Interview with Karen Nadasen of Ecommerce Forum South Africa and PayU on the pain points and growth opportunities of South Africa's ecommerce market

Monday 6 July 2020 12:30 CET | Editor: Andra Constantinovici | Interview

‘Ecommerce is not in competition to bricks and mortar retail, but an additional tool for retailers to use to sell their products and to improve their customer experiences. Retailers that refuse to recognise this “new normal” will fail.’

Can you share with us more about the Ecommerce Forum South Africa – it’s agenda and key-objectives, along with the relevant projects it has been working on?

Our mission statement is to increase awareness, confidence and capability of the ecommerce industry in South Africa. Breaking this down in more detail, we aim at improving trust is the key to an effective, efficient and growing ecommerce sector. We see the development of Trust as our main objective which must be addressed by a proactive approach to research, education, training and new initiatives.

Furthermore, we believe there is a need for both consumer trust and business trust in ecommerce in order to ensure the sector’s sustainable growth. EFSA has recently launched a Trustmark – this plays an extremely important role in creating and sustaining trust in Europe and the US. Consumers need trustmarks to be assured that their rights are guaranteed. The trustmark has an alternative dispute resolution system to deal with complaints that cannot be solved between buyer and seller. Just as ecommerce depends on trust, we are also developing a trust relationship with the players in the regulatory and policy spaces.  Our strategy is long term – we must forge lasting relations with policy makers, opinion makers and our fellow business colleagues.

It is imperative that the industry has a singular and collective voice when engaging with national government and regulators. The EFSA is committed to working with government and opinion formers to ensure that consumers are protected, which is another important element in the construction of a trust environment. We are also committed to encouraging training and education led by business and by academia. When EFSA was founded there was only one University offering ecommerce courses. Now there are 5 we are in dialogue with.

Going forward, solid research is vitally important for the healthy growth of any sector. Research helps to encourage investment; give indicators of development, and highlight opportunities. Ecommerce offers particular opportunities for women, the youth and rural communities. EFSA is exploring ways to assist inclusivity and, by so doing, reduce the digital divide.

Finally, we have our eye firmly on the enormous opportunities which the African Free Trade Area (AfCFTA) will offer SA. This requires close relations with government, training, particularly for online B2B, research and the growth of trust. 

Karen, you’ve been appointed Chairperson for Ecommerce Forum South Africa (EFSA), while being considered one of the most inspiring women in fintech in South Africa and an active advocate for women’s rights. Please share with us a bit about your background and what are your main objectives leading the EFSA.

My particular interest is to encourage the role of ecommerce and the digital economy to help develop the empowerment of women and disadvantaged groups – rural communities, youth etc.

EFSA has been publishing case studies of successful women in ecommerce thanks to one of my board member colleagues, Mpho Sekwele, for some time. These interviews have been taken up by the UN and published monthly on the UNCTAD website (eTrade for Women).

In addition, I also want to see more and improved research on ecommerce in SA; and we must also encourage training and education. I have 2 board members, Dr Adheesh Budree of UCT and Warrick Kernes of Insaka Academy, who are both leaders in education and training on ecommerce in SA.  

Can you tell us more on the ecommerce market in South Africa? What are the most stringent challenges retailers are facing and what are the biggest barriers to growth?

All indications are that ecommerce has grown rapidly since lockdown. The big retailers were reporting a rapid increase in home delivery orders from the first week. PayU has seen growth on some retailer online sales by 150%, growth on delivery services in excess of 700%. We have also had an influx of new businesses moving to online. 

Recently World Wide Worx, which has done a number of important studies on ecommerce in SA, estimated that turnover from ecommerce for goods had exceeded 2% of total retail before the lockdown. We believe that ecommerce’s share of retail trade may increase to between 5-10%. 

This also gives EFSA the opportunity to strengthen its position as a repository for research so we are calling upon industry and academia to partner with us in conducting ongoing research for the benefit of the industry, government and consumers. 

Once consumers have experienced ecommerce, have paid online, and had a product delivered to their doorstep, the initial concerns disappear and trust is built. 

Among the challenges facing retailers, I need to mention being able to keep up with delivery. Some retailers were able to respond fast enough to the growing online sales and implemented a number of options, partnerships with delivery companies, order and collect, instead of delivery to keep up with the demand. Additionally, there is an issue with know how on how to take a small business online, while information on how to do this is widely available. 

