E-commerce is a key catalyst for South Africa's CPG growth in 2023
There is no doubt that the COVID-19 pandemic and subsequent lockdowns provided the essential growth e-commerce needed. During challenging times, this channel offered safety, accessibility, and convenience to restricted consumers.
This led to a massive increase in usage among existing users and rapid adoption among consumers who had never used the channel before. In 2022, e-commerce remains a regular part of shoppers' routines, and in 2023, South Africa will enter a new era of e-commerce growth and integration.
1. Price-driven growth in e-commerce
E-commerce is far from a fad, and its use and sales figures in South Africa have not experienced a sharp decline. Instead, it has taken its rightful place as a star performer among global retail channels in 2022. Post-lockdown consumers continue to shop online, not just maintaining their habits but buying more.
Today, financial uncertainty and rampant inflation are prompting consumers to cut back on spending. They are chasing more promotions, and e-commerce is the retail channel they believe offers the best value for their money.
2. Rising usage rates
The latest NielsenIQ Barometer study, which surveyed 11,000 consumers across 12 different countries, including South Africa, further demonstrates the ubiquity of online shopping channels.
The study found that in South Africa, online shopping has become an omnipresent part of daily life, with 53% of grocery shoppers having bought groceries online in the past six months, and 16% of them having purchased more than half of their groceries online. 48% of respondents said they now buy more groceries online than they did six months ago, while 21% said they buy fewer groceries online (net change +27).
The most common method of shopping online is through a store's online website (67%), while 56% use a store or brand's app. However, when determining the primary method of online shopping, apps were mentioned more often than websites.
3. Exciting indicators
The result of more consumers adopting this shopping format is that e-commerce has opened a Pandora's box of dynamic, real-time data about South African shoppers, which is highly measurable. The key now is for manufacturers and retailers to leverage their digital channels and harness massive data analytics capabilities to generate insights. These benefits include data analytics capabilities that allow real-time tracking of "digital shelves," which is crucial as e-commerce offers a vast array of product variety not available in the offline world. It also enables brands to understand what is more effective, i.e., which promotional activities yield higher ROI, by reviewing relevant scores daily, thus getting the basics right.
Looking forward, South African e-commerce will continue to provide an incredibly powerful platform for understanding consumer and shopper behavior, as well as their needs and preferences. Crucially, it will be able to predict their future needs. As a result, measurement standards are likely to become a vital mechanism for innovation in 2023.