Julia Ahlfeldt | Founder | Julia Ahlfeldt CX Consulting | mail me |
In this fourth edition of the 2022 South African Digital Customer Experience Report, it has become clear how far South African consumers have progressed.
Consumers now interact with brands and shop both online and offline in increasingly sophisticated ways. Conversely, brands and businesses have made significant Customer Experience (CX) improvements to meet the growing demands of these savvy consumers.
There is little need to attribute these changes solely to the COVID-19 era. Although the pandemic accelerated the shift to digital for many consumers, it permanently influenced online shopping behaviour.
Savvier consumers demand more
Social selling and online reviews now play significant roles. Furthermore, online activity, in all its forms, increasingly influences offline sales. In fact, the report estimates that online product research and discovery influence as much as R293.8 billion in physical retail sales.
This figure spans the economy’s leading categories: groceries, fashion, medicine and toiletries, and furniture and hardware.
The report is the most comprehensive study of its kind. The study draws on responses from 2,000 South Africans. The three authors provide the primary insights into the data. Additionally, the report features contributions from 11 seasoned industry veterans. These include senior marketers from Meta, Woolworths, Zando, TFG, Luno, and the V&A Waterfront.
Artificial Intelligence (AI) is changing the customer journey alongside these broader digital developments. As consumers adopt new technologies and interact with brands across multiple channels, businesses must understand how these changes shape expectations and purchasing decisions.
Offline gets a massive shot in the arm from online activity
Until recently, people primarily associated online activity with websites and apps. However, that understanding no longer reflects reality. Today, online activity encompasses every interaction a brand has with its customers across multiple digital touchpoints. These include social selling, marketplaces, search engines, and reviews, among many others.
Consider how many consumers browse the internet for products before purchasing them in-store when discounts become available. Others consult reviews to gain an accurate picture of products they are considering. They do this before exchanging any money.
Social selling also deserves particular attention. It accounts for 10% of all e-commerce sales. As part of the ‘new’ online journey, consumers purchase directly through Instagram, Facebook Shops and WhatsApp. These platforms now serve as online purchasing channels, just like traditional e-commerce websites.
What we need to acknowledge is that online is far more complex than we had realised – and that selling can come from almost anywhere online. Brands need to grasp that new channels of trade are on the rise, and that even if purchases don’t happen online, that’s where many customer journeys begin. Brands may be missing valuable opportunities by limiting the channels that they trade through.
Facebook and Instagram illustrate this trend. According to the report, 48% of consumers purchase through these social media platforms. I also want to highlight another important point. Small businesses are not the only ones embracing these ‘alternative’ e-commerce channels. Global giants such as H&M are doing so too.
Following the digital crumbs to the store
Among the most significant findings in this fourth annual report is the strong relationship between online discovery and offline sales. Online browsing and product research can lead to substantial increases in physical retail purchases.
Previously, brands might have dismissed the possibility that a Google review could influence an in-store purchase. However, they must now recognise the importance of online activity. Consumers browse, research, compare products and read reviews with a specific goal in mind. They want to make informed purchasing decisions. Although they use online channels for convenience and information, they may ultimately complete their purchases in physical stores.
Woolworths, for instance, reports that more than 60% of its online browsers say they purchase in-store. This finding has reinforced the retailer’s focus on leading in omnichannel retail.
Brands are urged to reconsider their approach. It’s dangerous to disregard other channels and transactions that contribute to the broader construct of online shopping – these are no longer niche behaviours. Our research suggests that it’s time to rethink – and broaden – their definition of ecommerce in keeping up with the actual consumer behaviour.
– Charlie Stewart, CEO of Rogerwilco
AI is changing the customer experience as brands explore how technology can support product discovery, personalise interactions and connect digital activity with physical purchases. Businesses must therefore consider how emerging technologies fit into the broader customer journey rather than treating each channel as an isolated touchpoint.
A brave new world – the rise of the Metaverse
Despite the growing integration of online and offline shopping, this year’s study identifies another significant development: consumer interaction with the Metaverse. Interestingly, 53% of respondents say they have never heard of it. A further 23% do not know what it is. Meanwhile, only 1% have purchased something through the Metaverse.
Enthusiasts describe the Metaverse as Web 3.0, while sceptics dismiss it as a gimmick. Although consumers are still developing their understanding of this environment, the findings suggest considerable interest in future engagement. A substantial 79% of surveyed consumers say they would engage with it in the future.
AI is changing the customer interaction landscape as businesses explore emerging digital environments and new ways to engage consumers. However, the report’s findings also highlight the need to distinguish between consumers’ willingness to explore a technology and their actual adoption of it.
