The Growth of Ecommerce During Lockdown

Following the opening up of ecommerce in SA, some of the payment gateways are reporting significant increases in online activities. Payflex reports a 500% increase in grocery sales on its platform month-on-month since the lockdown started and a four-fold increase in liquor sales. The EFSA Chair, Karen Nadasen, CEO of SA’s PayU, expects ecommerce to reach 10% of total retail sales by the end of the year, but she pointed out that more research needs to be done into the size of the market because online retail figures often do not account for sales such as booking air travel and hotels. EFSA Research and Education Committee has prepared a paper for government funding, pointing out that it is impossible to measure the growth of ecommerce and its increasing importance for a society without information on B2B or C2C ecommerce or B2C sales of services (B2C data on sales of goods is covered by the World Wide Worx); online payment systems and delivery/logistics. The EFSA Committee includes academics from 6 universities.

Research on who is using ecommerce today from PayFast shows that Generation Z (18 to 24), is leading ecommerce innovation, with Baby Boomers (55 to 64) not far behind. According to the research, Gen Z is the fastest-growing group of online shoppers, with a 139% increase in users compared to 2019. By comparison Millennials (25 to 34) only grew by 55% but still account for the largest group of online shoppers. Millennials are also most likely to be using their mobile device, with 37% in this age group making payments with their mobile versus 28% on desktop.

Meanwhile, Woolworths’ new “click and collect” arrangement has become popular. This provides customers with a “curbside” version of click and collects at 60 of its locations. Customers order and pay online, drive to the store and are directed to designated parking bays where staff bring the shopping to the car in a contactless process. Other firms have also found new opportunities. Ride-hailing firm Bolt (formerly Taxify) has expanded to offer deliveries for businesses that need to deliver directly to customers but lack drivers. Businesses pay about R30 for a delivery in an 8km radius. In Cape Town the company has also introduced an online food delivery unit, Bolt Food, with plans to expand to Joburg soon.

For more data on SA’s ecommerce see https://www.yoco.co.za/blog/covid-19-recovery-monitor/.

Meanwhile, a newly released The Cost of Online CX: A R34-billion Opportunity, 2019 South African Digital Customer Experience Report, points out that although over 20 million South Africans (one-third of the country’s population) will shop online by 2021, local companies are missing the commercial opportunities. The study reveals that 71% of South African online shoppers abandon a purchase at checkout. The commercial cost of this for local e-marketers is a staggering R34-billion worth of goods per annum, according to the research. The survey pin-points payment failure as the major challenge (57% of respondents), while site speed (38%), being unable to find what they are looking for (37%) and difficulty in navigating the site (27%) all impact the likelihood of a sale.

Elsewhere, in the UK Online grocery shopping increased by 115% in the four weeks to 13 June over the same period last year, but while the revenues at ecommerce companies are rising so are their costs. On 30 April, Amazon reported its Q1 financial results. Revenues rose by 26% to $75.5bn but Amazon’s net income decreased to $2.5bn from $3.3bn and its operating income decreased from $4.4bn to $4bn. Amazon is expecting to spend the entirety of that $4bn operating income to help its employees and customers in the fight against COVID during the Q2.