Online retailer Amazon has made its first commercial drone delivery as it seeks to revolutionise the supply chain aspect of online shopping. The delivery was made in the English city of Cambridge and took 13 minutes “from click to delivery” the company says.
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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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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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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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South African e-commerce shoppers are snapping up shoes, electronics and homeware gifts, according to The Foschini Group (TFG), which has named these as the best sellers among its seven online stores. ‘Business Day’ newspaper quotes TFG executive Brent Curry as saying: “Footwear and electronics tend to be easy online purchases because people trust and know the brand and they don’t really have to touch and feel the product. Gifting, because it can be placed online and delivered the next day, is excelling as a category.” The group launched online stores late last year for @Home, Hi Online, Duesouth, Totalsports, Sportscene and Anatomy. According to ‘Business Day’, it plans to have online selling platforms for all of its 18 retail brands by 2018. Curry said e-commerce sales were currently running ahead of expectations and online was already making a 2.5% contribution to overall sales in less than a year. The original expectation was for a 5% sales contribution by 2018. The 2014 MasterCard ‘Online Shopping Behaviour Study’, published in conjunction with SA-based research organisation World Wide Worx, noted that South African online shoppers were becoming more diversified in their shopping choices. “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, said at the time. “No longer is online shopping confined to books and DVDs, plane tickets and apps.” A survey published last year indicated that local Internet users increasingly want to shop online, with 22% of people saying they have already made online purchases and a further 48% saying they expect to do so in future. Among the biggest barriers, though, was concern about whether the items ordered would be ‘as described’ and the security of online payments.
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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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South African Internet users increasingly want to shop online, with 22% of people saying they have already made online purchases and a further 48% saying they expect to do so in future. Among the biggest barriers, though, is concern about whether the items ordered will be ‘as described’ and the security of online payments. These concerns are particularly relevant to online consumers considering doing cross-border shopping. This is according to a recent study conducted by research company Ipsos on behalf of banking giant FNB and international online payments system PayPal. Among those South Africans who already shop online, going cross-border is a growing trend and the study estimates that almost 80% of online shoppers could eventually be buying cross-border items on the Internet. Currently most international goods are sourced from North America (51%), Europe (39%) and Asia (24%). A study conducted among Nigerian online consumers shows similar trends, with 47% of the West African nation’s online shoppers saying they already shop cross-border and a further 37% indicating they intend to do so in future. South African ecommerce sites are popular with Nigerians and the Ipsos study shows that 30% of people have bought from SA sites. Europe (mainly the UK and Italy) is the most popular source of online goods for Nigerians (41% of shoppers), followed by North American websites (38%). “Advancement of technology is helping to open up commerce opportunities for everyone - across borders, anywhere, anytime and via any device” says Efi Dahan, Regional Director for Africa and Israel at PayPal.
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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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Thursday, 18 June 2015 22:00

African e-commerce scene looks promising

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.”

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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.

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© 2015 by African Marketing Confederation