The future looks bright for those who think outside of the digital box

Looking closer at the national budget, it is becoming increasingly apparent that significant work is being put into the future diversification of the South African economy.

Pick n Pays recently announced turnaround strategy and the growth of the Checkers Sixty60 platform are also indicators that online shopping/entrepreneurship will play a vital role in the future of South Africa and that if companies want to differentiate their future value proposition, this is where their focus needs to be.

How big will this become, and what opportunities exist for young entrepreneurs?

Online entrepreneurship will take centre stage

According to an article published by Forbes, 20.8% of retail purchases are expected to occur online in 2023. Quickly departing are the days when shoppers would trek to the local mall to spend the day perusing various shops. Nowadays, the first touchpoint a customer has with a business typically takes place online, especially if the company has a presence on social media. As entrepreneurs look to start new businesses with little overhead, renting a physical retail space may no longer be a top priority. The focus is shifting to establishing a web presence that can capture online sales. Code-free website builders make this possible with a low barrier to entry.

The article adds that, by 2026, 24% of retail purchases are expected to occur online. There’s no denying that online shopping is popular in today’s day and age. But how will it look a few years from now? Research shows that it’s more than just a trend. Customers will likely continue to turn to the Internet whenever they want to make a retail purchase. It’s clear that turning your business into an e-commerce venture is more than just a fad. It’s a great long-term investment, especially if you hope to scale.

E-commerce sales are expected to grow 10.4% in 2023. Since 20.8% of retail purchases are expected to take place online in 2023, it’s no surprise that e-commerce sales are supposed to increase as well.[1] With more customers shopping online, your business can sell more and earn more as a result. Whether your goal is to boost your sales by a small percentage or you hope to completely transform your business from a startup to a large organisation, e-commerce can help.

The article indicates that the global e-commerce market is expected to total $6.3 trillion in 2023. One of the greatest benefits of e-commerce is that you can sell your products and services to anyone from anywhere. As long as a customer has access to your website, they can purchase from it, even if they’re on the other side of the world. If you currently have a local or national presence, this strategy can give your brand the global presence it needs to enjoy unmatched growth.

By 2026, the e-commerce market is expected to total over $8.1 trillion. When we say e-commerce is not a fad but a valuable long-term strategy, we mean it. In just three years from now, it’s supposed to take up trillions of dollars in market share. So what does this mean for your business? If you don’t jump on the online sales bandwagon now, you’ll likely miss out on a lot of money.

The article indicates that $992 billion was spent on social media commerce in 2020. Social media commerce refers to using social media platforms such as Facebook and Instagram to promote and sell products and services online. It allows customers to make purchases while on their social media apps. In 2020, e-commerce retailers took complete advantage of this strategy. Additionally, social media commerce is expected to reach $2.9 trillion by 2026. Just like e-commerce, social media commerce is not a fad. Research shows that it will continue to be popular and lead to trillions of dollars in sales over the next few years. This means that if you’re an e-commerce business with no brand presence on major social media platforms, you’re bound to miss out.

Finally, the article points out that 96.9 million people in the US shop on social media. Nowadays, making online purchases on social media platforms such as Facebook and Instagram is the norm in the U.S. While 96.9 million people currently do it, this figure is expected to grow to 114.3 million social buyers—an 18% increase.

Connectivity is an issue that is being addressed

The future of digital entrepreneurship does look bright for African entrepreneurs. However, they are heavily dependent on the dominance of major international tech giants that dominate the industry and are able to increase infrastructure on the continent.

What can we expect in the future?

“Currently, the provision of digital infrastructure in Africa is primarily controlled by foreign entities,” says Adio-Adet Dinika, a Zimbabwe-born, Germany-based, political scientist.

“Notably, tech giants such as Google, Facebook, Microsoft, Amazon, and Apple – collectively referred to as GAFAM – along with several Chinese firms like Huawei and ZTE, are significantly involved.”

In 2021, Google announced a plan to invest $1bn over the next five years to support Africa’s digital transformation. CEO Sundar Pichai said that the money will cover a range of initiatives, “from improving connectivity to investing in startups”.

One of the company’s key projects is the Equiano cable – a subsea fibre-optic cable spanning 15,000 km from Portugal to South Africa, with two strategic landing points in Nigeria and Namibia. The cable is supposed to be fully operational this year and bring a number of socio-economic benefits to partner countries. According to an impact assessment study commissioned by Google, the Equiano cable will increase connectivity more than five-fold in Nigeria, and two-fold in South Africa and Namibia. In addition, the study projects the creation of 1.6 million jobs between 2022 and 2025 in Nigeria, 180,000 in South Africa and 21,000 in Namibia.

Meta, Facebook’s parent company, will also launch its subsea cable, 2Africa, in 2024, encompassing even more coastal states. “The largest subsea fibre-optic cable system ever,” as Meta calls it, will circle the continent and connect 16 African countries, for an estimated cost of between $500m and $1bn. The social media giant, which also owns WhatsApp, Instagram, and now Threads, claims that 2Africa will “generate a $26.4bn to $36.9bn economic impact (at PPP) for Africa within 2 to 3 years of starting operations in 2023/4,” equivalent to the GDP of Senegal in 2022.

A tech giant

South Africa is joining Nigeria as an African tech giant. Boasting one of the most diversified economies in Africa, South Africa has the potential to lead the continent’s digital entrepreneurship charge. However, like the rest of Africa, connectivity is an issue.

South Africa is making progress in migrating from analogue to digital, which will mean that telecommunication providers will be able to access the sub-1GB (700MHz-800MHz) radio frequency spectrum bands occupied by the analogue TV signals. This will allow them to increase their internet offerings, which will increase access to the internet across the country.

However, digital skills are a growing problem in South Africa, with many tertiary education providers pointing out that a lot needs to be done to sharpen our tech skills. A recent report by SAP points out that South Africa severely lacks tech skills, particularly important skills such as cyber security. Fortunately, many tertiary institutions are offering courses and skills programmes to address this.

Be aware of the ever-changing environment

We must increase our focus on digital entrepreneurship as it can diversify the economy.

However, the challenge will be mentorship. While South Africa’s most prominent CEOs have committed to helping fast-track economic growth, they are also finding their feet in growing their digital platforms. Fortunately, there is hope as entrepreneurs can turn to the internet to find success stories or models to help them grow their businesses.

The future looks bright for those willing and have the energy to think outside of the digital box.