Q&A: Amazon is a threat to Africa’s ecommerce retailers
Local online retailers are under threat from Amazon’s entry into South Africa, as there is still a gap in implementing a full omnichannel approach, says Damian Michael, CEO, Innovo Networks.
South Africa’s ecommerce retailers will soon be facing their toughest competition yet as global retail giant, Amazon goes live on the continent soon, bringing with it a wealth of global ecommerce experience and tech expertise that local players may struggle to match. Although surveys show a consistent increase in online shopping uptake by South Africans, tech entrepreneur and Innovo Networks CEO, Damian Michael, warns that Amazon’s high profile, product range, cutting-edge technology and well-proven delivery and returns systems mean that local online retailers will have to step up to remain competitive.
What is the current ecommerce status of retail in Africa?
If the rest-of-Africa experience is anything to go by, there could even be a post-Amazon shakeout in the ecommerce market, as inflation-hit South African consumers spend less, and more ecommerce platforms compete for a consequently smaller share of the customer pie. Jumia, for example, is sometimes known as the ‘Amazon of Africa’ due to its e-commerce involvement in more than a dozen countries. But its once-aggressive expansion strategy has been pared back as it continues to make losses and reboots it management team. Similarly, Copia, the Kenyan-based B2C platform, has suspended operations in Uganda and put planned expansions into Rwanda and Tanzania on hold.
Where exactly does the threat with Amazon lie for local ecommerce?
Amazon is a slick and well-oiled machine, and is bringing to South Africa unmatched global ecommerce experience, customer service expertise and tech capability. In our research, we’ve found that local online retailers are struggling with artificial intelligence, contact centre efficiency, reverse logistics (when customers return unwanted items), and a general lack of suitable skills and resources. At a functional level, local ecommerce retailers are not delivering consistent customer excellence because they are unable to provide an integrated and seamless shopping experience.
Tech-savvy consumers expect to interact with a business through many different channels – from the website through to email, call centre, WhatsApp or the various social media platforms. But our retailers are currently multichannel focused– meaning that if, for example, a customer phones the call centre to complain about a problem with the pick-up of an item being returned, the call centre team can’t see that the client previously complained about the same thing on WhatsApp and Facebook. The customer gets frustrated at having to explain everything again and there’s tremendous wastage of human resources in trying to resolve what may be a simple reverse-logistics issue.
Similarly, the effective use of data and artificial intelligence is being hampered because multichannel is inherently channel-specific and fragmented, rather than providing a holistic perspective. The answer is omnichannel – where a single contact centre has an overview of all the data, all the customer orders, all the customer interactions, all the stock availability and all the product returns. Done correctly, it is personalised, seamless, integrated and efficient. It is what the likes of Amazon do well.
So, why are local retailers not employing the omnichannel approach effectively?
In South Africa, though, Innovo’s internal discussions with e-commerce retailers indicate a knowledge gap as to how to achieve an omnichannel approach. It does take time and it does require considerable tech expertise. But it may be the difference between staying in business or not. A successful tech-driven returns strategy, in particular, can be make or break. US research shows that returns effect 20% of a retailer’s inventory, which is a considerable number. But, at the same time, the returns policy may influence 100% of the consumer buying decision.”
As voice, data, and cloud solutions provider, we launched South Africa’s first full-stack omnichannel contact centre solution toward the end of last year, earning the company the 2022 Cape Business Process Outsourcing (BPO) Technology Innovation award. Cape BPO currently manages and streamlines the 1,900 contact call centres nationwide within South Africa.
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