3 factors impacting online shopping in SA, and how to address them during lockdown

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Article by Semona Pillay on BizCommunity

As of 22 May 2020 South Africa is on day 56 of lockdown. The extended lockdown has negatively impacted numerous businesses, employees, overall consumer spending and the economy in general.

To alleviate the pressure on the South African economy, government has introduced a ‘phased approach’ to lifting the lockdown which imposes less stringent measures per phase. However, this phased approach poses larger risks to already increasing Covid-19 numbers; 15,515 confirmed cases, 7,006 recoveries and 264 deaths in South Africa.

Despite the phased approach at lifting the lockdown, South Africa might never be able to ‘go back to normal’, especially in terms of retail which currently contributes 15% of South Africa’s GDP.

This presents an opportunity for retailers and consumers to adopt a ‘new normal’ – online shopping. In South Africa however there are numerous aspects that affect whether consumers will be able to accept the ‘new normal’ and determine the strategies that online retailers need to implement to accommodate their consumers. These include:

1. Recession

As expected, global lockdowns have had a negative impact on economies. According to Larry Elliot, economics editor for The Guardian, “the world should prepare for a coronavirus global recession”. South Africa is not exempt from this recession, and it should also be noted that Fitch Ratings downgraded the country to ‘BB’ status. This means that outside investors are not keen to invest in South Africa, and this could lead to further job losses.

Despite efforts from the South African government to introduce a ‘phased approach’ to re-establish the economy by lifting the stringent measures of lockdown, many businesses have closed down as they cannot reap lost profits.

2. Data access

Data access has been an ongoing issue. Ever since the SONA address in 2006, successive presidents of South Africa have suggested numerous strategies. Fourteen years later, consumers have only recently begun to experience reduced mobile data costs, following a directive from the President and the Competition Commission to mobile operators to reduce their data costs.

What’s more, obtaining a new spectrum licence to increase and improve internet connectivity was proposed in 2018, yet the Independent Communications Authority of South Africa (ICASA) is yet to conclude this process. This means that consumers in rural or remote areas still struggle to connect to the internet.

3. Digital literacy

According to a white paper written by Sefton-Green, Marsh, Erstad and Flewitt, digital literacy can be defined as “a social practice that involves reading, writing and multimodal meaning-making through the use of a range of digital technologies”.

The assumption on which this definition is based is that you would need first to be literate in order to have digital literacy. But South Africa has around three million people who remain illiterate. That can be attributed to poor schooling systems, an inability to afford to attend school, and dropping out of school. Most of these individuals are from no-income to lower-income earning segments. Thus they are further disadvantaged in not being able to use the internet to purchase online.

With these factors in mind, what can retailers and marketers do to remain #MarketingFit and to encourage all South Africans to shop online during a national lockdown?

To address the issue of a recession:

• Focus on value-offering packages of essential products that consumers need to buy even during a recession.

• Offer sales promotions, discounts, or value bundles for non-essential products to encourage consumers to buy them and so maintain their standard of living.

• Offer mobile data vouchers to customers who buy certain products or whose purchase amounts to a specific total.

• A large number of consumers are sceptical about providing their credit card details online, and most lower-income earners still use cash. So online retailers could offer a cash-on-delivery option.

To address the data access issue:

• Host competitions on TV and radio with mobile data bundle voucher giveaways or vouchers from the retailer. Airtime can also be given away when purchases are made.

• Optimise websites and mobile shopping applications with ‘light’ versions that require minimal data access by reducing the amount of rich content that requires more data.

• Partner with mobile service operators to offer free access in rural areas for a specific period of time. USSD technology can also be used to give away free data with spend on groceries.

To address the digital literacy issue:

• Constantly communicate with consumers via platforms that are available at home. In a lockdown, consumers might not be exposed to outdoor advertising, or be able to buy newspapers and magazines. Retailers can use TV and radio advertising to target lower-income earners, and social media for those who have access to and use the internet regularly.

• Use technologies presented by the 4IR, including artificial intelligence, to make the online purchasing process easier – for example, using technologies such as Siri or interactive chatbots on retailer websites to guide the purchasing process.

• Using voice-enabled settings on online stores for those who struggle to read content, so that consumers can hear and speak their prompts instead of reading and typing.

• Use virtual reality to create a 3D image of the store and its aisles to mimic the physical outlet, and so make the online shopping experience easier.

At the moment, consumers who have been sceptical about buying online might feel as if they have no other option. But there are numerous strategies that retailers and marketers can implement to encourage consumers to purchase online. Over time, this may alter consumer behavior, as consumers who were sceptical about buying online would experience the benefits associated with online shopping.

Retailers could, therefore, use the national lockdown to their advantage by trialing these online strategies, which would also promote an overall increase in online retailing in South Africa.

