While the scope of South Africa’s general internet access and online activity admittedly isn’t quite comparable to that of the US, Europe or Asia, one would be hard-pressed to deny that our e-commerce industry is growing in leaps and bounds. With stringent privacy policies and internet security systems settling into place, people are vastly more receptive to the idea of online shopping, and if latest stats and figures are anything to go by, we’re making up for lost time.
The latest MasterCard Worldwide survey on online shopping revealed that 51% of South Africans with internet access are shopping online with 75% of those having done so in the past three months. So what are we buying? The report showed that 50% of us are searching for deals on CDs and DVDs and 48% are using credit cards as their number one method of payment. An impressive 83% of online shoppers are satisfied with their overall experience. Online retailers remain optimistic about revenue growth, and this is further supported by the fact that even 2 years ago, in 2009, e-commerce sites such as Kalahari.net saw their revenues increase between 20-25% compared to the previous year.
Online shopping has made life infinitely easier and there are clear benefits to both the consumer and company. For the consumers, it’s easy to use, highly convenient and saves time. For the company, it simplifies entire processes; the quality of the data gathered from an e-commerce site is incredibly valuable especially in terms of creating highly targeted campaigns; it streamlines and automates the backend business process and it minimises supply chain inefficiencies.
At present however, although e-commerce is steadily expanding, there are still restrictions that are preventing it from reaching its full potential. These are mainly rooted in technology issues such as insufficient bandwidth, but also the fact that basic internet access across much of South Africa remains sorely inadequate.
As far as payment options are concerned, we are still relatively limited. PayPal partnered with FNB and launched in South Africa mid-2010, enabling us to sell to PayPal’s massive global customer base. Although this is undoubtedly a significant step forward for SA merchants, users are still unable to accept South African Rand payments. What it does allow is for money to be transferred to qualifying FNB accounts, where it is then converted into Rands. So while we can target an international market and offer PayPal as a payment option, it’s not yet possible locally. Therefore, credit card and EFT remain the main options of payment methods in South Africa.
In a bid to uplift e-commerce in South Africa, Jump Shopping, the country’s leading price comparison website, launched the E-Commerce Awards in 2005. The recognition that these awards offer is hugely prestigious and in 2010 three well-respected websites namely Take2, Private Property and our friends at Yuppiechef were clear winners across the various categories.
Interest in our budding e-commerce industry has caught the eye of New York-based hedge fund Tiger Global Management LCC which it turns out has been quietly buying up some of our major e-commerce sites over the past few years. In an article written by Memeburn reporter Garreth Bloor, the international company holds a stake in auction site Bid or Buy, job portal site jobs.co.za and online payment fulfilment site PayFast. Its impressive portfolio also includes travel booking site SafariNow, SA’s largest online property portal Private Property and online shopping site Take2. Clearly they’ve done their homework and are well aware of the industry potential we have. Even Groupon finally landed on African soil, when it bought out Twangoo, our own home-grown version of the daily deals site.
What’s evident from the facts and figures we’ve looked at is that although South Africa is showing positive increases in the number of people who are engaging in online shopping coupled with progressive developments in terms of e-commerce technology, the potential for growth in this industry is still huge and we eagerly anticipate more growth and opportunities for e-commerce in 2011.