Wednesday, 07 December 2016 08:49

Foschini Group innovates in e-commerce space

Retail giant The Foschini Group (TFG) is trialling a ground-breaking new delivery service for its products being sold online. Called ‘Deliver 2 Me’, it uses a geolocation tracking system – similar to that used by smartphone tracking systems or the Uber taxi app – to enable customers to pinpoint exactly where they want their purchases to be delivered. The ‘Deliver 2 Me’ system sends an SMS to a customer when their online order is ready for delivery and the client then selects a ‘Deliver Now’ option that enables the order to be delivered to the customer’s location, typically within three hours. The location need not be the client’s home or work address, but can be wherever they happen to be located at the time. TFG is offering the service in conjunction with WumDrop, an app-based courier service that operates in much the same way as Uber. The service is currently being trialled in Cape Town, but will go live in other cities in South Africa in the early part of 2017. Traditional retailers like TFG are facing increased competition from online retailers in SA and are now moving rapidly to counter the growing threat. After a slow start, fashion retailing is one of the sectors that is moving increasingly online
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Wednesday, 26 October 2016 07:46

Now the selfie becomes an e-commerce tool

Kenya’s M-Pesa started a mobile money revolution when it launched in 2007 and the service – as well as subsequent rivals – has been a major enabler of e-commerce and general retail in various parts of the world. But Bob Collymore, CEO of parent company Safaricom, noted during a visit to New York recently that M-Pesa must continue to innovate and improve its ‘clumsy technology’ if it is to keep pace with fast-changing rivals. Amazon is a dominant player in the e-commerce space and recently announced that it is working on a technology to enable e-commerce customers to transact via the near-ubiquitous ‘selfie’. Instead of using passwords – which are open to fraud, hacking or sometimes forgotten – shoppers will be able to use a photograph or video of themselves as a way to do transactions. “While many conventional approaches rely on password entry for user authentication, these passwords can be stolen or discovered by other persons who can impersonate the user for a variety of tasks,” Amazon said in a patent application for the technology, which was filed in March. To avoid criminals circumventing the system by using a photograph or existing video of the registered user, the system has a two-tiered approach. The first selfie will establish the customer’s identity, while the second selfie will prompt the user to perform certain gestures – for example a smile or head tilt – to verify that a real person is attempting to access the account. Industry experts observe this is an ideal strategy for younger Millennial and Generation Z consumers, who are already obsessed with the selfie lifestyle. According to the ‘Daily Telegraph’ newspaper, studies have found that more than one in five people use the same password for everything, while 58% use a handful of passwords, with small variations, across all their accounts
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When Yunus Masaba saw that Uganda’s informal taxis weren’t providing a suitable delivery service to the growing number of online shopping businesses in the city of Kampala, he came up with a solution – and a new business model. Initially it was e-commerce operations such as Hello Food, which partners with restaurants to home-deliver food orders to consumers, which provided the impetus for Masaba to co-found the business called Transporter Corporation. “Until we entered the market, Hello Food and other [online sales] companies relied heavily on the ‘boda-boda’ taxis (motorbikes and bicycles which serve as taxis) for deliveries. However, due to their informal nature, it wasn’t working and we saw an opportunity that nobody else had noticed,” he says in the latest issue of ‘Strategic Marketing Africa’, the publication of the African Marketing Confederation (AMC). Transporter Corporation subsequently provided a delivery service for several other e-commerce businesses and then moved on to deal with supermarkets and set up its own platform called ‘Your Supermarket’. This allows customers to shop at different supermarkets and Transporter Corporation will deliver. “[But], with our exposure in transportation, we did not want to stop at only transporting goods. We have now extended our offer to a chauffeur service, which mainly provides executive transportation,” Masaba tells the magazine. Given that the business is heavily dependent on interacting with customers online, he concedes that the high cost of data is one of the threats. “New players have entered the market, so we are hoping the prices will be drop. Costly Internet limits the number of customers we reach, so our expansion is limited. We find people have to make a trade-off; would they rather physically go the marketplace, or incur the high costs of Internet in order to use our service?”
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South Africans are showing growing confidence in e-commerce, with 56% of respondents to a survey conducted between December 2015 and March 2016 saying that they had shopped online. This is according to online data company Effective Measure. When making their first foray into the world of online payments, most people felt comfortable doing their first transaction with a bill payment merchant. Perhaps unsurprisingly, only 7% of respondents were happy making a vehicle-related purchase online. Effective Measure says local marketers should take note of what South African online shoppers look for before making a purchase. Fifty-nine percent said an on-delivery payment option would motivate them to buy more often, while 41% said they wanted a guarantee that they could return a product they were unhappy with. The most popular items that people like to buy online are: books; tickets for shows/events; travel tickets; hotel reservations; videos/music/DVDs. When it comes to the reasons why consumers choose not to shop online, the most common explanation was lack of access to credit facilities. South Africans were generally happy with delivery times for online purchases, which were most commonly delivered within five days. Fifty-eight percent of people said they were satisfied with this. “Understanding the digital consumer, their behaviour and barriers to entry is increasingly a focus for many businesses,” says Nicolle Harding, Country Manager at Effective Measure South Africa. “Whether they are a retailer building e-commerce competency, or a media owner implementing paid-for content strategies, the challenge remains the same: how do they effectively reach the right consumer, increase the propensity to purchase and increase the basket size?”
