sophisticated payment methods like bitcoin are inappropriate for the mass market. Instead we need to look at simple methods like cash, credit or debit card, preloaded social welfare card or enabling multi-functional facilities like the Myciti bus card," says Kevin Tucker, MD of Pricecheck.
"Product range, inventory, merchandising, buying, payment methods that are supported already, customer service, returns policies, and terms and conditions are important aspects of online retail that need ongoing work. If we ensure we can manage these, whether on mobile, desktop or tablet, then we win."
Omnichannel not as easy as it seems
Quite the retail buzzword of the decade, omnichannel is about true continuity of experience. Defined as a cross-channel business model that companies use to increase customer experience, omnichannel retailing uses multiple channels to be in contact with the customer. These could include brick and mortar stores, online stores, mobiles stores, mobile app stores, phone sales - multiple platforms at the same time.
Shruti Chandrasekhar, senior investment officer at IFC Venture Capital, warns that as much as online retailers want to achieve the omnichannel experience, it is not easy to achieve.
"Usually if you're a retail operator offline, you're not set up to handle the logistics out of your store - you can sell your products but if a customer returns it, you have to integrate it back into inventory. If you're online, you're centralised and don't have the kind of set up where you're operating from 30 or so warehouses. Bringing the two together is an enormous challenge."
Be mobile or go nowhere
There are 22 million smartphone users in South Africa. This figure, predicts Luke McKend, country director for Google South Africa, will increase by 20% during 2017.
"All key shopping moments in South Africa are via mobile. If yours is an e-business designed primarily for desktop, that's a disaster. By 2020, 35 million of your customers will be on smartphone," says McKend.
The primary determinants of being successful in retail have traditionally been choice, convenience, price and customer service. Today, says McKend, it's about these four plus technical proficiency.
"Customers today are demanding technical proficiency. Simple aspects like load speed can make or break a sale. Simplicity and seamlessness are part of the technical expertise that can determine a company's success - it's where online retail in South Africa will be won or lost," says McKend.
We're in the age of the customer. The customer holds the power not only of when and how to engage, but the extent of involvement.
James McCormick, principle analyst for customer insights at Forrester, says data-driven insights are what help businesses achieve the competitive edge. The challenge, however, solving the disconnect of driving action from data.
"An insights-driven company is one that uses data and analytics at every opportunity to drive action and better decision-making. The reality is that most organisations are insights-influenced rather than insights-driven. They may leverage data with their product management and marketing teams, and leverage analytics to a certain extent to improve customer experience, but by no means are they synchronising it across the entire organisation," says McCormick.
"Companies need their understanding of their customers and their business to be combining with their systems of engagement - e-commerce systems, Web sites and apps, and these need to be tightly bound together in order to deliver great experiences based on thorough knowledge of the customer."