Monday, January 24

Online retailers are losing R30bn

Shopping online, from your couch, while eating pizza, works great. It’s a much easier way to compare prices than driving from store to store. You have more information at your fingertips than a normally inexperienced and disinterested salesperson can share, if any of them care enough to look up from their cell phone to get their work done.

Still, hard-to-navigate sites and glitches cause many shoppers to “walk out the door” without buying anything.


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“E-commerce could increase by 100% [reach] 5.6% of total retail pie if bugs are fixed, ”according to SA’s latest Digital Customer Experience Report, the third annual survey on customer perceptions and experiences of online shopping.

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Taken together, failures in reliability, ease-of-use, security, delivery, and after-sales support from online merchants cost retailers nearly R12 billion in lost sales, according to the survey conducted by the survey community at ovatoyou line and Rogerwilco digital marketing agency.

In addition, ovatoyou estimated that frequent cart abandonment, when shoppers do not complete their transactions, amounts to more than 20 billion rand. “More than R30 billion is being left on the table, which is coincidentally the current market value of e-commerce in South Africa,” says Amanda Reekie of ovatoyou.

So consumer e-commerce could easily double if things worked as they should.

“A staggering 96% of respondents said they would spend more online if the retailers’ customer experience was better,” says Reekie.


Reekie explains that the researchers based their estimate of R30 billion in lost sales on two publicly available sources of information: the current value of e-commerce in SA as estimated by World Wide Worx and the number of online shoppers in SA estimated by We. Are Social.

According to World Wide Worx, retailers have annual sales of R30 billion. Other sources put it higher. For example, a recent Deloitte Africa study estimated that online sales had already exceeded R40 billion in 2019 and have been growing at a rate of 13% annually since then.

We Are Social estimated that some 21.9 million South Africans have purchased products online, a figure that is consistent with that calculated by the Deloitte study. Deloitte estimated that the number of online shoppers in South Africa will increase to 32 million by 2024.

Based on these figures, ovatyou calculated an estimated annual expenditure of R1 368 per capita.

“Then we looked at the average amount by which our respondents would increase their online spend if the experience were better,” says Reekie.

The survey found:

  • 5% of respondents would spend less than 10% more,
  • 26% would spend between 10% and 25% more,
  • 30% would spend between 25% and 50% more,
  • 23% would spend between 50% and 75% more
  • and 11% would increase spending by more than 75%.

“In each case, we select the median figure in the range; For those who suggested they would spend 10-25% more, we based our estimate on 17.5%. Therefore, the net impact of bad online experiences can be calculated at R11.95 billion, ”according to Reekie.

Incomplete transactions

The value of incomplete transactions is even higher, at more than R20 billion. A massive 76% of respondents say they don’t make it to the checkout but abandon their “cart” before completing their purchases.

“More than three-quarters of the 2,000 respondents in the study indicated that they abandon shopping,” Reekie says, adding that some of them abandon purchases frequently and others less.

The study specifically asked respondents to indicate how often they did not complete purchases and why. He used the data to calculate the weighted average of lost sales with the result that sales would be 20 billion rand higher if buyers actually came to the checkout.

More than half of those surveyed in the study indicated that high shipping rates were to blame, and 32% noted that long delivery times were a deterrent.

A third of online shoppers complained that there are too many steps in the checkout process, in addition to listing slow websites and a lack of support reasons for cart abandonment.

Payment issues, whether it’s a total failure to process the transaction (cited by 26%) or a problem with a discount code (20%), continue to be major impediments to completing a purchase.


When looking at how much of the experience deterred consumers from increasing their spending, three key issues stood out: delivery, credibility, and the overall experience.

“The opportunity cost is quite clear; Consumers expect a higher level of experience from the brands they shop from online. This could be partly because they have become used to the experience dealing with Amazon or Takealot, ”says Charlie Stewart, CEO of Rogerwilco.

“These brands have set a high bar and local retailers need to improve their online game if they are to turn consumers’ huge appetites for online shopping into rands and pennies.”

