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Saturday, June 15, 2024

Local brands are in demand despite big-name competitors

With Amazon’s South African operations now up and running, the question on everybody’s lips is what the impact will be on homegrown online shopping platforms.

The ecommerce giant has market capitalisation of more than a trillion US dollars, and there are fears it will crush local competitors.

What some may not realise, however, is that ecommerce sales still only account for around 5% of total retail sales.

This is despite the Online Retail in South Africa 2024 report, prepared by World Wide Worx in partnership with Mastercard, Peach Payments and Ask Afrika, stating that the country’s online retail sector surged to R71 billion last year – a 29% increase from 2022.

Yet even with such phenomenal growth, a massive piece of the ecommerce pie remains.

Some local brands even view Amazon’s arrival on these shores as positive.

“We believe that while Amazon’s launch will bring in more competition, it also shows that South Africa is an attractive market with growth potential,” says Craig Lubbe, Head of Marketplace at ecommerce ecosystem Bob Group.

“We hope this interest will further help bring ecommerce into the mainstream for everyday people in the country. Growth for the industry is what we hope to see overall.”

He adds that it should be remembered that South African shoppers are extremely value-conscious and have learnt to turn to platforms that best suit their pockets. And while it may have taken a while, they have also come to have faith in local payment solutions and shipping support channels.

It stands to reason that established local online sales platforms will need to find ways to differentiate themselves from what big-name competitors like Amazon can offer.

Lubbe believes this won’t be a problem for the homegrown ecommerce industry.

He cites the example of Bob Shop, which offers both large and small sellers a platform with a proven track record.

“Many of these less-formal sellers will not have the opportunity to trade on big-name competitor platforms. Our marketplace has a unique space among collectables sellers and those selling new, general merchandise.”

“We also offer auctions, which most competitors don’t. A section of our buying community loves the thrill of an auction.”

Mastercard itself has the potential to improve local ecommerce businesses.

In his foreword to the Online Retail in South Africa 2024 report, Gabriel Swanepoel, Mastercard country manager for Southern Africa, says the group recognises the transformative power of digital commerce and remains committed to enabling businesses of all sizes to thrive in this digital-first environment.

“The empowerment of small businesses through digital commerce holds significant promise for South Africa’s economy, enabling these enterprises to tap into broader markets, improve their operational efficiency and contribute to economic growth and job creation,” he writes.

Bob Shop (formerly bidorbuy) started in 1999 and remains one of the oldest internet platforms in South Africa.

uAfrica Technology’s acquisition of bidorbuy to form Bob Group has enabled the business to help merchants outside its marketplace realm. It now also offers services in logistics, order management and payments.

“Bob Shop has enjoyed incredible support from our shareholders, who believe that ecommerce in South Africa has a lot of potential. The platform has also retained a strong community of buyers and sellers over the years, without whom we would not have been able to keep serving the community online,” Lubbe says.

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