In a recent interview with CNBC Africa, Wayne McCurrie, Portfolio Manager at FNB, discussed the role of South African online retailers on Cyber Monday. McCurrie highlighted the limited opportunities for local players and the potential impact of international giants like Amazon.
Cyber Monday, known for its online deals and discounts, is not as popular in South Africa compared to other countries. McCurrie noted that while the concept is well-known, local online retailers have limited opportunities to participate in the event. Currently, Naspers’ takealot.com is the biggest online retailer in South Africa, but it is just a small part of the company’s overall operations.
Brick-and-mortar retailers in South Africa have an online presence, but online activities still make up a relatively small percentage of their overall turnover. McCurrie pointed out that while some retailers, such as Checkers 60-60, have seen a 40% increase in online activity, it is still less than 10% of their total turnover. As a result, a day like Cyber Monday is unlikely to significantly impact their financial results.
Looking at the international perspective, McCurrie highlighted companies like Amazon as major players in the Cyber Monday phenomenon. While Cyber Monday is more popular in Asia, Amazon’s entry into the South African market poses a potential threat to local online retailers like takealot.com. McCurrie believes that Amazon could potentially overshadow takealot.com, and it is crucial for the local retailer to have plans in place to counteract this competition.
The profitability aspect of online retail was also discussed during the interview. McCurrie acknowledged that online retailers often offer discounted delivery and operate on small margins. However, he emphasized the importance of eventually charging the appropriate price for delivery to ensure profitability. Despite the challenges, McCurrie noted that online shopping has become increasingly convenient, thanks to smartphones and affordable data, allowing a wide audience to participate in online retail.
When discussing the potential benefits for payment service providers during Cyber Monday, McCurrie stated that while there could be some marginal benefit, the industry is intensely competitive. Every bank and cell phone company in South Africa has an online payments portal, but profitability has yet to be achieved as appropriate pricing has not been implemented.
Finally, McCurrie touched on the role of food retailers during Cyber Monday. He noted that while food retailers like Checkers 60-60 did benefit from the event, Cyber Monday is still way smaller in South Africa compared to Black Friday. Black Friday, which has expanded to Black Friday week and month in South Africa, remains the more significant shopping event, with food retailers leading the way in offering competitive prices.
South African online retailers face limited opportunities on Cyber Monday, with local players like takealot.com having a small presence compared to international giants like Amazon. While online activities are growing, they still make up a relatively small percentage of overall turnover for brick-and-mortar retailers. The entry of Amazon into the South African market could further impact the local online retail landscape.