4 minute read
THE DIGITAL ECONOMY
from The New Normal
How COVID-19 affixed an ‘e’ to commerce
While e-commerce in SA has grown significantly in the past decade or so, it still lags the developed world, writes Rodney Weidemann
Many local e-commerce organisations were not ready on a technical level for the sudden lockdown last year. that’s according to investment analyst and market commentator chris gilmour who says this was particularly evident with food delivery.
“None of the big food retailers were able to properly fulfil the deluge of requests for online delivery that came about just after lockdown. i remember trying a well-known retailer and receiving a slot that was more than a month ahead, which was basically useless,” he says.
But, says gilmour, Pick n Pay and Bottles very quickly “made a plan”.
“since Bottles’ core competency was same-day delivery of alcohol, the liquor ban that came into force on lockdown day meant it no longer had a business. However, within a day or two, the company had totally changed strategy by combining forces with Pick n Pay to deliver groceries instead of liquor.”
Despite being a developing market that wasn’t truly ready, this sector saw significant growth during lockdown. gilmour notes that sa is not a “typical” developing market. “it more closely resembles a developed market with chronically high unemployment. that unemployment level mimics the impact of an emerging market. Whatever the definition, there are enough relatively well-heeled consumers in sa to make online retail viable. only relatively slow and expensive broadband connectivity, coupled with relatively poor logistics capabilities, has restrained the country from realising its online potential.
“Looking forward, i expect this improvement to be maintained,” he says.
“there is something of an ‘activation energy barrier’ to be surmounted by consumers when buying online. many still feel overawed at the prospect, but once they have crossed that barrier, they rarely return to traditional brick and mortar shopping for the bulk of their requirements.
“coViD-19 has acted as a catalyst for greater online spending, in an ultimately sustainable manner.”
Digital divide or digital development?
Digitally-enabled platform business models are the future of business, writes Rodney Weidemann
The business model of the future
is evidenced by the increasing numbers of organisations that are turning to digital platforms to directly drive revenue - a change from merely leveraging digital platforms to support conventional lines of business.
According to Jon Tullett, research manager, IT services for IDC sub-Saharan Africa, COVID-19 greatly accelerated this trend.
“When the pandemic struck, lockdown meant people were forced - and generally preferred - to stay indoors. Suddenly, every supermarket chain simply had to have a mobile app, not to mention an e-commerce site, a delivery network, and a support infrastructure for all of them. This led to frantic investment and innovation,” he says.
“Essentially, what we saw was several years’ worth of digital evolution taking place in a single quarter, and several years of digital revenue growth taking place at the same time.”
Of course, he notes, while buyers who are now used to developed world standards of online commerce and service delivery are unlikely to go back to malls, the market remains stratified – thus excluding many South Africans from effectively using digital services the same way.
“Savvy entrepreneurs are using this as an opportunity to build out niche services targeting underserved communities, something that drives up innovation, adoption and revenues, but the digital divide is still a concern.”
DID YOU KNOW?
Jon Tullet says that innovation is happening so fast, it now takes ongoing investment to keep up. AI is a great example of this – while still in relative infancy, it’s easy to see the impact it’s going to have on business, demonstrating the importance of consistent investment in what is a rapidly developing technology.
While digital innovation is both exponential and inspiring, adds Tullett, a concern is the impact on businesses or communities which are left behind.
“It’s really important that government steps up and supports market-wide digital transformation to mitigate this. Nonetheless, the more businesses move to digital platforms, the more they’ll pull other businesses, and, in some cases, entire supply chains, along.
“Last year was a big wake-up call for SA businesses to ramp up their digital operations. It’s obvious that when we find a new balance, it’ll be one that is well removed from the less-digital marketplace that existed in 2019.”
