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SA e-commerce on the up despite down economy

By Supplied Time of article published Aug 27, 2020

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Figures recently published in Salesforce’s Global Shopping Index show a 71% upswing in global digital commerce. This correlates with local data, according to the Consumer Pulse survey, which suggests that South Africa's lockdown measures are spurring consumers towards the country's burgeoning e-commerce sector. As a result of decreased in-store shopping, the report states that 30% of consumers claimed to have made use of online shopping options during the country’s Level 3 lockdown in June - a sharp increase from 19% prior to May, when Level 5 lockdown was in full swing.

Salesforce data for Q2 also points to a potential nervousness among consumers globally about product scarcity, as shopping cart completions increased 35% year-on-year (YoY). The worries of South Africans are more focused on the spread of the disease. Thus, the Consumer Pulse research shows that the majority of consumers remain fearful of Covid-19 transmission in South Africa, even as bans on alcohol, tobacco and e-cigarette sales are lifted. The report also shows that 70% of South Africans are "extremely worried" about the country's sharp rise in coronavirus cases.

Says Robin Fisher, Senior Area Vice President of Salesforce Emerging Markets, “Salesforce figures show e-commerce revenue in Q1 2020 growing 20%. Q2 data recorded in the midst of the Covid-19 pandemic shows unrivaled digital revenue growth of 71% year-on-year for the period. While we don’t expect ecommerce to continue growing at this speed in all geographies, there is clearly room for further growth in emerging markets, such as South Africa. In addition a 37% year-on-year increase in digital traffic growth over Q2 2019 was seen in tandem with a 34% increase in shopper spend.”

Figures published by market researcher Nielsen South Africa show that 65% of South Africans have reduced visits to physical supermarkets, traders and malls despite much of the population’s heavy dependence on informal trade outlets.

Nielsen shows notable increases in demand for online grocery retail and delivery, made possible by a combination of mobile-first technology and adaptation by local service providers. The report also notes that many South African consumers have been unable to join the e-commerce boom, as they struggle with access to technology, steep data charges and slow speeds - a critical barrier between retailers and millions of potential online customers.

Nielsen says 29% of South African consumers are shopping more online now than before the pandemic (compared to 30% reported in the Consumer Pulse survey), which aligns with Global Shopping Index figures that report a 37% increase in global digital traffic growth. This rapid increase to 29% from 21% before the Covid-19 outbreak, is a potential indicator of steadily growing medium- to long-term enthusiasm for e-commerce by greater numbers of South Africans. That said, it serves as a relatively modest increase compared to the worldwide 40% year-on-year increase in unique digital shoppers for Q1 2020, as published in the Global Shopping Index.

Fisher continues, “South Africa still has a great deal of ground to cover to make e-commerce accessible to the majority of people. Yet continued growth in the sector, as evidenced by YOY and quarter on quarter (Q/Q) figures, shows that there is potential for a digital consumer renaissance beyond the Covid-19 pandemic.”

According to McKinsey & Company's recent SA Consumer Sentiment, some 40% of consumers intend to increase their online shopping spend, compared to traditional in-store purchasing, even after the coronavirus crisis has passed. Salesforce also reported that, on a global scale, the convenience associated with online retail purchases has proven to be an overwhelming drawcard, even after physical storefronts have reopened en masse in different parts of the world.

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