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SA’s PayGate predicts 30% increase in Black Friday sales

By November 28, 2019 No Comments

South African payment service provider, PayGate, predicts a 30% increase in Black Friday sales this year as retailers extend their number of sale days.

A statement released by the service provider explains that the shopping holiday originated in the US as the day after their Thanksgiving holiday when retail outlets would significantly reduce prices.

“This brick and mortar sale day was soon joined by Cyber Monday when online stores capitalised on the primed deal-hunting psyche of consumers at the end of the weekend. The two days have now blurred into one chaotic shopping sensation.”

According to PayGate, in 2018 US online sales alone hit US$6.2-billion and the company references retail tracker Black Friday Global which stipulates that interest in Black Friday deals in South Africa has grown by 9900% over the past five years.

PayGate’s tracking of payments for Black Friday, meanwhile, shows the number of transactions doubling every year for the past three years, and payment clearing house, BankservAfrica, says it saw a 55% growth in transactions in 2018 compared to the previous year.

PayGate expects 2019 Black Friday transactions to grow by 30% this year.

Low base

“To be fair, South African ecommerce growth comes off a very low base. It has only been in the past three years or so that it has really taken off. This is largely driven by user behaviour and the massive ad spend thrown at the shopping day by the larger retailers,” explains Brendon Williamson, CSO at PayGate.

“We expect many of the local retailers will extend the sale days to more than just the weekend and may even spread it out over the week ahead of the official November 29th date. This will encourage those who receive their salary cheques on the 25th to get involved while they are still cash flush.”

Based on BanksServe Africa’s publically released figures, as well as its own analysis, in 2018 PayGate processed 64% of Black Friday transactions. The company believes this could increase to as much as 70% in 2019.

While PayGate expects the sale days to be extended, they say that the size of the baskets will probably remain similar to 2018, with consumers aware of the event and saving up to take advantage of the prices – most especially for tech and hardware and appliances.

Most businesses are gearing up ahead of time, but some are cutting it fine, the company suggests.

“We have definitely seen a surge in new merchant applications. Everyone within the online payment ecosystem are much more aware of the unique needs of e-commerce businesses and so are better positioned to help set-up merchants to enable faster payments,” says Williamson. “From a transactional process point of view, we know we are prepared as our processing systems now auto scale as the transaction volumes demand which gives our merchants a real peace of mind should their sales hit unexpected peaks during the day.”

Grant Gietl, General Manager at World Net Express says South African businesses need to keep a few vital facts in mind when planning for the delivery logistics associated with Black Friday and other seasonal sales.

“Good logistics companies will track historical data and plan ahead with their ecommerce clients. We have seen that our client deliveries can increase by anything from 30% to 100% during Black Friday promotions, and we make sure we are ready to handle the extra volume by working closely with them in the planning phase.”

Williamson leaves local retailers with some important advice: “It’s clear South African consumers are changing their buying behaviour to more closely reflect those seen internationally. Big shopping events, like Black Friday, will become increasingly important to local retailers. When coupled with a sluggish economy, big saving events will draw further attention still and local retailers should ensure they are ready to take advantage of these opportunities.”

In June 2019 Hayden Sadler, Country Manager at INFINIDAT said Black Friday and Cyber Monday see huge increases in traffic to businesses offering special deals.

“With 68% of shoppers buying Black Friday deals on their mobile phones in 2019, Takealot amounted to over R196 million – a 125% year-on-year growth in sales and 127% growth in orders. In addition, the BankServ Africa Economic Transaction Index (BETI) showed a 55% growth in online sales for Black Friday and 36.4% for Cyber Monday in 2018.

High data storage performance is essential to cater to this hugely increased demand but maintaining the level of capacity required for these infrequent events at all times can be cost prohibitive. For many Etailers meeting increased peak demand means shutting down other business services, including the application environment or additional infrastructure. This less than ideal scenario has a negative impact on the productivity of an organisation and could result in unplanned downtime in other areas.”

Source: IT Web Africa