The future of e-commerce in SA

 ·15 Sep 2013
South Africa top

Mobile, online-offline convergence and simpler payment methods paint the landscape for where e-commerce is headed in South Africa, according to Luke McKend, country director for Google South Africa.

Speaking at the uAfrica eCommerce Conference in Sandton on Wednesday (11 September 2013), McKend presented the challenges of doing e-commerce in South

Africa, and painted a picture of what the market will look like in the next few years, according to trends seen by Google.

According to McKend, the key challenge faced by online stores in South Africa is to deliver on the promise of e-commerce – to gain loyal customers through meeting expectations and provide a stable, trustworthy and secure service.

Looking at the South African e-commerce market, McKend highlighted that the country is projected to see 29.8 million Internet users by 2016, with a 25% increase in online spend anticipated this year.

Notably, McKend noted that, in 2014, South Africa is expected to have 80% smartphone penetration as mobile operators such as Vodacom and MTN are working to bring “sophisticated” devices to more people at a more affordable price.

“The web is mobile,” McKend said, stating that most people’s first interaction with the Internet in South Africa will be through a mobile phone – and Google SA stats reveal that there are more mobile searches than desktop searches in South Africa.

Luke McKend

Luke McKend

The future of e-commerce

Quoting data from World Wide Worx, uAfrica head Andy Higgins said that, in 2013, South Africans are projected to spend as much as R4.2 billion online – excluding air tickets – representing an estimated 25% growth in the market.

According to McKend, the “store of the future” will a convergence between physical retail and online – where customers don’t discern between buying something online or offline, but view purchases and transactions as “I’m buying this from a store.”

The gap between what is considered “commerce” and what is considered “e-commerce” is going to narrow, McKend said, and technology is going to be core to the transition.

To this end, McKend said that all stores will need to make sure all their products are available online – if not for purchase, at least for review.

“We need to make sure that all the inventory we actually have lives in the cloud,” he said, adding that users need to be able to see everything retailers have, online.

Users who don’t see products online, assume it’s not available in store, McKend said, noting a growing trend in online users looking at inventory through websites to research products before stepping foot into a store.

Another shift to be expected in the e-commerce space, are simpler payment methods.

“We need to make online payment easier,” he said.

According to the director, payments need to become a completely digital transaction, and noted that Google is experimenting with different payment methods, particularly NFC, across the globe.

In mature markets like the USA, the Google Wallet has been there for a while – but it’s not necessarily a model applicable to other regions, like Africa, where a number of competing payment methods, like mPesa, are seeing massive uptake and success.

“The idea [of the Google Wallet] is to replace the card. The key is simplicity, to make sure you’re only carrying one device for all your needs.”

In Africa, Google is looking at other methods, with McKend highlighting the NFC-card bus payment system in Kenya as an example of how to go about simplifying payment for services.

In closing, McKend said that more stores will be moving to create a personal relationship with customers.

While technology may change the landscape – how people shop and how people access stores – it’s the core of the experience customers have with stores that will determine continued success and loyalty.

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