E-commerce will be the primary driver of business growth in the next ten years. Although the Covid-19 pandemic expedited the need for businesses to overhaul their digital and e-commerce offerings radically, this rise has been on the cards for many years.
Companies that don't proactively invest in e-commerce are already falling behind competitors. And apart from all but a few niche industries, businesses that don't rectify this will struggle to retain market share and stay relevant in a rapidly digitising country.
Although few would dispute the broad claim that e-commerce is the future of business, some still claim that South Africa has some time before the digital boom. But the numbers refute this.
In 2021 South Africans spent roughly R76 billion at online stores, making it the 41st largest e-commerce market globally. Covid-19 kickstarted SA’s year-on-year e-commerce growth by 19%, and although economists expect this to drop off from these highs, the next three years should still see South Africa's annual e-commerce growth rate to hover around 8%.
"Although the market is 35% penetrated, this doesn't tell the whole story," says Herman de Kock, Executive Head: Sales and Service, Nedbank Business Banking. "Penetration in this definition is one person buying at least one item online in 2021. But as consumers grow more comfortable shopping online, and as technology facilitates faster and safer payments and quicker and easier delivery times, it's safe to assume the trend will continue ahead of inflation."
Simply put, no business owner can afford to miss out on the growth opportunity in e-commerce, says de Kock. He highlights critical issues that business owners must consider if they want their e-commerce strategy to grow over the next three years.
1. Clients must remain your primary focus
Digitisation of businesses often comes at the expense of the human touch. De Kock says the best way to avoid this is to see digitisation and whatever it means for your business as an augmentation of your strategy and not a strategy in itself.
"Stay focused on what your customer wants and how much their buying and product preferences have changed in the new normal. Let the latter guide you on how to pivot your business model and investigate how that will inform your investment in digitisation, of which e-commerce can be an important piece," de Kock says.
2. Tackle your e-commerce integration one step at a time
It's tempting to look at an e-commerce strategy as an impossible task and give up before you begin. But it's the small, considered steps that create the critical mass needed to get an e-commerce strategy started and eventually bearing fruit.
One of the best ways to start the process is to tap into existing solutions in the e-commerce and banking marketplace. Accepting digital payments, for example, used to be a nightmare - particularly for small businesses. But this is no longer the case, says de Kock.
"For example, Nedbank offers solutions that enable your business to adapt to the era of digitisation in small affordable steps, such as its brand-new Tap on Phone feature on its PocketPOS app. This feature converts your compatible smartphone into a card-accepting device, with no extra fees," he says.
Multiple digital wallet services also exist, such as Apple Pay, Samsung Pay & Masterpass (QR).
3. Embrace the future, but respect the past
Embracing the future of e-commerce and the latest payment methods doesn't mean you can completely forget about the technology that came before it. The progressive and layered nature of the sector means banks are constantly evolving their solutions - not scrapping and rewriting them.
"The new normal does not mean casting aside previous methods. Rather, it should encourage an eclectic approach that results in a hybrid client-centric experience," de Kock says.
4. Leverage data to your advantage
E-commerce isn't just about accepting new payment solutions, though. Customers who shop online share extensive information that businesses can - and should - leverage to both improve the customer experience and your bottom line.
"For example, Nedbank's big-data solution, MarketEdge, can empower your business to understand your customer base. It provides innovative merchant payment date insights to help merchants better understand their customer's buying patterns, typical demographics, and other valuable market information," de Kock says, "All of which benefit both the customer and the business."
5. Link into existing, robust ecosystems
Many of the world's most powerful online businesses - Amazon, Uber, and Airbnb, for example - are not doing anything particularly complex. Instead, they're leveraging the power of the platform economy, which simply allows two or more of their users to interact.
Your business doesn't have to take these giants on - instead, by linking into platform economies, you can exploit ecosystems that already exist. And local examples, like Nedbank's Avo, create marketplaces that connect businesses to clients.
"Avo Business-to-client enables merchants to meet customer needs by enhancing their selling power. This is an era where platforms give the business owner the ability to launch their business into multiple ecosystems. Whether users need home services, groceries, takeaways, great tech deals, deals on vacation destinations, entertainment options or security solutions, Avo offers these and much more," says de Kock.
"Soon, we will be launching Avo's new Business-to-business (B2B) Marketplace, businesses to buy from and sell to other businesses."
E-commerce has changed dramatically in recent years - and the biggest boom in online sales and transactions is yet to come. By forming partnerships with others who share an equal vision for the future of the online world, there's no reason why any business in South Africa can't take its existing e-commerce solutions to the next level.
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This post was sponsored by Nedbank and produced by Adspace Studio.