Customer Behaviour in SA: What to Expect from E-commerce
- Jenna Attwell
- Apr 24, 2024
- 4 min read
Updated: Aug 2
The Zeitgeist of 2024
Photo credit: Boxed water is better on Unsplash
Content
Welcome to the paradigm shift and the trickle-down effect.
Just think how recent socio-cultural trends have impacted the everyday consumer, the times we find ourselves in. Brands that attune to the zeitgeist find it easier it to understand consumers compared to those who are stuck in their old ways - 'you can lead a horse to the water, but you can't make it drink' scenario.
If you had to introduce the post-pandemic consumer to the pre-pandemic version, you'd have two very different consumers. Why? When we're faced with something unfamiliar, we make up our minds based on that experience - the 'what you see is what you get' fiasco. That's just one example out of many, but it's not always the case.
As technology provides more access to buyers, international brands will easily snuff out their smaller competitors, creating a vacuum effect for any local businesses that want to reach their prospective consumers. For more on the matter, follow the yellow brick article.
The E-commerce Playbook
The shift of our e-commerce landscape ties back to the Covid-19 pandemic. When consumers were forced to change the way they went about their everyday lives, businesses were driven to restructure their framework around those changes. Albeit, the pandemic (the catalyst) was the biggest influence behind operation reconfiguration.
Aside from the cluttered ad space from multi-national companies, what we should be asking is, 'What will these multi-national platforms take away from local competitors?'
Amazon in South Africa
Everyone knows that Amazon is more than just a multinational e-commerce giant, offering the latest tech and the slightly smaller-than-advertised pyjamas. Not so long ago, the up-and-coming news of Amazon's plan to join the South African market was announced, but didn't really resonate with the majority. The truth is, we know exactly who would have an advantage over the market on a global scale, but with our market? Local is lekker.
The global scope and reach is what drives Amazon's revenue into the billions. According to Statista, "The steadily increasing sales figures speak for themselves — Amazon hit nearly 575 billion U.S. dollars in net sales revenue worldwide in 2023." What contributes to these figures are the third-party sellers, ad space, subscriptions, and courier delivery fees. Whilst customers have an enormous selection to choose from, end-to-end logistic services are what make it work.
The difference between local and Amazon is that Amazon is present in a multitude of locations, so no matter where a customer orders from, expect a delivery in X days.
The one thing that South African e-commerce sites have an up on is the brand loyalty. The majority of South Africans (based on what I think - don't quote me) are more inclined to shop from who they know versus a massive multi-national brand like Amazon. However, not enough people are aware of how import duties and customs work; and if the delivery costs more than the product (which in some cases is true), people would rather not buy. It's also worth noting that if South African's import (even for personal uses), they're limited to a certain number of imports a year. The government stipulates that either you stay within the limit or get yourself an importers licence for business distribution (based on what SARS confirmed).
SHEIN & TEMU
Recently, we've seen a growing presence of international e-commerce stores entering ZA. TEMU - owned by PPD holdings in China - became the next runner up against Shein, Superbalist, Bobshop, Zando, and Takealot. No matter where you look, TEMU's online presence is everywhere, infiltrating Google and Facebook's ad space. Both companies offer prices that South African businesses simply cannot match, and with ever increasing competition, it makes it that much harder to compete. Marketing campaigns from Shein have shown tremendous results, spending an estimated worth of 3 Billion U.S Dollars alone in 2023, whilst TEMU spent 1.2 billion U.S dollars on Facebook and Instagram.
However, we're starting to see local brands take action. With increasing advertising and interest from Shein and Temu, retailers like Zando plan to tackle both, using a global division called 'Zando Global'. They're incorporating 200 000 products, ensuring a fuss-free shopping experience from a local operations point-of-view. The goal is to reduce uncertainties when it comes to ordering products online.
The Online Marketplace in 2024
We're dealing with a number of shopping growth spurts at the moment. The digital presence comes at a time where the new generation are calling the shots, with personalisation becoming the norm. For instance, platforms like TikTok, Instagram, and Facebook are utilising platform features to direct users to their shop - eliminating the need to search outside of the app.
The Shopping Landscape:
Woolworths has 'Woolies Dash,' Checkers has 'Checkers Sixty 60,' and Uber has Uber Eats - the game is on. Grocery shopping online wasn't even a priority before the pandemic, and now it's become a commodity for everyone. Since 2016, over 1.8 million users have downloaded the Woolies Dash app - offering food, homeware, and fashion from a single touch-point.
One example to show how much online shopping has changed competitive selling in S.A:
A Statista report shared the Takealot group revenue, reaching 808 million U.S. Dollars in 2023 - a significant increase when compared to 2019 (revenue stood at $318 million U.S. Dollars).
Summary
The scary thing is, we're living in a digital world that is constantly evolving. Everyone is bombarded by brands that tend to think, 'the more, the better'. This couldn't be further from the truth. We're not just consuming content online, but we're spending an awful amount of money, more than ever before. What comes to mind is quantity over quality; it's no longer the other way round. This begs the question, 'are we revolutionising the e-commerce landscape or filling it with stuff we simply don't need and are paying the price for it?' (quite literally).
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