Mastercard has revealed that the total growth for online retail in South Africa (SA) in 2022 came to 35%, bringing the total of online retail to R55-billion. Within that context — after a dramatic enter-stage left as a celebrity of the pandemic — e-commerce is yet again revealing more avenues to explore. 

Two simple concepts: an online marketplace connecting buyers to sellers (sellers of multiple brands) versus D2C selling products online that the business makes directly to consumers (one brand owner).

Here are a few of the pros and cons of unlocking sales potential and connecting with consumers on these respective paths to purchase:

Online marketplaces: broader customer base

Marketplaces offer brands and retailers a platform to sell their products to a larger audience. The likes of Takealot, Makro, Leroy Merlin and Superbalist are some of the South African favourites — with Amazon to follow.

The advantages include the relative ease of getting started and being able to leverage the existing traffic and the customer base to generate sales. Logistics, customer service and payments are also handled by the marketplace.

With the added plus of one can either self-drive or let the platform handle the management (retail model) thereof.

On the opposite end of the scale, disadvantages include:
  • the high level of complexity required to manage this space
  • the fact that the marketplace owns the customer so you can't leverage future customer data or sales, and
  • there is a high level of compliance and boxes to be ticked, plus the load of costs from storage to delivery and they take a commission of the sales.

Furthermore, brands don't typically have the full product range available which can detract from the overall customer experience.

D2C: control over customer experience

Selling D2C is the new buzzword with many traditional brands that used to sell through third parties now wanting to sell direct.

This involves having a customer-centric e-commerce platform to connect with existing new customers, nuanced through the brand's website and managed by the brand.

The advantages include:
  • greater control over the brand and the design
  • being able to offer a superior customer experience
  • greater margins as one is not paying out to a third party, and
  • ownership of the customer experience.

One can run "online only" deals gathering valuable customer and product selection information, as well as list the full product range online. So too, the year-on-year growth is exponentially higher than traditional retail.

The disadvantages include:
  • the high set-up and running costs
  • the complexity of dealing with agencies and service providers, and
  • complex customer management that potentially could put one's brand at risk.

So too, while most retailers are experts at retail but not e-commerce, making sure you have the right teams to steer the ship can be costly, challenging and can detract from the core focus.

In South Africa, the online landscape is seeing increased penetration with new marketplaces starting to get traction such as the AVO "super app" by Nedbank. While the D2C market, supported by rising digitalisation will also capture a sizeable share of sales. Selecting a platform(s) comes down to finding your fit around what suits a product or product category and a combination of enhanced systems, marketing and excellent customer service to ensure sustainability around attracting and retaining customers.

For more information, visit www.ecomplete.agency. You can also follow eComplete on Facebook, Twitter or on Instagram.