South Africa’s e-commerce boom rests heavily on optimising retailer-to-consumer logistics and efficient, on-time delivery
While sales in South Africa’s online retail market will hit a predicted R9-billion in 2016, double the level of only three years earlier, it is a boom that rests heavily on optimising retailer-to-consumer logistics and efficient, on-time delivery.
Online retailers, many of whom are still unprofitable despite the increase in business, are competing in a market where the bar is being lifted constantly and new players continue to enter the market. An effective supply chain strategy is therefore vital to keep costs down and provide a point of competitive advantage.
“Consumers are demanding faster and cheaper delivery,” Jaco Jonker, CEO of local Internet auction and online marketplace BidorBuy, tells the ‘IMM Journal of Strategic Marketing’ in its February-March 2016 issue.
The magazine says it is a reality that is also being taken seriously by The Foschini Group (TFG), which is now in the midst of a R100-million online retail rollout that begun in 2014. “I believe innovation in online retail will revolve around logistics,” says Robyn Cooke, TFG’s head of e-commerce.
A crucial decision for retailers is whether to retain logistics in-house or to go the outsourcing route. TFG chose the latter, outsourcing to Naspers’ On The Dot unit, which claims to be South Africa’s largest multichannel media logistics company.
Outsourcing is working well for TFG. “Over 98% of orders are reaching customers in the time promised,” Cooke says. When it comes to standard deliveries, these are typically made within three to five working days, although in Johannesburg and Cape Town – which account for 80% of orders – delivery is usually achieved in one or two days.
TFG is targeting huge scale and expects online sales to comprise 5% of its total SA sales within five years – in monetary terms at least R1,3-billion annually. “We expect to grow online sales at 40% a year,” says Cooke.
The ‘IMM Journal of Strategic Marketing’ explores this and other marketing-related topics in the February-March 2016 issue. The magazine is published five times a year by the Institute of Marketing Management (IMM).