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Digital Retail Africa 2023
New Markets for South African Online Merchants and the Need to Build
Trust
By Drs Alastair Tempest
CEO Ecommerce Forum of South Africa
26 January 2023
Keyglobaltrendstoseizenewgrowthine-Commerce
The global e-Commerce landscape is rapidly changing. With fewer barriers to entry, more online retailers are emerging daily and joining the fierce
competition for customers’ attention and ultimately their loyalty. The top trends below could help build a brand that lasts
TREND 1
RADICAL CHANGES IN CONSUMER BEHAVIOUR:
Differentiate and diversify to win
TREND 3
ONLINE MARKETPLACES:
Greater choices, greater profits
TREND 2
SOCIAL COMMERCE:
Come for friends, stay for shopping
Global e-Commerce
more likely to purchase from a
company with strong brandvalues
4x
are concerned about the
environmental impact of the
products they buy
77%
contributing to the rise in online
searches for “sustainablegoods”
globally since 2016
71%
Customers are… Emerging social commerce enablers
• Global social media channel sales around
the world are expected to nearly triple by 2025
• Building trust with customers is key
• Social commerce is an opportunity for
businesses to take back control of their brands
on digital channels
• Many brands, are investing in online
communities to humanize their brands and
increase customer retention
of consumerspurchaseproducts
through marketplaces at least once a
month
38%
Sources: Deloitte Analysis, Shopify Future of e-Commerce Report 2022, Mirakl Marketplace Index 2022
Increase in
product
assortment
Increase in total
marketplace sales
YOY
(Q4 2020)
Increase in web
traffic
32% 34% 81%
$5tn
In 2022
Global e-Commerce Sales are
expected to reach…
$6tn
By 2024
and
e-Commerce sites across
the world
12-14mn
Online stores pop up daily, with an
estimated…
With fewer barriers to entry more
online retailers emerge which means
more brands competing for customers
Without Trust Ecommerce Cannot Survive
• “83% of consumers refuse to do business with brands they do not
trust. To build trust, brands must focus on exhibiting transparency,
warmth, honesty, and reliability.” (Gartner)
• “Nothing builds trust like the truth, and most customers value truth
and honesty above everything else.” (Natalie Doyle Oldfield, Forbes)
• “It’s important to remember that trust is a matter of perception and
something every business has to earn.” (Adam Rogers, Shopify)
Nischal Mewalall, SABRIC CEO, “online shopping can be unsafe because
fake websites are being used to defraud you of your money or harvest
your credit card data” SABRIC Annual Report 2022
Consumer Goods and Services Ombuds, 2022 Q2 report
Some Thoughts About Trust
• “It’s worth noting that building trust takes time, but losing trust takes
one poor decision.”
• If you please your customers they will tell their close friends, if you
annoy your customers they will tell everyone they come across!
• Probably the most famous cases was United Airways which broke a
customer’s guitar and refused compensation. The victim, Dave
Carroll, a Canadian musician, wrote “"United Breaks Guitars”, a hit
song in 2008. It is rumoured that United’s stock lost 10%.
Retaining Trust – One Useful Instrument
• National “trustmarks” have been set up in Europe since the 1990s.
Most countries have an ecommerce trustmark.
• EFSA tried to copy the European model in 2019, but it was too
expensive and there was no traction.
• Enter blockchain, which is used to verify or certify facts about
companies or items (like cryptocurrencies).
• Using blockchain we can verify that an e-shop’s Ts&Cs and privacy
policy are correct. We can also verify that the company is properly set
up and follows the company regulations. That can be done
automatically.
EFSA Certification/Verification System
• We hope to have this up and running mid-2022
• The cost to the e-shop will be minimal
• Other services can be added over time: eg insurance, customer
complaints resolution, similar service for suppliers, etc.
• A certification icon will be awarded – renewable each year
• Unresolved or multiple complaints will lose the e-shop its certification
• Another service for online B2B e-merchants will be designed.
• That will be expanded to businesses across Africa
New Cross-border Opportunities
1) The African Free Trade Area (AfCFTA)
2) USA, EU, UK
Challengesfacingcross-borderecommerceinAfrica
REGULATORY COMPLEXITY FOREX
LACK OF REAL-TIME ONLINE
CREDIT SOLUTIONS
HIGH COST OF BUSINESS IN
AFRICA
GOODS DELIVERY incl RETURNS
CASH RELIANCE DIGITAL CHANNEL
SCEPTICISM
INTEGRATION
COMPLEXITY
Sources: Deloitte Analysis from interview with e-commerce Subject Matter Expert
Exporting to Rich Markets
• There’s a lot of competition, but niche markets are very attractive
• Most African goods can be sold duty free due to agreements, such as
AGOA in the USA or the EU Customs Duty treaties.
• Note – country of orgin. Example - reselling Chinese goods will not
benefit from these agreements.
• Sales tax (VAT) maybe applicable (esp. in the EU).
• Specialists, or most courier services will work out taxes/duties when
applicable.
• Trust is important (see point on trustmarks in Europe).
Thank you for listening!
