Growth Prospects of E-Commerce Industry in South-Africa

E-commerce flat illustration concept

We are well aware about how greatly the e-commerce industry is booming across the globe. There are countries like USA, China and India wherein the rise of e-commerce market is ever-increasing with the pace of time. But its not like that in all parts of the world as there are also some countries which have yet not experienced the e-commerce boom but are slowly but surely moving ahead on that road.

South-Africa is one such region which is still in the infant stage with regard to the growth of e-commerce industry within it. In comparison with the rest of the world, it is not even close to any significant primary benchmark in the industry. The question which forefronts at this is that why is the e-commerce arena lagging so much behind in South-Africa? What is holding up South-Africa in moving ahead on the path of e-commerce growth?

Limitations Faced by the South-African E-Commerce Industry:

Absence of the necessary environment needed for the overall growth of e-commerce sector is mainly responsible the lack of growth of e-commerce industry in South-Africa. Enlisted below are some of the main reasons affecting the growth of e-commerce industry in South-Africa:
Consumers in South-Africa find delivery charges for online purchases to be higher. They instead prefer to practically go to the retail store outlet and purchase the products from there itself.

Most of the people are under the impression that they can do an online purchase only if they are having a credit card (although most online stores do offer at least EFT as a choice).

Consumers are not sure about whether to provide their credit card details to the online store website or not. They are worried about the security issues, specially related with credit card fraud.

Many consumers prefer purchasing products like clothing, footwear etc. by practically seeing the products and trying hands on them on the spot, which is not possible with the online medium. Also, they are not sure about how they can return the items, if they find them unfit after making an online purchase.

Due to lack of proper website design or content, many times consumers feel unsure about buying from such mediums and instead prefer to purchase from a local authentic physical store.

There is a lack of Internet penetration in many pars of South-Africa, which does not allow many prospective consumers to access e-commerce websites and purchase through them.

Present E-Commerce Industry Trends Prevailing in South-Africa:

Electronic commerce

Looking at the limitations faced by the South-African e-commerce industry, it can be said that it’s not at all a bed of roses in the e-commerce arena prevailing there. However, witnessing the traction gained by the e-commerce industry across the world, South-Africa has off-late recently began reaping the benefits of this platform. Based on the latest figures, e-commerce industry in South-Africa was expected to make up R 4.2 billion of South-Africa’s GDP in 2013 alone.

According to a MasterCard research from 2013, e-commerce makes up about 2% of the total retail market in South Africa at present. Besides, e-commerce in South Africa is emerging as a healthy and growing market in South Africa, with an annual growth of between 30% and 40%, according to World Wide Worx MD Arthur Goldstuck. The factors responsible behind this growth figures are partly backed by the digital participation curve, which suggests that an average person requires about five years online before they are ready to shop online.

In the recent times, there have been some e-commerce companies which have begun to mark their online presence in the e-commerce marketplace. One of its remarkable examples is Nigeria based online retailer, Jumia, which although being founded only before two years, is speedily gaining a significant marketshare within the country.

Although, there were some noteworthy retail e-commerce closures like Style36, 5Rooms, Kinderelo, SA Camera and 5Ounces recently, but on the other hand, a noticeable success has also been marked by other retail e-commerce endeavors like YuppieChef, Ghana’s, Sierra Leone retail and consumer site GoShop, Nigerian classified ad site OLX; and Konga, a Nigerian competitor to Jumia.

Looking to the present scenario, it can surely be said that South-African e-commerce industry is slowly but surely on its way of building a strong e-commerce position and embrace the booming e-commerce times in the upcoming future.

Growth Prospects of E-Commerce Industry in South-Africa:

Modern business with new technologies

At present, we are marking a significant increase in the number of people using the medium of Internet in South-Africa. This will surely help in ensuring a healthy growth of the e-commerce industry, because with the increase in online experience, user’s are more likely to make an online purchase and do so more regularly. Based on the figures by the International Communications Union, at present, 16% of the African population is having an internet access, which is up from 10% in 2010.

However, a continued growth of e-commerce depends, on a number of other factors also such as government tax policies and cross-border customs regulations, availability of adequate and secure payment solutions, shipping and handling standards and Internet access costs. According to a recent report by McKinsey & Company it has been revealed that, eCommerce could account for as much as 10% of retail sales in the African continent’s largest economies by 2025.

Overall, we can say that, there are surely many growth prospects in store for the e-commerce industry in South-Africa but to open its doors, we need to be more innovative in our approach towards online business. Online retailers can surely win over the widespread willing buyers, provided they make online shopping experience more reliable, accessible and secure for everyone.

A Final Note About the E-commerce Industry in South-Africa:

Although, most retailers may not have opened the doors of e-commerce in South-Africa until now, the present sales figures of the e-tailers are on the rise, almost every month. This surely indicates that gradually consumers are becoming more adapt with the medium of e-commerce and this trend will surely increase, provided South-Africa inevitably follows the latest technology trends like the rest of the world.

It can advised that future South-African e-tailers insist on developing a genuine world-class site that is in line with their product offerings. Also, they need to keep their focus on the back office personnel to ensure that orders arrive in a timely manner and they update their customers at every step of the order fulfillment process.

There exists all the possibilities for the South-African retailers to enter the e-commerce platform and increase their earnings and expand their reach up to their prospective customers located across the globe. Even though, it has not been the case until now, but the times for a progressive e-commerce sector in South-Africa are not far enough. Now, it is certainly the time to get going and make a significant mark in the South-African e-commerce industry.

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