South African business winners in the new coronavirus economy
Could this emergency be the big catalyst needed to finally really boost the utility value of e-commerce in South Africa?
Beauty therapists, event organisers, bars and restaurants and other industries that rely heavily on the close physical orientation of their customers will understandably be facing a lot of uncertainty during this difficult time, but for other industries the conditions may be just right to ignite a massive growth surge.
Up until now, the growth of e-commerce in South Africa has frankly been pedestrian. In so many ways it has failed to be the market-creating innovation that it has been in other parts of the world.
Online purchases only make up about 2% of all retail sales in South Africa, in large part due to South Africa's entrenched 'mall culture'.
According to a Visa survey, 63 percent of South Africans said they prefer to make purchases at a mall, and Urban Studies found that 76 percent of South Africans visit a mall at least once a week.
As a result, the big South African retailers have focused their capital expenditure on opening more and more brick-and-mortar stores than investing heavily on expensive online portals.
But now with the plunging costs of digital access and digital asset development - as well as the demand for increased levels of 'social isolating', because of the coronavirus outbreak; could this emergency be the big catalyst needed to finally really boost the utility value of e-commerce in South Africa?
Services like Uber Eats and Mr D were already exploding, but with over two million downloads and more than 700,000 monthly active users - Mr Delivery especially is sure to see an incredible surge in demand for its services.
The timing of the launch of Checkers' Sixty60 service couldn't have been better and I would assume that services like UCook, Faithful to Nature, Yuppiechef, Takealot etc etc. would also see a significant uptick in demand.
What e-commerce in South Africa has always struggled with is the expense of site maintenance, the cost of delivery, the low levels of consumer demand for the utility; on top of the razor-thin margins that most in the industry need to work with.
If retailers can rework their business models to curate higher margin products that simply offer the value of 'access to the products on offer', without trying to recreate or undermine the more holistic value of what physical retail offers South Africans, then this could be a wonderful opportunity for the category.
The point is that this pandemic could well be the shift in mindset needed to successfully open up the category in South Africa. It's the urgency that e-commerce needed - and it's now here.