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While online retailing in South Africa is growing and attracting increasing attention from marketers and consumers, it still accounts for only a tiny percentage of overall retail spending in the country. This is one of the most notable findings of a study released yesterday (Wednesday). According to the Online Retail in South Africa 2016 report by Johannesburg-based technology consultancy World Wide Worx, e-commerce spending will total around R9-billion. However, this is still only 1% of total retail spending. “While 1% represents a very small proportion of overall retail, it is also a psychological barrier for investment in e-commerce initiatives by physical retailers,” said Arthur Goldstuck, MD of World Wide Worx and principal analyst of the survey. “The number also masks the extent to which a number of major retailers have exceeded the 1% online mark by a substantial margin, compared to the vast majority that are not yet close to this mark – if they have an e-commerce presence at all.” Goldstuck noted that online retail in the country is often viewed as being undeveloped and lagging behind the major international markets. “Even retailers themselves use this kind of terminology; however, this often also results in an underestimation of the healthy growth rate of online retail in this country.” He said it should be borne in mind that much of this growth has come as a result of an increase in the number of experienced Internet users in South Africa who are ready to transact online, rather than the retailers themselves getting it right and convincing shoppers to spend more on e-commerce. The study forecasts that by 2020 local online retail sales will double
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Amidst the challenges of limited Internet connectivity and unreliable connections, the Global Connected Commerce Survey by research company Nielsen has found that Nigerians’ use of mobile devices to make online retail purchases is significantly higher than the global purchasing rates across several categories. “This points to the fact that an e-commerce experience is the new retail reality, as digital devices enable Nigerian consumers to shop wherever and whenever they choose,” says Nielsen. “The shift towards mobile purchasing reflects a larger trend that is occurring in retail: proximity shopping. Across all regions [covered by the international survey], smaller format stores that are close to work or home are growing fastest, and nothing offers greater convenience or proximity than the mobile device in consumers’ pockets.” The study says that, as more consumers adopt an ‘on-demand lifestyle’ and turn to mobile devices to shop, the most successful retailers will be those that optimise and differentiate their mobile services as a way to enhance the in-store experience of shoppers. It found that three quarters of Nigerian respondents (77%) who are Internet connected have used their laptop, and 46% their smartphone, to purchase packaged grocery food. Other popular online buys include beauty and personal care products, fashion-related items, restaurant/meal delivery services, travel-related products, and books and music. When it comes to the types of activities potential shoppers engage in online, 50% of Nigerian respondents said they looked up product information, followed by 32% who said they used the Internet to compare prices. A total of 31% said they looked for product reviews. When engaging in online shopping, cash-on-delivery and debit card payments are the most common form of payment methods (76% and 59%) for Nigerian online shoppers, with direct debit from a bank accounting for 38% of payments.
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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).
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With its young, tech-savvy population, increasing urbanisation and fast-growing middle class, Africa seems a natural fit for e-commerce. In sprawling and congested cities such as Lagos and Nairobi, travelling to malls and retail outlets is notoriously difficult – so going online to buy clothes, electronics or even household products has a certain appeal for many frustrated urban consumers. Moreover, the way in which many African markets tend to leapfrog the technology curve and rapidly embrace platforms such as mobile money bodes well for the emerging sector. But, reports ‘Strategic Marketing Africa’, the quarterly journal of the African Marketing Confederation, experts say it’s unlikely that the major e-commerce players on the continent are turning a profit as yet. But that may start to change as online shopping systems become more sophisticated and the companies involved gain traction. The Fourth Quarter 2015 issue of the magazine also examines Africa’s huge – and still growing – youth market, which represents an enormous opportunity for marketers who can understand them and tap into their interests and aspirations in an empathetic way. Those aged 16-34 are said to account for 53% of Africa’s income and 65% of the continent’s spending, so it’s clear why they constitute a key consumer segment. “By virtue of their sheer numbers, young people are easily the most important consumer demographic on the African continent,” reports global management consultancy McKinsey & Company. Other issues under the spotlight include the strategy that took Ecobank from the tiny nation of Togo to become a pan-African banking powerhouse, the success of Madagascar’s ethically sourced chocolate brands on the global stage, and the journey of soleRebels, an Ethiopian shoe brand that expects to have 150 stores operating worldwide by 2018. ‘Strategic Marketing Africa’ is published quarterly by the African Marketing Confederation (AMC), a pan-African body that represents marketing associations in South Africa, Zimbabwe, Zambia, Kenya, Ghana, Nigeria and Morocco. The AMC is also currently assisting with the formation of marketing associations for Ethiopia and the Indian Ocean Islands.
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Thursday, 12 November 2015 07:45