Online shopping has seen a sharp increase since the start of the pandemic and is one of the few growing sectors.

Read: The (online) stores are open!

The user base is broad, and the report reveals that 82% of respondents have made at least one purchase online. More than 70% of those who reported a household income of less than R10,000 per month.

This entry of a new cohort of shoppers, coupled with an increase in the number of categories people are shopping in, takes online shopping out of the narrow niche it used to be, Reekie says.

Significantly, 32% said the number of online stores they shop at has increased, 31% have made online shopping a part of their shopping routine, and 20% report buying more through networks social.

“With improved levels of connectivity and an abundance of online shopping options, there is no good reason why SA should lag behind other markets such as the US and the UK. The customer experience is really holding her back, ”says customer experience expert and commissioning partner Julia Ahlfeldt.

She believes that given how expensive it is to walk your feet through the door, or rather your eyes on the page, cart abandonment should be the center of attention. “Retailers need to examine the functional and emotional reasons why shoppers don’t complete their transactions,” he says.


When sales are made, retailers must complete the rest of the online experience offline, and this is where some of the key aspects of the transaction come together.

This is the point at which the investment made by the client, whether in time, energy or money, materializes, according to ovatoyou.

A third of the respondents spoke of the delivery of their purchase when defining their experience and perception of the brand.

As important as purchase delivery is, it was outperformed by 34% of respondents who said that unpacking their new purchase was the most memorable aspect of their online shopping experience.

As an example, in recent years unboxing has become one of the most popular video categories on YouTube.

“Unpacking is a huge missed opportunity for brands,” says Ahlfeldt. “Items randomly thrown into a drop box do not say ‘we appreciate our customers.’

Factors Affecting Confidence

The research points to three factors that build trust in buyers.

The first is your own experience. Big stores like Amazon and Takealot have done this part of the journey well, according to Rogerwilco. Stewart says that a good customer experience minimizes frustration, reduces doubts, and prevents customers from switching to a rival site.

“Retailers must recognize that consumers are becoming more loyal to the experience than to the brand,” says Stewart.

The second factor is brand resonance, with 32% of respondents saying they shop at familiar brand and category stores. Nike, Samsung, and Apple were just a few of the names mentioned, as were Clicks and Superbalist.

While peer reviews go a long way toward establishing trust, customers are also more likely to buy from a brand they’ve seen advertised. This information should not be lost on new entrants who must consider the cost of marketing and branding when preparing budgets for their online stores, Stewart says.

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The third trust factor is security. About 12% of respondents said they wanted online stores to make a clear commitment to maintaining the privacy and security of their personal information, while 11% expressed a need for a secure environment in which they could conduct transactions.

Sharing experiences

When it comes to making the biggest purchase, a remarkable 55% of shoppers based their decisions on social media posts and 54% looked at reviews on the brand’s website. Third-party review sites were used by another 35% of those surveyed in the study.

Importantly, negative reviews would stop 64% of buyers in their tracks and result in a lost sale.

Recommendations from family and friends are just as important as reviews, with 54% of respondents indicating that they follow recommendations, closely followed by promotional information and brand advertising.

Around 21% of online shoppers were persuaded by so-called influencers.

If the shopping experience was positive, 78% of those surveyed said they would share it with their friends and family (who are responsible for 54% of purchasing decisions).

Almost 60% of shoppers would post about a great service on social media or online review sites. A similar number indicated that they would buy more of the brands they like.

On the contrary, a bad experience is also shared: 52% would tell family and friends and 45% would post on social networks.

Notably, more than half of the respondents indicated that they would never use the infringing site or brand again.

“We can really say that the customer experience is a brand experience,” says Ahlfeldt.

Stewart reiterates the importance of online shopping. “SA is online. Whether people are shopping for groceries, buying wigs, or making investment decisions, over the past 18 months we have witnessed a sharp increase in consumer desire to interact with brands through their phones, televisions, watches, laptops and computers “.

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