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Partial ban on e-commerce ‘unintelligible’ under level four lockdown

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South Africa’s e-commerce sector believes the Department of Trade, Industry and Competition’s decision to incrementally open e-commerce is “dissatisfactory and remains unintelligible”.

Last week, during a media briefing by members of the National Coronavirus Command Council, Ebrahim Patel, minister of trade, industry and competition, outlined the regulations relating to the COVID-19 level four restrictions.

He noted the local e-commerce sector will be opened “incrementally” during COVID-19 level four restrictions, initially allowing deliveries of a larger list of products, with possibilities of a further expansion during level four lockdown.

This after Patel had, in recent weeks, drawn criticism from local online businesses for restricting e-commerce activities, with South African logistics and e-commerce businesses writing the minister an open letter, requesting home deliveries of non-essential goods to be allowed during the lockdown.

SA has been in lockdown since 26 March; however, government last week began to lift a fraction of COVID-19 lockdown regulations, which has seen about 1.5 million South Africans return to work this week.

While level five lockdown regulations limited e-commerce merchants to selling only essential goods such as hand sanitisers, masks, groceries andcleaning equipment, level four permits the trading of ICT equipment such as laptops, mobile phones, winter clothing, bedding, some hardware, a longer list of personal toiletries, hot foods for delivery, products like stationery and educational resources.

Kim Reid, CEO and founder of Takealot.com, says the relaxed trading rules in level four lockdown can still be translated as a ban on unfettered e-commerce, as a wider list of categories remains out of bounds.

“While we are encouraged by the government’s indication to relax e-commerce in stage four, I will never be satisfied until e-commerce is allowed unfettered. We haven’t seen any real movement to incrementally open up e-commerce yet, so we don’t really understand what it means. There is still quite a large number of items which have a long tail catalogue which haven’t opened up to trading,” notes Reid.

Goods that haven’t yet opened up to selling include household appliances and equipment such as fridges and home appliances, washing machines, toys and exercise equipment, etc.

Reid believes the partial ban of e-commerce isincomprehensible, as the sector contributes significantly to economic growth by providing jobs not only to those working for e-commerce companies, but to thousands of online traders listed on the major online platforms, which form part of the marketplace.

ICT analysts believe the current health crisis will motivate more people to adopt online shopping, even after the lockdown has been lifted.

Local retailers Game, Pick n Pay, Makro and Shoprite told ITWeb that lockdown regulations have led to a massive surge in online grocery orders, with new unique online customers hopping onto the e-commerce bandwagon.

Government had cited unfair competition as one of the reasons for refusing unfettered e-commerce activities during the lockdown.

“It’s nonsense that government says there will be unfair competition; there is no such thing as fair competition, and they should be promoting competition not protecting industries,” comments Reid.

“E-commerce is an enabling platform,which promotes social distancing rules. There is no reason to stop it, which is why all over the world online shopping is allowed. Every single reason that has been given to limit e-commerce in SA is not a valid reason.”

The Takealot Group, which owns clothing and accessories e-commerce site Superbalist.com and Mr D Food delivery service, says its business has taken knock since the beginning of the lockdown period, with Superbalist.com being forced to completely close down, while the other two businesses have been operating at 10% to 15% of normal trading rates.

Under level four lockdown, Superbalist.com has now resumed operations, allowing trade on most of its available items.

Kim Reid, CEO and founder of Takealot.com.
Kim Reid, CEO and founder of Takealot.com.

Invigorating economic activity

The lockdown regulations aim to slowdown the spread of the coronavirus, which has already infected 7 220 South Africans, with the death toll rising to 138 as of Tuesday morning.

Under level four lockdown, the entire agriculture sector will be allowed to operate; however, only half of the mining and manufacturing sectors will open, with retail, professional and personal services following suit, said Patel.

Derek Cikes, commercial director of online payment gateway Payflex, which is used by over 160 South African online merchants, believes opening up the e-commerce sector is a move in the right direction, but it could happen faster.

“The decision to do this incrementally cannot be justified by the fact that this would be ‘unfair competition’ to spaza shops and brick-and-mortar stores lacking a sufficient digital infrastructure.

“There are leaders in the different retail environments which have established their key positioning in environments to which other businesses have open access,” Cikes points out.

Under level four lockdown, many of Payflex’s fashion and apparel online merchant partners are able to sell winter clothing, which comes as a welcome positive for them; however, the majority of merchants are still not able to either open or fully function due to the restriction of products which are allowed to be sold, he adds.

“While this helps some economic activity to resume, the current level four lockdown restrictions are preventing merchants from recouping their losses as a result of level five lockdown,” notes Cikes.

According to Laurian Venter, director at local e-tailer OneDayOnly.co.za, partially banning an industry that can benefit South Africans during lockdown does not make sense at all.

“E-commerce is being used worldwide as part of the solution to this terrible pandemic. Safe deliveries to your front door and ensuring people do not unnecessarily leave their homes is a great way to curb the spread of this disease and serve the people of SA,” comments Venter.

OneDayOnly will continue to allow customers to order and pay for all items; however, delivery is only offered for essential and unbanned goods. This, according to Venter, means in essence the online shopping platform will be unable to fulfil deliveries on any non-essential orders.

“This has a very adverse knock-on effect for smaller as well as larger businesses using our site to promote stock that they would otherwise have no way to sell. This also means that stock sitting in our warehouse cannot be delivered until we reach level three lockdown,” Venter concludes.

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