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Online retail gets real

After decades of experience in selling online, retailers still seek out the secret of reaching the digital consumer, writes ARTHUR GOLDSTUCK.

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It’s been 23 years since the first pizza and the first bunch of flowers was sold online. One would think, after all this time, that retailers would know exactly what works, and exactly how the digital consumer thinks.

Yet, in shopping-mad South Africa, only 4% of adults regularly shop online. One could blame high data costs, low levels of tech-savviness, or lack of trust. However, that doesn’t explain why a population where more than a quarter of people have a debit or credit card and almost 40% of people use the Internet is staying away.

The new Online Retail in South Africa 2019 study, conducted by World Wide Worx with the support of Visa and Platinum Seed, reveals that growth is in fact healthy, but is still coming off a low base. This year, the total sale of retail products online is expected to pass the R14-billion mark, making up 1.4% of total retail.

This figure represents 25% growth over 2017, and comes after the same rate of growth was seen in 2017. At this rate, it is clear that online retail is going mainstream, driven by aggressive marketing, and new shopping channels like mobile shopping. 

But it is equally clear that not all retailers are getting it right. According to the study, the unwillingness of business to reinvest revenue in developing their online presence is one of the main barriers to long-term success. Only one in five companies surveyed invested more than 20% of their online turnover back into their online store. Over half invested less than 10% back.

On the surface, the industry looks healthy, as a surprisingly high 71% of online retailers surveyed say they are profitable. But this brings to mind the early days of Amazon.com, in 1996, when founder Jeff Bezos was asked when it would become profitable.

He declared that it would not be profitable for at least another five years. And if it did, he said, it would be in big trouble. He meant that it was so important for long-term sustainability that Amazon reinvest all its revenues in customer systems, that it could not afford to look for short-term profits.

According to the South African study, the single most critical factor in the success of online retail activities is customer service. A vast majority, 98% of respondents, regarded it as important. This positions customer service as the very heart of online retail. For Amazon, investment back into systems that would streamline customer service became the key to the world’s digital wallets.

In South Africa online still make up a small proportion of overall retail, but for the first time we see the promise of a broader range of businesses in terms of category, size, turnover and employee numbers. This is a sign that our local market is beginning to mature. 

Clothing and apparel is the fastest growing sector, but is also the sector with the highest turnover of businesses. It illustrates the dangers of a low barrier to entry: the survival rate of online stores in this sector is probably directly opposite to the ease of setting up an online apparel store.

A fast-growing category that was fairly low on the agenda in the past, alcohol, tobacco and vaping, has benefited from the increased online supply of vapes, juices and accessories. It also suggests that smoking bans, and the change in the legal status of marijuana during the survey, may have boosted demand. 

In the coming weeks, we can expect online retail to fall under the spotlight as never before. Black Friday, a shopping tradition imported “wholesale” from the United States, is expected to become the biggest online shopping day of the year in South Africa, as it is in the USA.

Initially, it was just a gimmick in South Africa, attempting to cash in on what was a purely American tradition of insane sales on the Friday after Thanksgiving Day, which occurs on the third Thursday of November every year. It is followed by Cyber Monday, making the entire weekend one of major promotions and great bargains.

It has grown every year in South Africa since its first introduction about six years ago, and last year it broke into the mainstream, with numerous high profile retailers embracing it, and many consumers experiencing it for the first time. 

It is now positioned as the prime bargain day of the year for consumers, and many wait in anticipation for it, as they do in the USA. Along with Cyber Monday, it provides an excuse for retailers to go all out in their marketing, and for consumers to storm the display shelves or web pages. South African shoppers, clearly, are easily enticed by bargains.

Word of mouth around Black Friday has also grown massively in the past two years, driven by both media and shoppers who have found ridiculous bargains. As news spreads that the most ridiculous of the bargains are to be had online, even those who were reticent of digital shopping will be tempted to convert.

The Online Retail in SA 2019 report has shown over the years that, as people become more experienced in using the Internet, their propensity to shop online increases. This is part of the World Wide Worx model known as the Digital Participation Curve. The key missing factor in the Curve is that most retailers do not know how to convert that propensity into actual online shopping behaviour. Black Friday will be one of the keys to conversion.

Carry on reading to find out about the online retailers of the year.

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Cars

“Hello BMW” – Now we’re talking

BMW brings impressive safety features and a built-in voice assistant to its 4th generation X5, writes BRYAN TURNER.

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Marking 20 years since its release, the BMW X5 has been given a substantial redesign for its fourth generation. A major revamp of aesthetics and functionality affirms this luxury Sports Activity Vehicle’s (SAV) position in the market.

New safety features not only make it safer but also more comfortable to drive. The redesigned headlights utilise laser lighting, which eliminates glare on reflective objects like signboards in dark driving conditions. The laser lighting technology also extends the distance of bright lighting to about 500 meters, 200 meters further than the previous generation.

The Driving Assist Professional package, an option for the SAV, comprises a steering and lane control assistant as well as a lane keeping assistant. These assistants work closely with a smart collision evasion system, which helps avoid collisions with vehicles or pedestrians suddenly appearing in the driver’s path. As soon as an evasive manoeuvre is detected, the system assists the driver with steering inputs to direct the vehicle into a clear, adjacent lane.

BMW Operating System 7.0, the latest version of the car’s software, focuses on customisability. This means that more aspects of the vehicle can be set up in a way that is most comfortable for the driver. For example, the 12.3” infotainment panel features a home screen which uses a three-tile layout, where one can have one large tile and two smaller tiles. These tiles can be swapped around and configured to the point where drivers no longer have to search through menus to get what they would need, as their favourites sit on a customised home screen.

