Strategies for retailers to ride the online shopping wave to capitalise on the 7.2% surge

Capital Connect Retailer Strategies

Rapid growth in online shopping across most demographics creates a compelling opportunity for agile retailers to expand into new markets, build customer loyalty and grow their revenues. It also means that they will face more competition from shops outside their traditional catchment areas.  

That’s according to Steven Heilbron, CEO of Capital Connect, who says that online shopping has been on a sharp upward trajectory in South Africa since the COVID-19 lockdowns of 2020. A study commissioned by Capital Connect, a leading fintech that provides frictionless opportunity capital to retailers in 24 hours, shows that online ecommerce retail sales are estimated to be about 7.2% of all retail sales. 

Heilbron says that the research shows that more than half the South African adult population has already made use of online shopping and that around three quarters of online shoppers make use of smartphones to conduct their online shopping. Growth in online sales is expected to grow sharply in the years to come. 

According to the research, growth in online shoppers and retail value is driven by the higher numbers of South Africans with smartphones and internet access. Increased penetration of debit cards, higher usage of social media, and growing numbers of South Africans with income from grants and other sources are also contributing to growth. 

Clothing and shoes sales are generating about a quarter of online retail sales value, with Asian ecommerce firms like Temu and Shein turning up the heat on local retailers. Other major online retail categories include electronic and digital devices, jewellery, leather goods  and accessories, food and beverages, and household appliances.

Says Heilbron: “With the local launch of Amazon still on the cards, growing competition from Asian drop-shipping firms, and the rapid growth of home delivery services, the ecommerce market is heating up. Most retailers will need a strategic response to the rise of ecommerce.

“They have several options. For some, it might make business sense to double down on their in-store experience. By offering product demonstrations or workshops, a comfortable bistro or coffee shop, and great advice and service, they can offer customers a reason to shop in person rather than online.”

“Others might want to invest in an omnichannel environment. They can offer their clients options such as click-and-collect and home delivery, in addition to their brick-and-mortar store. Going online can offer them a way to reach new customers or even the possibility of diversifying their offering.”  

To succeed in an omnichannel world, retailers will need an efficient logistics engine. For some, this might mean partnering with a courier or with a platform like MrDFood or Uber Eats. Others might want to invest in their own scooter or van to control the customer experience directly. 

Retailers may also need to relook their product mix to meet the needs of online customers. Some might be able to get an edge by buying in bulk to promote online shopping specials. It is also key to provide responsive and knowledgeable customer service across all channels.

Heilbron adds: “Whether retailers want to invest in an online advertising campaign, buy a delivery vehicle or fleet of scooters, expand into new channels, invest in in-store shoppertainment or refurbish their stores, they will need fast, reliable finance to execute their strategies to outsmart the competition. With Capital Connect, retailers can apply for a retail loan of up to R5 million from an app and the funds hit their bank account within 24 hours, without the hassle of providing audited financials.”

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