E-commerce in South Africa - Lessons from China

By Warren Fabricius, issued by Realm Digital

21 Apr 2015

The year 2014 saw a major shift in consumer behavior and spending habits, and this was reflected in the launch of the biggest IPO yet, that of the Alibaba Group, raising $25bn. Founded by Peng Lei and Jack Ma and led by Jonathan Lu, Alibaba has been a household name in China for years, selling everything from clothing to pet food, but demand for instant gratification, quick delivery and transactional enablement meant that a critical mass would be reached, and today China is the world's largest e-commerce market, and it's only going to get bigger.

E-commerce in South Africa - Lessons from China

So what are they doing right?

The forecast for e-commerce in China in 2015 is predicted to reach 50%, with online accounting for 10% of total retail spend - massive when compared with the US where e-commerce represents just 6.1% of total retail sales. Online influences purchasing decisions by up to 50% and impacts overall shopping experiences by 100%! A lot can be said about the pervasiveness of e-commerce in China, which can be highlighted by the influence and position of Alibaba.

Additionally, increased digital penetration in China and the development of digital banking is sure to sharpen both the appetite and ability to purchase anything online. Businesses like Taobao (consumer-to-consumer online retail) and Tmall (B2C online retail) have taken point and having a huge impact with their creation of a safe and cheap option for everyone to be buyers and sellers in a digital market place.

China has a low cost and very dynamic supply chain, meaning that products can be delivered swiftly without the consumer having to shell out huge amounts of cash for delivery. This, coupled with a very busy work ethic entrenched in Chinese culture, means little or no time for shopping. All of this points to a very healthy place for China's online shopping habits, and will no doubt grow in the coming years.

What do we need to do to improve e-commerce in SA?

Simple really, and I'll leave the "how to" open for discussion and interpretation.
Improve product delivery turnaround times and cost.
Enable all e-commerce businesses, including informal sectors such as street vendors, to be part of a national, e-commerce marketplace.
Enable easy-to-use transactional platforms (simple mobile payments for example) that could facilitate transactions in the informal sectors. I see this as a huge barrier-to-entry.
Improve the ability for small e-commerce shops to set up multi-currency payment gateways that are simple to use and implement.
E-commerce Education. Make online shopping affordable and attractive to the masses, removing especially fears of doing online transactions.

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About Warren Fabricius

Warren Fabricius the Senior Account Manager at Realmdigital

Realm Digital is a global technology partner dedicated to helping businesses realise their vision through end-to-end digital solutions. Our process spans strategic consulting, user-focused design, and full-scale development, followed by ongoing support to drive long-term success. With a talented team committed to innovation and exceptional client experience, we deliver impactful results that add value at every stage.