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Brands That Invest Online Today Will Reap The Future Reward

Brands That Invest Online Today Will Reap The Future Reward

Rudi Nienaber

E-Commerce Manager Smollan

Rudi.Nienaber@smollan.com

In 2016, ecommerce reached 1 percent of total retail sales in South Africa. While still lagging behind the global average of roughly 8 percent, the recent growth of online retail has surpassed that of bricks and mortar by a factor of five.

Although we may not catch up to more advanced markets anytime soon, ecommerce remains one of the most dynamic retail formats in South Africa with a host of online retailers making significant progress in meeting the needs of a growing online shopper base.

Despite this progress, research has shown that several impediments to online adoption remain a reality in South Africa, including a distrust of online payment methods, the cost of delivery, the lack of online loyalty or rewards programs, and poor product information.

Though we’ll overcome many of these challenges, contrary to what some commentators may say, ecommerce will not be the death of retail. However, it will, without a doubt, shape the nexus between retailer, shopper, and brand beyond anything we’ve witnessed in recent history.

Below are five predictions, varying in timeline and probability, that we believe businesses in

the retail sector should be thinking about:

The Distinction Between Online and Offline will Become Obsolete

The harnessing of electricity was a momentous development for humanity and the first electric products were called out for their ingenuity. Rightly so. But over time electricity stopped being a “thing” and simply became an enabler for the way we operate. The same has happened to “digital” and the same will happen to “online”. We’re not there yet – “omnichannel” remains an aspiration but this will become the norm as shoppers begin to expect a seamless experience in how they engage with brands in front of a screen or on a shop floor. The siloed approach in which we typically deal with online and offline doesn’t recognize the reality that online is simply another sales channel.

Households will be Powered by Smart Technology Driving Automatic Replenishment

We’ve started to see the early stages of this but in time, artificial intelligence and connected devices will allow for our stock up shopping to be shifted to predictive auto- replenishment. This may not be a reality for large portions of our populations but there is a huge amount of spend which will potentially be at play. The implications for brand stickiness, impulse purchase, non-invasive in-home messaging, and direct to consumer relationships can’t be ignored. Retailers and brands that can unlock this opportunity will also be able to overcome the

relative cost of delivery because of increased basket sizes and predictable cycles of fulfilment.

Retail will Remain Relevant, as an “Experience”

Retail won’t die, but the space and functional requirements of a retail store will drastically change. Experience will trump necessity, as shoppers look to retail as a space to explore the senses. In-store marketing geared purely towards dissemination of information will become less effective as shoppers are powered with almost limitless information at their fingertips. However, retail will continue to provide an invaluable opportunity for tangible, immediate gratification and sensory influence.

Mobile Commerce will Leap Frog Modern Trade Retail in the Developing World

In much the same way that mobile phones leap frogged fixed line telephony in many parts of the world, mobile commerce could potentially do the same with a portion of modern retail. As smart phone penetration and data accessibility increases, so too will the growth in mobile commerce, and a scenario will emerge in which the roughly 100,000+ informal retail outlets in South Africa could become a powerful digitally enabled click and collect network. Not only would this help overcome barriers associated with online payment and delivery, but brands could have access to huge amounts of shopper data that would support highly targeted messaging and promotion directly in the hands of the shopper.

Democratization of Sales Through Third Party Marketplaces Allow Niche Brands to Take Share 

Marketplaces have played a big part in the success of some of the world’s dominant ecommerce platforms. Locally, we’ve seen several players introducing marketplaces, with four out of the top five trafficked online retailers having a marketplace. As a result, it’s never been cheaper or easier for smaller, niche brands to reach markets at scale. Conversely, for large established brands, not only is there a potential threat from emergent brands, but also the threat of uncontrolled sales of ones’ own brands. As such, it becomes hugely important for brands to have a clear view on the “what, where, and how” of their own products along with those of competitors across the online ecosystem.

Given the relative immaturity of ecommerce and brands’ online journeys in South Africa,

an opportunity exists for those businesses that invest in the space today to attain a  disproportionate share of online sales relative to their position in traditional retail. Even

the most basic interventions of increased availability and enhanced visibility through consistent digital merchandising can put brands ahead of the competition, and place brands at the start of the journey towards seamless omnichannel retail.