Why does virtual turnover ≠ real profit?

Type ‘how do you make a success out of ecommerce?’ into ChatGPT and you’ll get something like it ‘requires a combination of strategic planning, effective marketing, and excellent customer service’. Simple, right? Apparently not if recent reports and events are to be believed. A Daily Maverick article last week revealed that, globally, retailers are struggling to create profitable digital entities despite throwing over $1 Trillion at the problem. And closer to home we see a similar pattern. 

In Cape Town, locals drive past the swanky new headquarters-in-the-making of Amazon every day wondering when, if ever, the world’s mega-retailer will actually open operations on African soil. And Naspers keeps telling us that its Takealot operation is actually going to make a profit for the first time this year, which would be a proper turnaround on the R224 million loss they reported for 2022! 

But here’s the rub: in BrandMapp we measure a massive 82% of mid-market-and-up adults saying that they are now active online retail shoppers (i.e. excluding things like electricity and airtime which are more ‘services’) with 30% saying they buy clothing and accessories and a remarkable 20% now saying they regularly buy groceries and alcoholic beverages online. And that’s why all of the retailers mentioned above seem to be showing ever-increasing turnover and often double-digit growth year on year. 

So clearly the issue is has nothing to do with consumer appetite and everything to do with the right combination of strategic planning, effective marketing, and excellent customer service. Or have the new AI gods got it wrong, d’ya think? 


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