Covid-19: Short-term pessimism, long-term optimism

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Article by Rowan Leibbrandt on BizCommunity

This too shall pass. And once it has, we will need small-, micro- and medium-sized enterprises (SMMEs) more than ever to boost our flailing economy, drive innovation and create jobs.

Fortunately, we’re a nation of natural-born entrepreneurs – just look at the recycling industry in South Africa with over 80% of recyclables collected by informal waste pickers. These people are literally creating work from waste, and we can learn a thing or two from them. Call me an optimist, but I firmly believe that we can overcome this and create opportunity on the other side.

That said, as businesses we clearly need to navigate the current coronavirus-infested waters first, and this isn’t something any of us have experience in. We’re in what looks more like a wartime economy than any of the recessions and credit crises we’ve seen before, and most of us are learning on the job. It’s at unique times like these that we compete against unfolding events rather than other businesses.

It’s in that context, and in the spirit of collaboration, that we’ve been asked to share some of what we’re trying. I need to add an important disclaimer though: while we’re doing our best to figure this out, and these are the things we’re trying, they’re by no means the holy scripture on business management. We’re not experts, just entrepreneurs trying to survive.

Some of what we’re doing was suggested to us by more experienced people whose opinions we value, and some just seemed sensible to us when considering our particular set of problems. In any event, here’s what a drinks startup is trying to do to make it through lockdown, when everyone seems to really want a drink but it’s illegal to buy any!

1. We’re trying to manage how we feel about this emotionally

Trying to separate the short-term from the long-term seemed to give us some clarity of thought. And we consciously change gears between the two depending on what we’re debating – we call it being pessimistic for the short-term and optimistic for the long-term.

So, we’ve scenario planned for the worst, but we are also planning an aggressive bounceback when things somewhat begin to normalise (whatever that will look like).

2. We’ve identified which parts of our business are the most critical to our survival

In our type of business, we essentially have three types of assets – our receivables (which are basically out of our control now), our brands (which are in hibernation) and our people (who are our organisational muscle). We quickly drew the conclusion that our people had to be our focus.

We’re doing everything that we can to allow us to continue to pay salaries in our worst-case scenarios. And we’ve treated agencies, consultants, and small suppliers in the same way – essentially as extensions of our team. We think this makes business sense, and it makes us feel good about ourselves which isn’t something to take lightly in these stressful times!

3. We’re spending a lot of time on the phone

A lot of people who owed us money were simply not paying. We received a handful of calls from people who took the time to explain to us their particular situation and tried to give us some confidence as to when they thought they would be able to resume payments.

We were so impressed by these customers that we decided to do the same, and to use this opportunity to relationship-build by demonstrating that we are a different type of business.

Our aim became to outperform other creditors in terms of clarity and communication about how we were planning to resolve the situation. My business partner and I called all our creditors personally, shared as much information as we could, and committed to coming back to them with a payment plan to normalise our account once we know we may resume trading.

What we’ve learnt is that most suppliers understand the crisis we’re all in, and what they really want is a debtor that is transparent, has some sort of plan, and doesn’t just disappear.

We also talk to our bank every two to three days. Within the first week of lockdown, we took them through our scenario planning and how we will be addressing the various pinch points. Then we explained how we intend bouncing back. In this case, we felt that it would be best to be available and to over-communicate. It was a huge amount of work, but we’re glad we did it.

I think this has been one of the most important things I’ve learnt in this crisis: pick up the phone and keep talking to everyone who is important to your survival. Let’s hope it helps us get through it all!

4. We’re being optimistic about the long-term

All drinks companies will lose 6 weeks of sales (maybe more) so we are anticipating that everyone will be super defensive on the other side. SA will be unexciting for the multinational companies, and there is unlikely to be the same level of brand investment as there was before.

We’re trying to think of ways that allow us to emerge from this and be on the front foot while everyone else is on the back foot. We’re considering ways for us to recover quicker and move faster when we bounce back, enabling us to gain more ground in the categories we’re in, than we would’ve been able to under normal circumstances. It’s hard, but we think we have some good ideas…

We’re trying to stay convinced that if you can survive something like this, you definitely come out stronger – almost by definition. If you can get through an erratic currency, intermittent electricity supply, very nearly running out of water, and now corona, you can’t tell me you won’t have a pretty impressive business at the end!

Having to grow in this challenging environment forces businesses like ours to build the kind of muscle we wouldn’t have to build if we were operating elsewhere. Compare doctors who have trained in South Africa with those who trained in Sweden, for example. The same is true of startups we think.

I think that may be enough opining for one day. I know many companies our size (and maybe us too) won’t survive this crisis we’re going through, and we aren’t downplaying the sadness of so many people losing their jobs and their livelihoods. While we’re trying to be thoughtful and positive in our response to what are undeniably some pretty big challenges, there is no certainty in any of this, and we know we don’t have all the right answers.

That said, we decided to start a business here because of the enormous opportunities SA offers, and as far as we’re concerned those haven’t gone anywhere. We plan still to be around in a few months to go after them!