Any Questions?
alastair@ecomafrica.org

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Alastair Tempest

  • 1. Digital Retail Africa 2023 New Markets for South African Online Merchants and the Need to Build Trust By Drs Alastair Tempest CEO Ecommerce Forum of South Africa 26 January 2023
  • 2. Keyglobaltrendstoseizenewgrowthine-Commerce The global e-Commerce landscape is rapidly changing. With fewer barriers to entry, more online retailers are emerging daily and joining the fierce competition for customers’ attention and ultimately their loyalty. The top trends below could help build a brand that lasts TREND 1 RADICAL CHANGES IN CONSUMER BEHAVIOUR: Differentiate and diversify to win TREND 3 ONLINE MARKETPLACES: Greater choices, greater profits TREND 2 SOCIAL COMMERCE: Come for friends, stay for shopping Global e-Commerce more likely to purchase from a company with strong brandvalues 4x are concerned about the environmental impact of the products they buy 77% contributing to the rise in online searches for “sustainablegoods” globally since 2016 71% Customers are… Emerging social commerce enablers • Global social media channel sales around the world are expected to nearly triple by 2025 • Building trust with customers is key • Social commerce is an opportunity for businesses to take back control of their brands on digital channels • Many brands, are investing in online communities to humanize their brands and increase customer retention of consumerspurchaseproducts through marketplaces at least once a month 38% Sources: Deloitte Analysis, Shopify Future of e-Commerce Report 2022, Mirakl Marketplace Index 2022 Increase in product assortment Increase in total marketplace sales YOY (Q4 2020) Increase in web traffic 32% 34% 81% $5tn In 2022 Global e-Commerce Sales are expected to reach… $6tn By 2024 and e-Commerce sites across the world 12-14mn Online stores pop up daily, with an estimated… With fewer barriers to entry more online retailers emerge which means more brands competing for customers
  • 3. Without Trust Ecommerce Cannot Survive • “83% of consumers refuse to do business with brands they do not trust. To build trust, brands must focus on exhibiting transparency, warmth, honesty, and reliability.” (Gartner) • “Nothing builds trust like the truth, and most customers value truth and honesty above everything else.” (Natalie Doyle Oldfield, Forbes) • “It’s important to remember that trust is a matter of perception and something every business has to earn.” (Adam Rogers, Shopify)
  • 4. Nischal Mewalall, SABRIC CEO, “online shopping can be unsafe because fake websites are being used to defraud you of your money or harvest your credit card data” SABRIC Annual Report 2022 Consumer Goods and Services Ombuds, 2022 Q2 report
  • 5. Some Thoughts About Trust • “It’s worth noting that building trust takes time, but losing trust takes one poor decision.” • If you please your customers they will tell their close friends, if you annoy your customers they will tell everyone they come across! • Probably the most famous cases was United Airways which broke a customer’s guitar and refused compensation. The victim, Dave Carroll, a Canadian musician, wrote “"United Breaks Guitars”, a hit song in 2008. It is rumoured that United’s stock lost 10%.
  • 6. Retaining Trust – One Useful Instrument • National “trustmarks” have been set up in Europe since the 1990s. Most countries have an ecommerce trustmark. • EFSA tried to copy the European model in 2019, but it was too expensive and there was no traction. • Enter blockchain, which is used to verify or certify facts about companies or items (like cryptocurrencies). • Using blockchain we can verify that an e-shop’s Ts&Cs and privacy policy are correct. We can also verify that the company is properly set up and follows the company regulations. That can be done automatically.
  • 7. EFSA Certification/Verification System • We hope to have this up and running mid-2022 • The cost to the e-shop will be minimal • Other services can be added over time: eg insurance, customer complaints resolution, similar service for suppliers, etc. • A certification icon will be awarded – renewable each year • Unresolved or multiple complaints will lose the e-shop its certification • Another service for online B2B e-merchants will be designed. • That will be expanded to businesses across Africa
  • 8. New Cross-border Opportunities 1) The African Free Trade Area (AfCFTA) 2) USA, EU, UK
  • 9.
  • 10. Challengesfacingcross-borderecommerceinAfrica REGULATORY COMPLEXITY FOREX LACK OF REAL-TIME ONLINE CREDIT SOLUTIONS HIGH COST OF BUSINESS IN AFRICA GOODS DELIVERY incl RETURNS CASH RELIANCE DIGITAL CHANNEL SCEPTICISM INTEGRATION COMPLEXITY Sources: Deloitte Analysis from interview with e-commerce Subject Matter Expert
  • 11. Exporting to Rich Markets • There’s a lot of competition, but niche markets are very attractive • Most African goods can be sold duty free due to agreements, such as AGOA in the USA or the EU Customs Duty treaties. • Note – country of orgin. Example - reselling Chinese goods will not benefit from these agreements. • Sales tax (VAT) maybe applicable (esp. in the EU). • Specialists, or most courier services will work out taxes/duties when applicable. • Trust is important (see point on trustmarks in Europe).
  • 12. Thank you for listening! Any Questions? alastair@ecomafrica.org