Online shopping drone deliveries could hit SA by 2021: expert

After a few years hovering around the 1% mark, online shopping’s share of total retail sales in South Africa will increase exponentially over the next three years, rising to about 4% by 2021.

This is according online fashion retailer, Spree, which forms part of Media24’s e-commerce branch.

“Barriers to entry such as lack of internet access and limited online payment methods are rapidly being overcome. There are also great improvements in the experience and convenience of online shopping that will draw shoppers online,” the group said.

Speaking on growth in the sector, Vincent Hoogduijn, CEO of e-commerce at Media24, said that growth figures for online fashion businesses “have been exponential”.

“In mid-2017, total sales at Spree were up 88% year-on- year; sales on the shopping app more than doubled, and daily transactions increased by 76%. If this growth continues and is mirrored by other players we will see online retail gaining serious ground and growing market share measurably over the next couple of years,” he said.

Hoogduijn noted that South African shopping trends often follow big global ones. Globally, online retail currently stands at 11% of all retail sales with China coming in well over 20% and large markets such as the UK and Germany standing at 18% and 11% respectively.

Hoogduijn said that it was almost certain that online retail will see its potential realised in South Africa over the next few years – for these reasons:

1. More people are getting online and connected

New research from #AfterAccess showed that 55.5% of South Africans now have a smartphone – and this figure is rising steadily. So the connectivity gap is no longer a major barrier.

“Many South Africans leapfrogged the desktop stage straight to mobile so the growing penetration of smartphones is likely to deliver a big boost for online retail.

“Technological advancements and our increasingly digital lifestyle also help to break down barriers such as lack of trust in delivery and payment, as multiple digital payment options (and even digital credit) are now being offered,” Hoogduijn said.

2. New tech will help get you what you want

“Shopping is increasingly about personalisation, with machine learning building up a psychographic profile of every customer at a granular level and suggesting products accordingly.”

By making use of technology like machine learning and improved online search functionality through voice (like Amazon’s Alexa), online retailers will be able to better serve customers exactly what they need, and direct them to what they’re looking for.

3. Deliveries will just get faster

In the US, drone deliveries and smart distribution tech are already reducing a three-day delivery time to three hours.

“Next to faster and more accurate deliveries, we’re likely to see at least some local deliveries arriving by drones in 2021,” Hoogduijn said.

Since South Africans have a penchant for instant gratification, faster delivery times are likely to speed up the uptake of online shopping as shoppers know that their purchases will arrive very soon after the order is placed. There is a huge correlation between speed to customer and revenue growth, he said.

4. Malls will embrace digital too

“South Africans love a mall outing – it is part of our national DNA. As a result, South Africa has an oversupply of malls – 1,950 of the 2,082 shopping centres in Africa are in SA, according to Dion Chang’s Flux Trends Report.”

Because of this, the mall will still be alive and well in two years’ time – but the way we shop there is likely to evolve as physical and online shops increasingly work in tandem, Hoogduijn said.

“More shops in malls will be shop fronts with limited stock – essentially more a brand presence than a store. Shoppers will browse there but want to buy online. This will mean that even mall shoppers will be making purchases online, demystifying the process. Soon they may no longer feel the need to go to the mall at all,” he said.

Read: New laws to charge VAT on software and other online services in South Africa

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Online shopping drone deliveries could hit SA by 2021: expert