* South Africa in lockdown since late March
* Online shopping surges as consumers stay home
* Retailers add capacity to meet demand
By Nqobile Dludla
JOHANNESBURG, July 15 (Reuters) - Like many of her
compatriots, Kubashnee Moodley made her first foray into online
shopping during South Africa's coronavirus lockdown. She is not
a satisfied customer.
The 42-year-old business management coach was once charged
for a parcel she never received and also had groceries delivered
to her Johannesburg home after dark. "I was not going to risk
going to the gate ... especially with crime so high," she said.
Moodley's experience encapsulates the challenging situation
facing the e-commerce sector in Africa's most advanced economy.
Having long lagged behind much of the world in terms of
e-commerce, South African retailers and delivery start-ups have
been doing a roaring trade online as consumers shy away from
shops during the COVID-19 pandemic, with the likes of Pick n Pay
PIKJ.J , Checkers and OneDayOnly experiencing an explosion in
demand.
But this post-COVID boom is straining the capacity of even
the largest retailers, leaving some customers complaining of
long wait times and poor service.
The ability to alleviate those growing pains will dictate
which companies emerge as e-commerce leaders and which will be
left behind.
Factors such as fear of parcel theft, online fraud and high
mobile data costs have long hindered South African e-commerce
growth, experts say.
Global e-commerce leviathan Amazon AMZN.O does not operate
in the economy of 58 million consumers, partly because of the
cost and challenges of setting up the required infrastructure,
analysts say. And African giant Jumia 4JMAy.DE JMIA.N only
launched in South Africa this year.
Amazon, the vast majority of whose customers have to rely on
cross-border shopping at its 16 websites around the world,
declined to comment.
ONLINE LAGGARD
E-commerce accounted for only 1.6%, or $1.2 billion, of
South African retail sales in 2019, according to London-based
market research firm Euromonitor International. In the United
States, the figure is 14.8%. Even Kenya shops more online than
its larger neighbour.
However, Euromonitor expects sales to double this year while
Nielsen South Africa's retail lead analyst Gareth Paterson
predicts up to 200% growth in online food purchases.
A survey conducted by Visa found that 64% of consumers in
South Africa bought groceries online for the first time because
of the coronavirus outbreak and that 53% made their first online
purchase from a pharmacy.
When lockdown restrictions imposed in late March were
loosened in May, market researcher Urban Studies found that only
50-70% of customers returned to shopping centres.
"This was the quantum shift," said Anthony Thunstrom, chief
executive of clothing and homeware retailer TFG TFGJ.J . "We
probably advanced two to three years in terms of online demand
because of COVID-19."
Nikki Lincoln, a 34-year-old communications specialist,
thought shopping online would spare her the "unnecessary risk"
of going out during the pandemic.
"Woolworths has closed off online deliveries for my area, so
I can't shop there at all. And Pick n Pay has such a long
waiting time you might as well just go to the shop," she said,
naming two of South Africa's leading supermarket chains.
CAPACITY BOOST
Woolworths WHLJ.J said that home delivery suspensions were
temporary, resulting from an employee testing positive for the
virus, but acknowledged that increased demand had caused delays.
In April it launched a drive-through click-and-collect
service, boosting its online capacity by 50%.
When the lockdown began, Pick n Pay partnered with Bottles,
an alcohol delivery app that expanded into groceries with the
promise of same-day service.
"Our enhancements last year to create a stronger online
operation ... enabled us to expand our offer in response to the
demand for online shopping. Our team rapidly increased its
capacity and reach and met the needs of many new customers,"
Jessica Knight, head of online at Pick n Pay, said without
commenting specifically on delays.
Sixty60 - a grocery delivery app run by Shoprite's SHPJ.J
Checkers supermarkets - backed away from hourly dispatching,
opting instead for same-day delivery. It is now expanding its
delivery area weekly.
Companies hoping to compete, therefore, are quickly pumping
money into their e-commerce offerings even as they feel the pain
of a pandemic-induced economic downturn.
Grocery delivery business Zulzi was forced to limit trading
to two hours a day for two weeks after shoppers overwhelmed its
app, but it has since quadrupled the number of shoppers and
drivers it employs and doubled its customer care staff.
It is now processing 2,000 orders a day - five times 2019
levels - and has done a year's worth of turnover in the past two
months.
TFG, the brands of which include @home, Foschini and
Markham, plans to raise 3.95 billion rand ($234.2 million) this
month, partly to bolster its e-commerce business.
($1 = 16.8698 rand)