The most important point to make is that ecommerce is NOT an easy process. It takes time, effort and determination. However, there are plenty of resources available to help businesses (and individuals) sell their products online. There are also a number of software providers which will hold your hand as you start your voyage into the world of ecommerce. Remember that your website is your shop-window, especially at this time. Illustrate your goods well with good photos. Make the purchasing process easy for your customers. Use a choice of payment services. We at PayU are always happy to help! And then work out how you are going to deliver the goods. 

As a business also grows, or has cross-border ambitions, I recommend that they keep up with regulation, policy and best practice trends. This is where them EFSA membership benefits become particularly important.

The barriers to growth in the market are, on one hand, excessive data costs, which are limiting the ability for people to shop online which does not help in driving financial inclusivity, and, on the other hand, education and trust. Knowing that you don’t have to go into a store to buy a bus ticket, for instance, when you can easily do this from your home.

The South African government very recently lifted a ban on all e-commerce trade after the COVID-19 pandemic allowed the onset of key restrictions. What did this mean for the South-African ecommerce market?

This really propelled the market forward and we saw all our online merchants resume business. This meant that even though they were not able to open stores immediately they could sell their goods online. There were even instances of companies about to close their doors, suddenly able to continue transacting and hence able to save jobs. People want to adhere to the rules and want to stay safe. Additionally, if you are elderly, have a compromised immune system or have young children you want to limit interaction as much as possible. Being able to shop online, your goods can be safely left outside which significantly reduces your chances of infection.

In turn, what do you see as the biggest opportunities for investors in the market? What are some trends that are gaining pace that would make the region a fertile ground for advancement and innovation?

Hyper-localisation. There has been a significant amount of artisans and local businesses coming online and a preference to support local. This will assist government’s primary objectives to build South African business and manufacturing basis.

Delivery companies. Express delivery within the day are good investments, literally driving everything, including top restaurants now offering you the option to fine dine at home.

Microfinance. Such as Spoon Money, that can aid in assisting informal traders to make the shift online.

Even before the pandemic and the current crisis moving retail to the online even further, experts were suggesting that online sales in South Africa will grow almost three times as fast as in-store sales in the period 2018–2023. What can retailers do to keep this momentum and capitalize on this context in a way to boost profits but also help their communities in the future?

Focus on the user experience from start to end. The moment a customer interacts on your site, selects goods, checks out, the payment process, until the point of receiving their goods and beyond. How would you manage damaged goods, returns refunds etc. Think about the end to end experience with the customer in mind. Ensure consistency in quality of goods and service. 

People who move to shop online are not accustomed to waiting for their goods, especially groceries. Merchants who have implemented next day delivery services or delivery within an hour for essential items have been quite attractive. 

We have seen some partnerships between retail giants and entrepreneurs who were fast to respond in delivery services. These really drove their volumes up. Some responded well while others started to fail in the after sales services when refunds were required etc. 

These kinds of partnerships provide a win-win outcome for innovative entrepreneurs and retailers. Some retailers such as Spar have been seen creating shelf space for local businesses. This could also be offered online. With it not being possible to visit small holdings and farms to get organic or local produce, some have gone online however this is also where retailers can offer more support and extend their platforms.

There are also companies that have extended their own platforms to allow smaller merchants to sell their goods online. One such is Granadilla, originally a swimwear site, extended its services to include groceries and fresh produce.

It is very important to stress that ecommerce is not in competition to bricks and mortar retail. Ecommerce is an additional tool for retailers to use to sell their products, and to assist retailers improve their customer experiences. Retailers that refuse to recognise this “new normal” will fail. 

About Karen Nadasen

Karen Nadasen, PayU South Africa’s Country Manager, is regularly described as one of South Africa’s most inspiring women in tech, nominated for IT Personality of the Year 2017, and listed among 100 Most Influential Young South Africans 2017. She has recently been appointed as the Chairperson for Ecommerce Forum South Africa (EFSA)

About Ecommerce Forum South Africa (EFSA)

It is the goal of the EFSA to increase awareness, confidence and capability of the ecommerce industry in Africa. EFSA represents large and small eShop owners,brick and mortar stores that are including ecommerce as part of their omnichannel strategy, and service providers (platforms, payments, logistics, delivery, consultants.) EFSA helps each of these stakeholders work cohesively with each other to enrich the overall ecommerce industry in Africa.

Free Headlines in your E-mail

Every day we send out a free e-mail with the most important headlines of the last 24 hours.

Subscribe now

Keywords: Karen Nadasen, PayU South Africa, PayU, ecommerce, Ecommerce Forum South Africa, South Africa, credit cards, retail microfinance, financial inclusion,
Categories: Payments & Commerce | Ecommerce
Countries: South Africa
This article is part of category

Payments & Commerce