E-commerce Misconceptions and how SA Sports Organisations can do better
Sport remains big business in South Africa but like all other industries, it is rapidly getting disrupted by technology advances. Globally there is an accelerating trend towards online commerce as it becomes an urgent priority for brands, yet local sports bodies continue to lag behind, losing out on lucrative fan spend and desperately needed revenue.
Global trends show soaring online sales growth
In the United States, many traditional brick-and-mortar shops are going out of business as big e-commerce operations such as Amazon and Walmart offer consumers unsurpassed convenience and choice.
Brands like Adidas are closing stores in order to double their e-commerce sales as they saw online sales jump 60% in 2017. Adidas CEO, Kasper Rorsted, recently stated: “Our website is the most important store we have in the world.”
Local brands not in the starting blocks
According to Statista, there are currently 18.43 million e-commerce users in South Africa, with an additional 6.36 million users expected to be shopping online by 2021. Revenue in 2018 is estimated at R42bn with an annual growth rate of 13.7%.
The big three in sports – soccer, rugby and cricket – hold in their hands a nation of sporting fans, who for the most part can only purchase branded gear in-stadium at a game or at a limited selection of sports stores. A few online shops are popping up but for the most part, large sporting bodies are missing out on a valuable revenue model. Even smaller sporting organisations could benefit from decent additional revenue if they invested in their e-commerce potential.
So why is there such a disconnect and poor take-up by South African sporting organisations? Let’s have a look at the misconceptions and some e-commerce truths.
An online store is not easier than a brick-and-mortar store
The biggest misconception is that operating an e-commerce store is easier and less complicated than a traditional brick-and-mortar establishment, but actually, the same problems and hurdles are encountered but in a different way.
Customer footfall, staff, marketing and cost to build are some of the basic considerations when building a physical store, yet when brands plan their online shop with a catchment area that spans the whole country, budgets are minimal, and staff and marketing planning is non-existent. An online shop needs to be treated the same way as a brick-and-mortar shop.
Rent money becomes marketing spend
With a normal store, position is key – the better the location, the higher the footfall and customer LSM, the steeper the rent. When an online store goes live, it basically exists in some far corner of the internet and no one knows you are there. That money that you would normally spend on rent must now be spent on marketing. In order to get customers, you will need to create sales and promotions and advertise on Facebook and Google.
With a traditional shop, you rely on the shopping centre to get footfall, with e-commerce, your marketing gets footfall.
An online store needs staff
An online shop does need people to look after specific responsibilities. If it is a small concern, you can do it yourself, but as you expand you will need people handling operations, marketing, sales, fulfilment and support.
You can outsource your marketing to an agency and you can also get a warehousing and order fulfilment service like Parcel Ninja to handle your operations. These operations services can warehouse all your goods, pick, pack and ship and they are safe and secure at a relatively low cost.
Launch as a lean start-up
To begin, you take your minimum viable product that will have the most impact, determine how long it will take to build and get selling online. That first push needs no bells and whistles, the point is to get you out and selling.
An online store is adaptable to circumstances and customer needs, unlike a brick-and-mortar shop, and can take advantage of that to succeed. From the moment you launch online, you can do backend renovations and keep upgrading, even on a weekly basis if necessary.
Get going!
E-commerce is not a new market in South Africa. Everyone has made an online purchase even though they might not be aware of it. Plane tickets, music concerts, even an airtime purchase is e-commerce. The market is mature and growing yet we continue to see huge gaps with sports brands and organisations that are coming late to the game.
Creating and activating a successful omnichannel strategy with inventory integration, order fulfilment and top-end customer service is obtainable with the right approach. E-commerce lets your sports brand reach more fans, faster, and easier than ever before, unrestricted by the constraints of 8 to 5 brick-and-mortar. It’s an always-on, 24/7 economy that offers massive rewards.
There’s no time like the present.
For a free consult, contact Sportal: info@sportalonline.com
Sportal offers turnkey digital solutions to enable sporting organisations to monetise their content and drive revenue.
