How lockdown unlocked online potential for Loot and the end of the line for brick-and-mortar stores
It exposed how vulnerable humans are to a virus; how a pandemic can wreak havoc on global markets, brought constraints in supply chains and logistics into stark relief, highlighted our socio-economic divides - and signalled the end of the line for many traditional brick-and-mortar stores.
On the flip side, lockdown has been a boon for e-commerce, triggering a surge in demand for online retail.
Loot.co.za was well-positioned to take up the challenge, said Greg le Roux, the retailer's chief executive, because it was able to acclimate rapidly. But logistic and supply issues remain concerns.
The deeper the crisis, the better the opportunity should be.
In 2003, another novel coronavirus triggered the rapid growth of Alibaba, setting it on its path to becoming a $470 billion (R8 trillion) success. Founder Jack Ma’s response to the epidemic, by sending staff to work from home to avoid spreading Sars during a self-imposed quarantine, is widely held as a watershed moment for online retailers as consumers and businesses turned to e-commerce in growing numbers.
In South Africa, which has lagged for years, it has taken a new coronavirus to fast-track online shopping, but the surge in demand has been hampered by logistic and supply constraints.
Before Covid-19, local online retail had been projected to reach just 1.4 percent of total retail in the country by the end of last year, reaching the R14bn mark.
By 2022, that was expected to hit the 2 percent mark, according to forecasts by World Wide Worx. In its Online Retail in South Africa 2019 report, the market researcher said growth rates of between 25 and 50 percent reported by individual online retailers, would not be unusual, “with slightly more tempered expectations for 2019 and 2020”.
Then came lockdown, and online shopping became a lifeline for many customers fearful of their exposure in brick-and-mortar stores.
A Nielsen syndicated study found lockdown and the temporary ban on non-essentials forced consumers to switch to digital shopping alternatives, with 37 percent of South Africans saying they were shopping more online.
Statistics show that revenue in the e-commerce market is projected to reach R63bn this year, adjusted for the impact of Covid-19.
Le Roux said: “We have differentiated ourselves by showing how we are able to adapt to change quickly by pivoting our business in line with our customers' demands and needs.
"This was evident when we were the only general online merchant who never had to shut business over the initial lockdown, but rather ensured we had essential items available for immediate dispatch while customers could purchase non-essential items for dispatch after they were allowed, according to the various lockdown levels.”
With a spike in demand and dramatic increases in orders, Loot.co.za experienced a 70 percent increase year on year.
That, coupled with the fact they were only able to operate with a third of their usual staffing component at the warehouse due to social distancing, government regulations and other issues, resulted in a bottleneck and delayed deliveries.
“Our suppliers are experiencing the same issues and as a result many items on order for customers are further delayed by this knock-on effect.”
The supply chain is under pressure, with inbound international cargo flights running weeks behind schedule and unable to piggyback off non-existent commercial flights, customs departments at airports shut due to Covid-19 outbreaks, suppliers are battling to satisfy demand and courier partners have staffing issues, which has resulted in a perfect storm for e-commerce.
With the easing of restrictions, bottlenecks will be resolved, but not soon enough for Le Roux.
He said Loot believed retail has changed for the better: “The pandemic has thrown online sales into the limelight. Online retail will continue to grow during the lockdown levels and beyond. This will be the new normal.
"No one is enjoying or having a good physical retail experience, whether that is to your local grocery store, the hardware store, or for that matter, to stock up on alcohol.”
Herein lies an opportunity, he believes.
“Selling on Loot gives SMME (small, medium and micro-enterprises) businesses the opportunity to market and sell their products to a much wider audience. Loot provides back-end services to these retailers that they may otherwise not be able to afford national distribution and logistics and marketing to our very large base on a daily basis.
"We also give sellers the opportunity to list in our daily deals and special offer campaigns. And we have warehouse facilities for the SMMEs to use in Cape Town and Joburg.”
Le Roux says Loot’s fees and handling costs are the lowest on offer.
“The pandemic has certainly helped SMMEs on trusted market places, such as Loot, increase their sales. Our sellers, operating off our marketplace platform, have seen massive growths of over 70 percent. In fact, the sellers' revenues off the Loot market place are almost double what they experienced over Black Friday last year. So it’s been an incredible success story for Loot.co.za,” he said.