How SMEs can leverage ecommerce to grow their businessSeptember 22, 2020
By Gabriel Swanepoel
Leveraging ecommerce: The key to grow your micro or small business
In the South Africa of about 15 years ago, total retail sales via ecommerce hovered at R2 billion. This year, the estimate for total online retail sales is close to R14 billion – a phenomenal 700 percent increase.
Ecommerce is not new of course, but certainly, a lot has happened in the past few months to make everyone think more in depth about what they buy and why. It has become top of mind for many people to find the easier, safer and faster way to buy – with more convenience and peace of mind. COVID-19 didn’t give rise to ecommerce, but the sweeping lifestyle changes that the pandemic mandated, have absolutely accelerated our use of ecommerce.
Consumer behaviour is changing
With the rise of the pandemic, globally and in South Africa, people are now more concerned with hygiene. From a business perspective and taking a closer look at the South African market, SMEs must think about what has fundamentally changed in the way that people are interacting.
How many of the things that you bought last year face to face, are you now buying electronically? Have you recently tapped a card, scanned a QR code, dipped into an eWallet, shopped from your couch?
If your own use of cash has reduced over the past few months, you can be almost certain that this is most likely the case for your own customers too. During South Africa’s initial lockdown, our Mastercard consumer sentiment study clocked three quarters (75 percent) of South African respondents saying they are using contactless. That was April. I think that in the coming months, we will see many more people using contactless payments.
In a way, the friction that consumers experienced at the physical checkout location before COVID-19, was less than it is now. We are required to wear a mask, wait in a queue outside a shop, keep a two-meter distance – let’s think about these behaviours from a consumer perspective. If I can access the same goods and services, either online or through a mobile app, and I'm able to have it delivered at my house, or I'm able to pick it up on the curb-side, then that starts to make a lot more sense to me as a consumer. If friction can be removed, it should be removed.
Understanding the reason behind behaviours is affecting the way we think about payments in general and how checkout works. If you think about it from a merchant perspective, then what should be top of mind? Clearly, an online presence is absolutely key, in whichever way or form. Equally important to having an online presence is acknowledging the impact of consumer interaction and engagement – ratings matter, engaging with consumers matter, dealing with complaints effectively and fast across all channels matter.
The need to go digital is driven by multiple factors, but three in particular have taken on a heightened importance in a COVID-19 landscape: Increased competition, higher customer expectations and deeper financial pressures. As technology further evolves, we need to be cognizant of the factors that drive this for us.
To remain competitive, you need to be in the ecommerce space
Consumers no longer face the traditional barriers in terms of interacting with your competition in order to affect a sale. Online access, the way that products can be researched, and how people can interact in a secure and safe manner across different platforms, allow them to reach out for the best price.
Think about how you can differentiate. What is the specific value proposition that you deliver from a product point of view? Can this be adapted to particular consumer expectations?
According to Mastercard data, for every $100 spent in MEA, half ($47) was spent on ecommerce in May compared to a third ($35) of this figure in February this year. A recent Nielsen survey indicates that consumers are doing more shopping online now than prior to the novel COVID-19 outbreak, with around 30% of South Africans, Nigeria and Kenya doing so. There is a steep increase in e-commerce, including making purchases on mobile.
Mobile checkout is crucial
When we think about digital commerce or ecommerce, it’s not just the web browser anymore, it has expanded across most of the channels that are available to us today. In a COVID-19 world, we don't necessarily want to interact with a point of sale (POS) device to type in our pin. We also want to be able to scan a QR code, and access information from our mobile handsets.
The contribution from mobile to digital ecommerce globally is said to be as high as 40 percent. And that shows the importance of mobile payment technology.
We know that 54 percent of South African internet access comes from mobile handsets. We know that it is important at the POS to not physically interact. So, where we can have a touchless checkout, that would be preferable. In terms of QR payment in South Africa, we've seen a considerable rise since COVID-19 as the likes of Pick n Pay and Shoprite deployed QR codes at the POS as a checkout mechanism.
Multiple business categories benefit from ecommerce
While groceries are still strong in ecommerce, we are seeing an increase in spend in very interesting categories that we didn't necessarily anticipate. Within the gaming world, for example, consumers are much more interested in signing up for full services that allow for entertainment at home. So be open to the opportunities for your product or service.
The ecommerce tools you need to go digital are available
COVID-19 has really highlighted for many South African entrepreneurs what is needed to keep business going. And because we recognize how crucial small businesses are to the economy, Mastercard has also adopted a vital and stabilizing role in enabling commerce by setting small businesses up with an online presence to safely accept digital payments.
SimplyBlu is an example of this - a result of our partnership with Standard Bank. Powered by Simplify Commerce, this solution helps small businesses cross the digital divide and enter the world of electronic trading. It provides businesses with a one-stop shop to easily set up an online store with billing facilities and the ability to accept a range of payments. These businesses include one in which a fashion designer pivoted to make masks – and she now sells them online with this ecommerce solution.
The changes in consumer behaviour are spurring an all-inclusive ecommerce approach, that is empowering SMEs. For SMEs in South Africa, it is important to adapt ecommerce technology that will encourage their customers to access their goods and services from across all channels and platforms, and meeting the customer where they want to interact.
Go digital, grow digital – it’s the future.