The last mile is the only mile
Never before has logistics attracted such intense competition, despite being an unglamorous part of commerce. Delivering products successfully has become the new commercial battleground. Businesses that offer the fastest deliveries at the best prices stand to win, particularly as consumers increasingly demand same-day or next-day delivery.
However, financial realities complicate this expectation. Being the first to deliver products quickly may satisfy consumers, but it comes at a high cost to companies. Even Checkers’ Sixty60 service operates with small margins. One could therefore question whether those margins always justify the expense of delivery.
Nevertheless, on-demand delivery has become the new normal. Brands have little choice but to make deliveries accessible, seamless and affordable. At the same time, they must find ways to maintain financial sustainability.
The reality is it is expensive to run a fleet of drivers, delivering smallish items or a box of goods – and even more expensive if the goods need to be recollected if they are not the right size, etc. In this instance, some brands in the UK have even started charging consumers a fee for returns.
– Amanda Reekie, Founder of online research platform, Ovatoyou
Brands are either having to charge for shipping or get consumers to cross a minimum payment threshold to be eligible for free shipping, and in so doing they risk the chance of cart abandonment as consumers are simply not willing to pay more for an item they’d find in store. It’s most definitely a conundrum for all brands, especially smaller brands who cannot absorb excess costs, but even larger businesses like Takealot are going to need to resolve this in the medium term.
The data demonstrates the scale of this challenge. Some 65% of respondents say high shipping costs deterred them from completing their purchases. This represents a substantial increase of 14 percentage points from the 51% who identified shipping costs as a barrier in 2021. Consequently, delivery costs have become a key consideration in consumers’ purchasing decisions.
International brands set to shake up the local industry
Amazon, whose South African launch had been anticipated for a long time, was expected to open in the country around February 2023. This prospect excited consumers but created a headache for local brands.
Consider Takealot, for example. Many regard it as the darling of the e-commerce world, with 22% of respondents identifying it as their preferred shopping destination. Its extensive product range, convenient shopping experience, and reliable delivery make it an attractive option.
However, Amazon’s anticipated arrival within six months threatened to intensify competition. The international retailer was expected to introduce its extensive product catalogues and highly regarded Prime service. Prime bundles delivery with access to Amazon TV. Would this polished experience prove too compelling for Takealot’s loyal customers to resist?
No brand, regardless of size or product, ‘owns’ the customer. Conversely, the customer is given a smorgasbord of shopping options, often comparing international sites or pages with local varieties. It’s certainly a dog-eat-dog world, which is why local brands must up their ante to guarantee that they can confidently stand up against, or alongside, international apps, and offer a seamless customer experience that keeps up with the next best customer experience out there.
This competitive environment reinforces the importance of understanding evolving consumer expectations. AI is changing the customer experience as businesses explore new ways to personalise services, improve convenience and compete across digital channels. Nevertheless, brands must ensure that technological innovation supports a seamless experience rather than introducing additional barriers.
Good keeps brands in the game; bad does untold damage
Against this backdrop, the report highlights a fundamental reality. Unhappy or disgruntled consumers share their experiences with others. Some 43% say they will take their grievances to social media. Exactly half would tell their family and friends.
This puts huge pressure on brands. Given switching is so easy, brands need to retain their customers’ happiness and put in place guardrails to prevent issues from occurring as far as possible.
Cart abandonment presents another significant challenge. Some 70% of consumers abandon their purchases at the last minute. Although this figure has declined from 76% in 2021, it remains substantial. Consumers mainly cite payment failures, high shipping fees, cumbersome websites, and slow delivery as reasons for abandoning their carts.
Based on these findings, the authors estimate that cart abandonment could cost businesses as much as R26.621 billion this year.
When problems arise, consumers still tend to contact businesses through email and call centres first. Each channel attracts 21% of respondents. However, consumers value human interaction even more than these traditional channels when seeking assistance with their problems.
In conclusion
Chatbots may theoretically offer faster responses, but they can also backfire when they fail to meet customer expectations. The findings illustrate this challenge: only 17% of respondents would choose chat as their first point of contact.
It’s clear from this fourth year of research that consumers are savvier about how to use all of online, from social media to chat platforms, in addition to web and app, all the while expecting better service and delivery.
AI is changing the customer, and consumers are beginning to dabble in new technologies while holding brands to account on their promises by reviewing products and services online before they buy offline. They indeed have all the power and can turn on a dime, switch brands instantly, and spend elsewhere from the palm of their hands.