World’s biggest online shopping day

Online shopping recorded its biggest-ever sales day yesterday (11 November) as Chinese consumers spent US$14,3-billion in 24 hours during an event known as Singles Day. Of that total, US$9,8-billion in purchases were made via mobile devices. Singles Day is a celebration for single people and is held on the 11th day of the 11th month because the number ‘1’ indicates a single person. To mark the day, young single Chinese will hold parties and gatherings designed to help them meet new friends or romantic partners. It has now become highly commercialised, with e-commerce retail giants such as Alibaba and JD.com competing to sell a wide range of goods to the country’s estimated 668-million Internet users. The sales figures achieved yesterday were “very solid evidence for the power of Chinese consumers”, Alibaba CEO Daniel Zhang is quoted as saying by news agency Reuters. He added that when the company started the event, “we never dreamed that it could be such a huge shopping day”. According to the news agency, “Singles' Day is the biggest shopping event in the world, larger than the United States' Black Friday and Cyber Monday combined. Many Chinese e-commerce firms offer steep discounts to attract consumption on a massive scale”. Retailers now face a huge logistical challenge to get the Singles Day online orders delivered to customers. Alibaba said the company and its partners would be using 200 aircraft, 400 000 vehicles and 1,7-million personnel to handle the deliveries.
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Online shopping is gaining traction across Africa and other emerging markets as Internet penetration continues to rise. 

African online consumer trends largely echo those of India, where, as mobile ownership and Internet penetration continue to rise, online groceries become more desirable. A 2014 US Department of Agriculture report reflecting on the increase in online grocery shopping in India notes that “the growth in India’s online retailing for food and groceries is a function of the rise in total Internet users from 120-million to 213-million in the past year, as well as a fall in mobile handset prices and a rise in smartphone penetration”.

Talking to daily newspaper ‘The Economic Times’, Amit Bhartiya, advisor at Mumbai-based e-commerce grocery website LocalBanya, cautioned, however, that “offline players going online cannot make a mark if they do not offer competitive pricing and value”. 

Indeed, competition is the name of the game, with smaller players in the online grocery market competing against the big guns such as online stalwart Amazon India, which recently introduced general online store KiranaNow, an express delivery platform in partnership with neighbourhood stores. ‘Knowledge@Wharton’, the online journal of the Wharton business school of the University of Pennsylvania in the US, recently noted this development in an article entitled Online Groceries in India: Will Consumers Bite? (7 May 2015). 

Launch in March this year, the KiranaNow pilot project’s stated aim is to deliver goods purchased online within two to four hours. An Amazon India spokesman told the ‘India Today’ news website at the time: “Our vision is to enable our customers to buy anything and everything they want online, anytime and anywhere – at low prices and a convenient, fast and reliable delivery experience.”

While India is forging ahead with online buying, according to the recently released Nielsen ‘Future of Grocery Report’, a blended approach to online retail is advisable for the African market. Nielsen Africa Retailer Services and E-Commerce MD, Harsh Sarda, noted: “The most successful modern and traditional trade retailers and manufacturers will be those at the intersection of the physical and virtual worlds, leveraging technology to satisfy shoppers how, when and where they want to shop.”

He continued: “A key aspect of meeting these needs is in-store digital enablement options that bring the ease, convenience and personalisation of online to brick-and-mortar stores. Instituting digital strategies into the in-store experience is, therefore, not just a nice-to-have for key consumer markets – these options can increase dwell time, engagement levels, basket size and shopper satisfaction.”

This could be in the form of a retailer or loyalty app, or Wi-Fi that enables shoppers to opt in to receive information on special offers while they’re shopping. While this is currently a more prevalent strategy in South Africa, increasing mobile penetration across Africa could potential broaden the appeal of a blended physical and digital shopping experience where convenience and value take centre stage. 

According to a 2014 MasterCard ‘Online Shopping Behaviour Study’, published in conjunction with research organisation World Wide Worx, online grocery shopping in South Africa displays a steady increase with local e-commerce sites becoming the preferred option. Only 24% of local online spend was on foreign shopping sites, down from 27% the previous year and 33% in 2012. 

“The products that consumers are buying suggest that online shopping is becoming increasingly mainstream, which also bodes well for local retailers,” Arthur Goldstuck, MD of World Wide Worx, told business website ‘BusinessTech’. “No longer is online shopping confined to books and DVDs, plane tickets and apps.” 

 

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