The X5 gets a voice assistant with the BMW Assistant Professional. “Hello BMW” will wake the onboard voice assistant for voice commands. These voice commands could be anything from “Play rock music” to “Is my tyre pressure okay?”. Renaming the voice assistant’s wake prompt is also possible if the driver has named their car something other than BMW.

Keeping in line with the latest technology, the X5 features options for a wireless charging tray in the front and two additional USB Type-C ports. Other features include an adaptive navigation system, a hard-drive-based multimedia system with 20 GB of memory, Bluetooth and WiFi connectivity.

BMW’s attention to minor details goes a long way with massage seats and thermo-cupholders. Electrically adjustable and heated sports seats are fitted standard. Additional options include seat massage functionality and ventilated seats. The thermo-cupholder option allows a driver to keep a beverage heated or cooled during a drive.

Unlocking the X5 with a smartphone will soon be a reality with a planned update to the BMW Connected Drive app, in the second quarter of 2019. BMW Digital Key brings functionality to lock and unlock the car with a smartphone’s NFC chip, which eliminates the need for a traditional car key. The driver will simply hold the smartphone to the door’s handle and the car will unlock. Once the driver is inside, the smartphone can be placed on the built-in wireless charging tray, and the NFC chip will register again to verify the driver. From there, the engine can be started.

Overall, exciting technology features come with the new X5 and even more impressive features will come with software updates in 2019.

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ERP needs asset management

A single, integrated EAM and ERP solution can power an asset-intensive business into the future, says MOHAMED CASSOOJEE, MD and Country Manager, IFS South Africa and Africa.

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Most Enterprise Resource Planning software originated in the manufacturing sector as materials resource planning (MRP) solutions for organisations that needed to manage a lot of inventory. From there, they were rapidly developed into solutions for every industry imaginable.

But these roots mean that most standalone ERP software isn’t quite enough on its own to address the needs of organisations in asset-intensive industries such as metal foundries, mining, oil and gas, pulp and paper, energy and utilities, and construction and engineering.

Companies in these sectors are not managing inventory as much as they are managing the capacity of a fixed asset over its lifecycle as well as handling large-scale infrastructure projects with long planning cycles. This is where enterprise asset management (EAM) comes into play, offering capabilities that are not found in typical ERP systems.

EAM systems are built to help organisations manage assets such as plants, heavy machinery, pipelines and industrial-class vehicles. These solutions enable organisations to track the location and status of assets and asset objects in real time, schedule work orders to maintain and fix the assets, and manage the storage of spare parts required to service them.

As Africa’s governments, state-owned enterprises and private sector step up infrastructure investment, EAM has a vital role to play in ensuring that organisations drive the highest possible value from their new assets, whether these are telecoms networks, railway systems, ports or power plants.

According to the World Bank, Africa needs to spend around $93 billion a year over the next decade to address its infrastructure backlogs — about one-third of that cost is for maintenance. In 2008, World Bank found that about 30% of the infrastructure assets of a typical African country needed rehabilitation.

These numbers point to the urgent need for organisations across the continent to take a more proactive and preventative outlook towards maintenance of their key infrastructure and assets. Implementation of EAM can enable organisations to better track, manage and maintain assets to prolong their lifespan and enhance return on investment.

From asset planning to construction to operation to decommissioning and replacement, EAM allows organisations to maintain, manage and optimise assets over the entire asset lifecycle. By helping companies to increase asset productivity and availability – while reducing total cost of ownership – EAM can have a direct impact on profitability and financial sustainability.

Good EAM solutions can also be paired with corporate performance management and analytics tools to let organisations analyse operation disruptions and determine and address the causes, such as maintenance issues, inadequate training, or design faults.

Technological advances, along with the associated price drop for smart products being developed for the Internet of Things (IoT), now make it possible to monitor almost any asset in real-time from nearly any location across the globe. This further boosts the power and usefulness of an EAM solution. It is imperative that the EAM solutions that are implemented are built on robust, newer technologies that can easily support IOT, AI and smart bots.

EAM and ERP: a critical partnership

To sum up, ERP manages business operations, while the EAM system manages all the monitoring and operations of the asset. That means for most companies it isn’t an either-or choice because they need both EAM and ERP to drive optimal business performance.

Some organisations opt for so-called ‘best of breed’ EAM and ERP solutions from different providers. Yet integration can be a headache. The challenges include master data synchronisation and transaction integration. The company may also need to consider whether the ERP or EAM system is the better fit for a particular transaction or asset type.

However, for most organisations in asset-intensive industries, the ideal solution is an ERP system with extensive EAM capabilities: a system built from the ground up to manage not only basic business functions but also assets and their maintenance. Such a solution provides one complete solution spanning key processes and data.

This approach enables the organisation to truly manage and maximise value over asset lifecycles. It also empowers the enterprise to organise operations around the assets and individual asset objects it uses to create value for stakeholders, customers and the community.

For most asset-intensive companies, delivering EAM capabilities as part and parcel of an integrated ERP solution, simplifies their business systems landscape, giving them a single source of truth. The same arguments apply to project management and workforce management systems.

Organisations seeking to transform their business by standardising processes and leveraging reliable, real-time data will benefit from an ERP system with all of these capabilities, setting them up to adopt IoT, artificial intelligence, or whatever other new technologies are coming up next.

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