With
global online shopping giant Amazon due to launch in South Africa shortly,
local business-to-consumer (B2C) e-commerce retailers will soon be facing their
toughest competition to date.
Although
surveys show a consistent increase in online shopping uptake by South Africans,
tech entrepreneur and CEO of Innovo Networks, Damian Michael, warns that
Amazon’s high profile, product range, cutting-edge technology, and well-proven
delivery and returns systems mean that SA-based online retailers will have to
step up like never before to remain competitive.
If
the rest-of-Africa experience is anything to go by, there could even be a
post-Amazon shakeout in the e-commerce market, as inflation-hit South African
consumers spend less and more e-commerce platforms compete for a consequently
smaller share of the customer pie.
Jumia, for
example, is sometimes known as the ‘Amazon of Africa’ due to its e-commerce
involvement in more than a dozen countries. But its once-aggressive expansion
strategy has been pared back as it continues to make losses and reboots it management team.
Similarly, Copia, the Kenyan-based B2C platform, has suspended operations in Uganda and put planned expansions
into Rwanda and Tanzania on hold.
“Amazon
is a slick and well-oiled machine, and is bringing to South Africa unmatched
global e-commerce experience, customer service expertise, and tech capability,” observes
Michael. “In our research, we’ve found that local online retailers are
struggling with artificial intelligence, contact centre efficiency, reverse
logistics (when customers return unwanted items), and a general lack of
suitable skills and resources.”
Michael
explains that, at a functional level, local e-commerce retailers are not
delivering consistent customer excellence because they are unable to provide an
integrated and seamless shopping experience.
Customers
interact through many different channels
“Tech-savvy
consumers expect to interact with a business through many different channels –
from the website through to email, call centre, WhatsApp or the various social
media platforms,” he says.
“But
our retailers are currently multichannel focussed– meaning that if, for
example, a customer phones the call centre to complain about a problem with the
pick-up of an item being returned, the call centre team can’t see that the
client previously complained about the same thing on WhatsApp and Facebook. The
customer gets frustrated at having to explain everything again and there’s
tremendous wastage of human resources in trying to resolve what may be a simple
reverse-logistics issue.”
Similarly,
the effective use of data and artificial intelligence is being hampered because
multichannel is inherently channel-specific and fragmented, rather than
providing a holistic perspective.
“The
answer is omnichannel – where a single contact centre has an overview of all
the data, all the customer orders, all the customer interactions, all the stock
availability, and all the product returns,” states Michael. “Done correctly, it
is personalised, seamless, integrated, and efficient. It is what the likes of
Amazon do well.”
In
South Africa, though, Innovo’s internal discussions with e-commerce retailers
indicate a knowledge gap as to how to achieve an omnichannel approach. “It does
take time and it does require considerable tech expertise,” says Michael. “But
it may be the difference between staying in business or not. A successful
tech-driven returns strategy, in particular, can make or break. US research shows that returns affect 20% of a retailer's inventory, which is a
considerable number. But, at the same time, the returns policy may influence
100% of the consumer buying decision.”
