Black Friday online sales soar, but basket sizes are shrinking

As the number of South Africans who have turned to online shopping increased this Black Friday / Cyber ​​Monday, the COVID-19 crisis has prompted most shoppers to opt for smaller baskets.

While local banks and payment platforms have reported a surge in contactless and online transactions, consumer sentiment and spending continues to reflect the current economic downturn due to the effects of the pandemic, the habits of purchase shifting to more essential items.

With Black Friday falling again during the lockdown, more South Africans were expected to turn to online shopping channels than in previous years.

Karen Nadasen, CEO of the payment platform PayU South Africa and chair of the Ecommerce Forum of South Africa, notes that the average basket size of PayU’s e-commerce partners has declined by 22%, while online transactions have increased by 30% year over year.

“The online shopping landscape has changed for the better – more South Africans are buying more products – but COVID-19 has reduced the size of the shopping cart, which has shrunk by 22%.

“The way shoppers approach the biggest online shopping day of the year is no longer what it used to be. The Black Friday experience changes every year.

As consumers’ purchasing power has taken a hit, this has reduced the novelty of Black Friday slightly, Nadasen adds. Only a few years ago, South Africans stayed awake until midnight to grab the first bargains; however, this year the numbers have gone down.

Karen Nadasen, CEO of PayU South Africa.

Karen Nadasen, CEO of PayU South Africa.

“Last year we saw a 33% drop in volume compared to 2019, in that first hour of trading between midnight and 1 a.m. This year we saw an additional 6% drop. seems to stem from last year’s disappointing Black Friday experience, where many shoppers felt that the good deals just didn’t materialize, and of course, the fact that people have less money.

Local payments provider Peach Payments saw a more than 103% increase in payment volumes for online purchases this year compared to 2020.

“This year’s record Black Friday numbers show positive signs for the future of e-commerce in South Africa and the rest of Africa,” said Rahul Jain, CEO and co-founder of Peach Payments.

“On Friday alone, online retail sales through the Peach Payment gateway increased from Rand 31.7 million in 2020 to Rand 56.7 million (up 78%). Food and beverages increased 91%, while sales of cosmetics increased 40%, and travel and accommodation increased 52%. “

While other payment methods like QR codes, Apple Pay, and Mobicred are gaining ground in local online shopping, Jain notes, compared to 2020, the volume of cardless payments has far outpaced all other modes. of payment.

This shows that South Africans are increasingly aware of the security advantages offered by cards over methods such as EFT, he adds.

In the United States, online sales saw a reversal of the usual growth trend this Black Friday, totaling around $ 8.9 billion, down slightly from $ 9 billion in 2020, according to Adobe Analytics.

The First National Bank (FNB) says Black Friday spending increased 19% year-on-year, with transactions worth more than R 2 billion processed at its Speedpoints.

Chris Labuschagne, CEO of FNB Card, said: “Total spend on online transactions (card not present) has increased by 20%, while tap-and-go contactless devices have increased by over 600% of year after year this Black Friday.

“The pick-up in spending is a sign that households are gradually finding their feet during a difficult 18 months due to COVID-19 and the lockdown. We are also delighted to see many of our customers using our wide range of convenient and more secure payment alternatives, such as virtual cards and Apple Pay.

According to data published by Standard Bank, the use of contactless card payments at the bank’s partner merchants has increased by more than 100% compared to 2020.

“South African consumers have been hit hard over the past year and a half, but we have seen an increase in the volume of online shopping spent during this period compared to last year,” said Nelisa Zulu, responsible for cards and payments. at Standard Bank.

“It’s great to see that our customers have embraced innovation and embraced contactless payments to transact seamlessly. ”

Cowyk Fox, Senior Executive: Day-to-Day Banking at Absa Retail and Business Bank, comments: “At Absa we have seen noticeable increases in payment volumes this Black Friday. Contactless payments have grown over 110% year-over-year, and online shopping has also grown significantly, up nearly 30% year-over-year.

“Additionally, digital payments have grown by over 50% as customers gain confidence in using their Apple Pay, Samsung Pay and QR payment capabilities to make payments. “

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David A. Albanese