Retail giant Makro has unveiled its first ‘pick-up locker’ concept in South Africa, enabling items ordered by customers online to be collected out-of-hours at selected McDonald’s fast food outlets and Sasol petrol stations. The strategy, which is already being used in some international markets, aims to assist clients who can’t get to stores during normal operating hours and are also unavailable to accept home deliveries.
Makro’s new service is currently in the test phase and has been rolled out at five Gauteng locations thus far, with several more to follow in the next few weeks. Orders are available in the lockers within 48 hours of online purchase and customers open their specific locker by entering an SMS code on a touch screen interface on the front of the locker.
McDonald’s and Sasol, both of which offer relatively safe locations operating at nights and weekends, are partners in the project. It’s also likely that some pick-up lockers will be located in office parks. According to a press statement by the Makro, this supplements the home delivery and in-store click-and-collect solutions already on offer. The latter enables customers to select and pay for their goods online, then pick them up at a nominated store.
“The added option of collecting your online purchase from a secure locker at a location close to you, or on your way during daily travels, has amplified the convenience of online shopping,” Makro CEO Doug Jones says in a statement. “We continue to expand our online range and hope that the combination of convenience and additional variety will make our customers’ lives easier. We are not limited to what our store can hold – [our website] now boasts 20 000 products that can be purchased online, with a high percentage of products eligible for delivery to a locker – and customers are no longer limited to two [delivery mechanisms].”
He adds: “We have seen steady growth in our online retail figures and while we continue to leverage our strengths as a traditional retailer, we are also constantly thinking of innovative ways in which to enhance and simplify the online shopping experience so that our customers can engage with us at the time and in the channel of their choice.”
The lockers can accommodate products as big as a microwave, but alcohol is excluded from the service. “The law requires that you ensure that the person who places the order, as well as the person who receives the order, is of legal drinking age. And until we are able to solve that we won’t be allowing customers to buy and receive alcohol in this way,” Jones is reported as saying by ‘Business Day’ newspaper.
As online shopping slowly gains ground in South Africa, local retailers are now moving towards delivery options already available in markets such as Europe and North America. In the UK, for example, the giant Waitrose supermarket chain has a drive-thru service where customers can collect their online grocery orders without ever having to leave their vehicle. The chain has also been experimenting with GPS tracking technology to recognise when customers are close to a particular store – so that staff can prepare their shopping orders and have them ready when they arrive.
A growing African middle class and young population are creating a demand for products that store-based retail cannot meet due to a lack of shopping malls and gridlocked cities. As a result, e-commerce is on the rise on the continent and its future looks promising.
This is according to Bernadette Kissane, a London-based analyst at international market intelligence firm Euromonitor. She says development has been most notable in Nigeria, where a surge in telecommunications investment and smartphone purchases has fuelled the growth of the Internet.
“Furthermore, Nigeria boasts the largest online market for apparel and footwear in the region, which is expected to grow from US$104-million in 2014 to US$1,08-billion in 2019, mainly due to the dynamic development of trusted [online retailers] Jumia and Konga,” Kissane notes.
She adds that Jumia and Konga are leading the way for Internet retailing in Nigeria, with 36% and 23% market share respectively. Both businesses offer a range of products, from books to beauty, and include a number of local and international fashion brands such as Topshop, H&M and Vero Moda. Jumia, which now operates in eight African countries, found success in offering fast delivery services and establishing trust with consumers by allowing payment on delivery.
“A number of start-up [online] retailers have emerged in response to the growth witnessed in Nigeria,” Kissane says. “For example, ‘Webmallng.com’ and ‘Buyam.com.ng’, act as online malls, allowing merchants to set up shop in one place. Although this creates a vast product offering for consumers, it appears to cause confusion regarding the management of the site, as ‘Buyam.com.ng’ continued to display Christmas promotions on its homepage in February.”
Meanwhile, South Africa, the region’s largest apparel market overall, is expected to record a much slower pace of growth in Internet retailing, rising from US$50-million in 2014 to US$73-million in 2019. This highlights that the consumer preference in SA is to use the Internet as a research tool, but purchase items in store as a result of the mature formal retail environment.
“E-tailing in sub-Saharan African is currently dominated by local businesses.” Kissane observes. ‘Spree.co.za’ is South Africa’s primary online player with a 10% market share. The website has a similar aesthetic to ASOS (a successful British online fashion and beauty store), providing editorial content and offering an array of brands including Levi’s, Guess and Nike. Mr Price, the leading South African retail chain, has also acknowledged e-commerce as an essential distribution channel, having launched its transactional website in 2012.”
Looking at online retailing in general in sub-Saharan Africa, Euromonitor expects that it will follow the same pattern as in other markets. As more consumers gain access to the Internet and become comfortable shopping online, growth will be driven by competitive pricing, providing opportunities for fast-fashion brands appealing to the younger demographic.
“Clearly, e-tailing is still in its infancy. The weak transport infrastructure and lack of consumer confidence will continue to restrain growth,” Kissane says. “Further still, in a region where many consumers do not have a credit card and in some cases no formal address, retailers are faced with a magnitude of logistical problems they need to overcome.”
She continues: “Although forecast growth is promising, in order to see a return on investment, strategy will need to be long term and platforms such as Spree, Konga and Jumia, provide a route to market that minimises risks and allows brands to build customer relationships.”
South Africa's burgeoning e-commerce era means that consumers are no longer shopping entirely online or offline. Rather, they taking a blended approach and using whatever channel best suits their needs.
This is one of the key findings released last week as part of the Nielsen Future of Grocery Report. It is based on research that polled 30 000 online respondents in 60 countries to understand how digital technology will shape the retail landscape of the future.