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Online Prices Are So Similar To Retail ?

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E-Commerce has gone through an explosive growth period in South Africa over the last few months and there is still room to grow this sector even more. In the past the houses that had credit cards and internet would do the occasional purchase with the most popular items being entertainment tickets for various events. source Were among the top online companies 6 months ago and now how things have changed.

Shows you how topsy turvy the world is today as there are no tickets on sale these days and the market place has gone full circle. Retail sales online used to account for only 1% of total sales and that has changed significantly. If you aren't online then your business is suffering and those that have a terrible online sales platform may as well not even bother.

One of the biggest retailers in the country is losing big time because they can't control their online activities. The site doesn't update when products are sold out leaving many disappointed customers. I just find this sort of thing very stupid as you are doing more harm than good long term for your business. They are creating problems when none should exist and is rather off putting. I have seen this first hand as certain suppliers keep the stock off site for them and courier vans arrive to collect items that don't exist due to being sold out. Courier companies don't care as they are charging for the collection anyway even if there is nothing there. I wonder how long it will take them to pick up on that one?

A close friend of mine mentioned that e-commerce has grown 26% since lock down and I would stab at a guess it is actually higher. Unfortunately the bulk of the population doesn't have the ability to buy online as they are just barely surviving from month to month. the country may have a population of 60 Million but how many actually can afford to buy online? source What one would expect to see. Rather scary growth and how quickly the world changed their shopping habits.

I have seen some of my customers open up separate divisions as they are now servicing the online craze. The retailers with their dinosaur approach are going to be eaten alive as their pricing points are way off. In the past an item would sell for x amount and most of the other retailers would price accordingly as they all operated the same way.

If one analyses how things are priced then the winners are going to be the online sellers as they have huge margins to operate within. What normal retailers did in the past has to change otherwise they cannot last. They are on a business path that has changed and their business model is literally screwed.

A product is bought for peanuts from China as their so called buying power says to them that is how it has to be. They then stick on a 20 % rebate or more onto that price which is in sense just extra profit. Then all the other costs are factored in like shipping, warehousing,rent and import duties. This is not the real cost of the item because of the hidden rebate but still this is how they operated. The mark up then gets added to the item and the price that the original item cost is nowhere near the selling price and why things are out of sinc.

Now imagine an online business buying the same product knowing what is being charged by their competition as rebates are not required. There is no rent except for the picking warehouse which the retailers have anyway plus all the extra staff saved manning the retail shops. This is all profit and why the likes of Amazon are making so much money compared to the likes of Walmart.

I never understood how the large retailers could get away with what they did and this is good news for the consumer as long as the online retailers don't get too greedy. Already we are seeing similar pricing on most items and that should not be the case as their profit margins are now through the roof. Personally I hate greed of any kind and look forward to the day that consumers are thought of first before how much they can fill their pockets. Price wise I see very little benefit these days and find it all very strange.