Boom in cyberspace shopping

Cyberspace shopping in South Africa is booming with online retail sites surpassing all expectations for 2006.

And industry players say they expect the steep upward growth to continue next year.

A recent survey found that online sales from SA sites had grown by a whopping 30 percent from last year, which is 10 percent more than forecast.

South Africans are becoming more comfortable with buying everything from books, CDs and DVDs to groceries online.

Affordable connectivity

And while the festive season has contributed to the sharp spike, industry players say the growth has been consistent throughout the year.

Online research specialist Arthur Goldstuck, of World Wide Worx, said 2006 saw the start of a major online shopping boom – and he believes that this is the beginning of rapid growth in the industry.

His research – The Goldstuck Report: Online Retail in South Africa, 2006 – had earlier looked at figures supplied by online retailers in South Africa and had forecast online sales of R617 million for the year, which would have been a 20 percent increase on last year.

“What has emerged is that this year’s growth has been 30 percent and was closer to R668-million, which is the first time in several years that there has been such a large growth rate,” he said.

In his report Goldstuck examines the possible reasons for the dramatic upturn in the industry’s growth.

It was in line, he said, with a phenomenon known as “the experience curve” whereby people felt more confident buying online as they became more comfortable using the Internet.

“When online retail started there was a small base of users and… this base has now increased,” said Goldstuck. 

“The research had found that users needed to be online for five years before they felt comfortable enough to start banking online, and thereafter it takes another year or two before they shop online.

“The base number has always been small but that has grown and we expect 2008 to be the year of critical mass and a major uptake to start in online retail.”

While the festive season saw a slight peak in online spending, the increased growth was consistent through the year, said Goldstuck.

November and December – when most of the festive season spending is done – accounted for only about 25 percent of online spending in the year, which is not significantly high, Goldstuck said. 

While people have been buying books, CDs and DVDs online for some time, the research found an increase in the purchase of groceries and electronic goods.

“Books and DVDs were the most popular but electronics such as PCs and iPods were the new big players.”

Online sales were still largely centred on the country’s major cities, with Johannesburg accounting for 50 percent of volume.

Another trend that has emerged is that as online sites’ sales grow, existing physical – “bricks and mortar” retail stores have begun to move online as well, he said.

Novelty online store, which has been operating for the past two and a half years, has enjoyed “phenomenal growth since mid November”, according to co-owner Simon Swanich. 

“The sales have been seven-fold our normal sales figures.”

And while people were still “very apprehensive” about the security of the banking element involved in online purchases, “this is slowly beginning to break down,” he said. 

Among the items that topped the list of online purchases through their site were brandname clothing, jewellery and toys, said Swanich.

He said online shoppers were interested in this form of spending in search of cheaper prices rather than being “just interested in the convenience of this kind of shopping”.

Michael van Rooyen, of online book store, said his company had experienced significant growth this year and expected revenue to be more than double that in 2005. 

But, he cautioned, affordable connectivity remained vital for the industry’s growth. “We’re hoping that the cost of broadband connectivity will continue to come down.”

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