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Shopping sites prepare for Black Friday battles

Read time 5min 40sec

Online retailers are gearing themselves for a boost of sales on what is expected to be the biggest shopping day of the year, on Black Friday, 29 November.

With one week to go, the Black Friday frenzy has already begun as online retailer’s battle it out by running early discount deals in an attempt to gain the biggest number of customers on the day.

Black Friday is traditionally the day after Thanksgiving in North America, which marks the day when retailers move into profitable territory (the black).

The trend has been embraced globally in recent years and is regarded as the start of the festive shopping season.

While retailers like Shoprite, Pick n Pay, Makro, Checkers and Game are expecting thousands of walk-in consumers, PwC research shows that each year, more and more South Africans are opting for online shopping, with 43% of this year’s Black Friday shoppers opting for e-commerce sites.

South African consumers are planning to spend 36% more this year than in 2018 during the Black Friday/Cyber Monday shopping period.

Online shopping sites Takealot, Zando, TFG (formerly known as The Foschini Group), bidorbuy, Superbalist and Massmart, told ITWeb they are preparing to run online deals that run up to five days after Black Friday.

Takealot says its Black Friday gross merchandise value grew 125% from 2017 to 2018, with orders up by 127%, generating revenue of R196 million in 2018. This year, SA’s biggest shopping site says it is eyeing even bigger gains.

“We are anticipating an 80% increase to around R350 million in revenue on Takealot and a 50% increase to R40 million on its sister e-commerce site, Superbalist,” says Takealot CEO Kim Reid.

“We expect to ship at least one order every second, with roughly 10 000 boxes leaving our warehouses every hour. We have more than 4 500 delivery drivers and we anticipate they’ll travel over 4 million kilometres from Black Friday until 24 December. To put that in context, it is the equivalent of circumnavigating the globe over 100 times.”

Refilwe Boikanyo, communications manager at Massmart Group, says in 2018 the group, which owns Game, Makro and Builders Warehouse, among others, reported group sales of R1.8 billion on Black Friday.

“Makro alone made its first R200 million within 15 hours on its online platform, which is equivalent to what our biggest online competitors made for the entire Black Friday trading period. Our trading brands are among the most popular Black Friday destinations for electronic appliances, hi-tech products and festive season consumables, so every year there is a bigger appetite and we are expecting even more this year.”

Takealot CEO Kim Reid.
Takealot CEO Kim Reid.

Higher turnover, despite economic downturn

According to PwC, on Black Friday 2018, South African retail sales increased by 1 952% compared to an ordinary shopping day, while the global average is an increase of 663%.

“In a survey of 1 000 South Africans, around 85% intend to buy something, or would consider it, if there is a good enough deal. An average consumer is expected to spend roughly R3 812 on Black Friday sales,” notes the report.

Financial services firm, BankservAfricasays last year South Africans spent R2.89 billion in card transactions on Black Friday sales, a 15.92% rise in sales compared with 2017.

“In 2018, BankservAfrica’s data showed a total of 5 204 594 in-store card purchases (4.8 million) and online card (404 594) sales,” says Martin Grunewald, executive head of payments business at BankservAfrica.

“We expect nothing less in 2019 as Black Friday sales have been growing year-on-year. Interestingly enough, many South Africans purchased essentials in 2018, although some were splashing out on appliances. We could see the same pattern this Black Friday.”

Despite SA’s economic downturn and financial planners warning South African consumers to not indulge in the allure of Black Friday mega discounts, Grunewald says he expects a bigger turnover in this year’s card transactions.

“Every month we issue the BankservAfrica Economic Transaction Index; although the overall numbers are down, the economy is still growing at a pace that is lower than the population growth rate. As such, we believe Black Friday spend could lead to another month of transactional volume growth,” he points out.

Graham Du Plessis, head of marketing at Zando, says due to the current economic climate, the company is “cautiously optimistic” about this year’s Black Friday.

“Naturally you have to factor in the difficult economic climate in SA at the moment and how this has impacted retail as a whole this year.

“However, we have consistently exceeded our double growth targets in prior years, so this does lead us to be confident. Our customers still really respond to real value being offered and we believe we have the right mix for our 2019 Black Friday sale.”

Consumer buying behaviour, adds Du Plessis, has evolved over the past few years, to customers gearing up for Black Friday by saving up during the course of the year.

Bidorbuy CEO, Craig Lubbe, says the online shopping platform, which has around two million registered users, is expecting no less than great returns.

“In the past three years in particular, bidorbuy has seen an incredible increase in demand over the Black Friday period. We anticipate this to continue this year, witha double-digit growth. Last year, shoppers rushed to take advantage of substantial discounts across all of bidorbuy’s 30-odd categories of products, with the most popular being the home and living, cellphones and accessories, electronics and gaming categories.”

Local banks FNB and Absa say they expect a significantly higher number of card present and card-not present transactions during the Black Friday and Cyber Monday period.

FNB says it expects a 15% increase in Black Friday transactions, while Absa was unable to confirm a number.

“Over the past three years, FNB has seen a substantial increase in transaction volumes for the period between Black Friday and Cyber Monday.While we still expect that card present transactions will reflect the majority of consumer spend, online and app purchases have shown strong growth in recent years in line with the increase and adoption of e-retailing in SA and globally,” says Thokozani Dlamini, FNB Merchant Services CEO.

Banks and cyber security firms have warned consumers to be vigilant while shopping online, as fraudsters are already planning to pounce on unsuspecting shoppers.

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