Article provided by Lulalend
There has been a permanent change in the way that people shop and, in turn, the way that businesses need to operate. In the absence of brick-and-mortar stores being open during the lockdown, as well as a general fear of crowded malls when things were able to re-open, South Africa’s e-commerce sector exploded.
According to Trevor Gosling, co-founder and CEO of Lulalend, he has seen phenomenal growth in e-commerce businesses who have connected with them for SME financing. “Between the period of October 2020 and February 2021, we saw an 86% increase in loans made to e-commerce businesses and online retailers in comparison to the same period between 2019 and 2020.”
“The loans were strongly linked to growth-related requirements, such as the purchasing of inventory or the expansion of marketing,” Gosling explains.
“The reality is that South Africans have now become familiar with and are used to the convenience that shopping online provides. For those who have seized this opportunity and taken the time to invest in developing their digital offering, they will continue to see rewards in the long-term,” he adds.
One of the fundamental differentiators around e-commerce in 2021 is that, while in the past this has been dominated by retailers, the adoption and familiarity that people now have of purchasing goods and services online has meant that nearly all sectors can capitalise on this trend.
The boom in demand also allowed businesses across a variety of categories to adopt a new way of delivering their products with innovative non-contact formats – whether contactless payments or automated fulfilment systems to help curb the spread of the virus.
“Gone are the days when buying online was simply a purchase of a book, clothing item, or food. Nowadays, having a business presence online that integrates e-commerce functionality will become a lot more common,” Gosling points out.
“It takes more than just setting up an online site.” Gosling says that the new competition emerging out of this pandemic and advancing technologies will require SMEs to incorporate innovative ways of marketing, selling, and fulfilling customer orders if they are wanting to maintain and grow their bottom line.
This is where SMEs will need to invest. “From the increase in new loan applications from e-commerce businesses that we saw”, Gosling says that one of the biggest learnings from them is the need to pressure test any new technology or systems that might be brought online. “It will be important to expand capacity limits as well as invest in systems that will allow for personal, timely and automated customer interactions and sales fulfilment.”
“A secondary, but equally important, the benefit is that it’s not just about an increase in revenue. Doing so means that they are able to reconnect with their existing customer base all while expanding their brand presence to new and potentially untapped markets,” he adds.
Understanding the purchasing paths of these new online customers and ensuring that your platform provides a seamless and simple shopping experience across different devices will be critical. “For those with physical stores, it will also mean ensuring that they are experience-led and digitally connected to any e-commerce platform that could assist in generating sales after the customer has left the store,” Gosling points out.
To do this will require access to capital. “Taking on debt is often essential for business growth. Being able to invest in your business to ensure that it meets the changing needs of its customers is crucial for survival,” he adds.
“Now is the time to act. The world has changed and so have the ways that customers connect with brands. To ensure that they capture market share and emerge after the crisis as market leaders, business owners will need to start making these changes now,” says Gosling.
To help SMEs wanting to move their business online, we’ve created a practical guide that is available as a free download here.