by ORiSA. Transparency, setting industry standards for excellence, education, and a trust mark that’s an indicator of a safe place to shop online — that’s what Edcon’s Paris Philippou believes will help drive local online retail.
What motivates a person to buy something online? Is it because the shopper trusts one online retail brand more than another? This, in part, is what KPMG sought to understand when it did a global research study of some 18 430 consumers in 50 countries across the globe. All those surveyed had bought at least one item online in the previous year and were between the ages of 15 and 70.
Biggest impediments
Trust is one of the biggest impediments to shopping online, but what builds trust? The 2017 KPMG Research, called “The Truth About Online Consumers”, reveals that transparency, access, putting consumers in control, education, and personalisation build online confidence in ecommerce retailers.
Trust is something that Philippou thinks about a lot. The Edcon group’s divisional executive for ecommerce and digital says that branding plays a big part in building trust, as does the sophistication of South Africa’s banking system.
“South Africa has a fairly mature banking environment in comparison to the rest of Africa, which helps,” he adds. “This helps build trust because there has been a big educational push to make online shoppers aware that if there is a problem with fraud on their bank account, when it comes to online stores, the liability sits with the retail partner or the bank — whether this is an Edgars, a Takealot, or any one of the banks, which safeguards the consumer,” he explains.
Knowledge
“This means, from a transactional perspective, a lot of trust has already been gained,” Philippou says, going on to explain that trust, in part, is about knowledge and about how much the market is doing to explain the risks associated with retail, and what customers should do if their transactional cards are used fraudulently. “A big part of what trust means to the consumer is the degree to which they are comfortable enough with a brand to shop online with them.”
Despite this, he says, “there is still a lagging element of trust. For too long now, the total percentage of online retail spend year-on-year has hovered just above 1% in SA. We speak about this as the psychological 1%, a barrier that needs to be broken and which has so much to do with trust.
“But what we see in emerging markets is that if you break this barrier and start moving beyond the 1% to 2, and 3%, you get a snowballing effect. After that, retail ecommerce grows more aggressively.”
Emerging markets
The World Bank reports that GDP in emerging markets grew rapidly, surging from 11% to 28% after the millennium to 2016. During the same period, the cost of smartphones dropped by as much as 40%, according to Boston Consulting Group, enabling “spectacular advances” in internet access. “Internet users in emerging markets now outnumber internet users in developed markets by more than two to one, and the difference is widening,” Boston Consulting Group writes in its report: “Digital Consumers, Emerging Markets, and the $4 Trillion Future”.
“E-retail revenues in the biggest emerging markets rose to $800 billion in 2017, a figure that represents 15% of all retail revenues in those markets. And that number is dwarfed by the volume of digitally influenced purchases, which amounted to about $1.8 trillion last year and should grow to a staggering $3.9 trillion by 2022,” Boston Consulting Group writes.
A cornerstone to trust, Philippou believes, is knowledge. “By this I mean, how much is the market doing to manage the narrative and to actively educate online shoppers, and this is where a body like the Ecommerce Forum of Africa can step in,” he says. A forum board member and chair of the Trust Committee, Philippou is part of the body’s drive to grow local retail ecommerce by working with the industry to enhance trust through education, sector knowledge, research, legislation, and consumer protection. In tandem, the forum has launched “Safe.Shop”, a trust mark first set up in Amsterdam but which is now used universally to build trust among consumers worldwide and to foster global digital trade.
Industry standards
“We’re bringing in agreed industry standards, and engaging with online retailers to ensure that they meet these minimum criteria so that the industry works together to grow the sector as a whole,” he says. “We’re hopeful that this will make people more comfortable to do that first online shop, or to start shopping online regularly.”
Innovation, Edcon’s ecommerce head says, will also drive growth: “South Africa should be growing a lot faster, but there are so many gaps and opportunities for local solutions. This is where the real retail disruptors are going to emerge from. Younger generations are going to be the ones that come up with the ideas that we can’t dream of right now, and which will catapult retail ecommerce to new levels.”
More ORiSA stories
- Alastair Tempest on trust at the speed of the internet [interview]
- Manuel Koser on investing in entrepreneurs [interview]
- Customer experience a growth driver at Cape Union Mart [interview]
- Yuppiechef — disrupting retail convention
Online Retail in South Africa 2019 (ORiSA) is a study conducted by World Wide Worx and Platinum Seed with the support of Visa, and is endorsed by the Ecommerce Forum of Africa. Marklives.com is the media partner, and Heavy Chef is the learning partner for this initiative, which seeks to actively promote online shopping and the growth of online retail in South Africa. For more info, go to onlineretail.co.za, or download the executive summary.
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