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Black Friday online sales soar, but basket sizes decrease

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While the number of South Africans that took to online shopping increased this Black Friday/Cyber Monday, the COVID-19 crisis prompted most shoppers to opt for smaller baskets.

While local banks and payment platforms reported skyrocketing contactless and online transactions, consumer sentiment and spending continue to reflect the current economic downturn due to the effects of the pandemic, with buying patterns shifting to more essential items.

With Black Friday once again falling over the lockdown period, more South Africans were expected to take to online shopping channels than over the previous years.

Karen Nadasen, CEO of payments platform PayU South Africa and chairperson of the Ecommerce Forum of South Africa, notes the average basket size across PayU’s e-commerce partners was down 22%, while online transactions were up by 30% year-on-year.

"The online shopping landscape has changed for the better – more South Africans are buying more products – but COVID-19 has dented the basket size, which is down by 22%.

“The way shoppers approach the biggest online shopping day of the year doesn't look quite the same as it used to. The Black Friday experience is changing annually.”

With consumer buying power taking a knock, this has reduced the novelty of Black Friday slightly, Nadasen adds. Just a few years ago, South Africans were staying up until the clock struck midnight to snatch the early bargains; however, this year the numbers have lowered.

Karen Nadasen, CEO of PayU South Africa.
Karen Nadasen, CEO of PayU South Africa.

"Last year, we saw a 33% drop in volume compared to 2019, in that first hour of trading between midnight and 1am. This year, we saw an additional 6% drop. This seems to stem from last year's disappointing Black Friday experience, where many shoppers felt the good deals simply didn't materialise, and of course, the fact that people have less money.”

Local payments provider Peach Payments saw an increase of over 103% in online shopping payment volumes this year compared to 2020.

“This year’s Black Friday record figures show positive signs for the future of e-commerce in South Africa and the rest of Africa,” says Rahul Jain, CEO and co-founder of Peach Payments.

“Online retail sales through Peach Payment’s gateway on Friday alone increased from R31.7 million in 2020, to R56.7 million (up 78%). Food and beverage increased 91%, while beauty product sales increased 40%, and travel and accommodation increased by 52%.”

While other payment methods like QR codes, Apple Pay and Mobicred are gaining traction in the local online shopping arena, Jain notes, compared to 2020, the volume of card-not present payments far outstripped all other payment methods.

This demonstrates South Africans are becoming more aware of the security benefits offered by cards over methods like EFT, he adds.

In the US, online sales saw a reversal of the usual growth trend this Black Friday, totalling about $8.9 billion, down slightly from $9 billion in 2020, according to Adobe Analytics.

Hard-pressed consumers

First National Bank (FNB) says Black Friday spending has increased by 19% year-on-year, with transactions worth over R2 billion processed on its Speedpoints.

Chris Labuschagne, CEO of FNB Card, says: “Total online transactions (card-not-present) spend increased by 20%, while tap-and-go contactless devices saw more than 600% increase year-on-year this Black Friday.

“The recovery in spending is a sign that households are gradually finding their feet in what has been a difficult 18 months due to COVID-19 and the lockdown. We’re also delighted to see many of our customers using our wide range of convenient and safer payment alternatives, such as virtual cards and Apple Pay.”

According to data released by Standard Bank, utilisation of contactless card payments across the bank’s merchant partners increased by more than 100% compared to 2020.

“South African consumers have been hard-pressed in the past year-and-a-half, but we have seen an increase in online purchase volume spent over this time when compared to last year,” says Nelisa Zulu, head of card and payments at Standard Bank.

“It’s great to see that our customers have embraced innovation and have adopted contactless payments to transact seamlessly.”

Cowyk Fox, managing executive: everyday banking at Absa Retail and Business Bank, comments: “At Absa, we have witnessed some notable jumps in payment volumes this Black Friday. Contactless payments increased more than 110% year-on-year, with online shopping also growing significantly − up almost 30% year-on-year.

“In addition, digital payments have risen more than 50%, as customers gained more confidence in using their Apple Pay, Samsung Pay and QR payment capabilities to make payments.”

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