Online shopping: is SA ready for it

Imagine not having to deal with rental space, having the autonomy to price goods competitively, and being able to tailor-make services to customers’ needs. These are just some factors that for some, make online shopping businesses trump retail stores.

While the battle for consumers and market share among retailers in brick-and-mortar stores still dominates and rages on, the e-commerce industry, though still in its infancy in South Africa, is starting to show potential.

The e-commerce industry has gained traction across the world and South Africa only recently began harnessing the benefits of this platform. In 2013 alone, the industry was expected to make up R 4.2 billion of South Africa’s GDP.

According to a MasterCard research from 2013, e-commerce makes up about 2% of the total retail market in South Africa.

However, the online shopping market has its challenges.

Head of marketing at Interactive Advertising Bureau South Africa (IAB), Sarah Rice, told Moneyweb that the country’s large land mass, poor transport logistics, lack of broadband penetration, and a persistent lack of trust in online payments, all hinder the take-up of online shopping. Rice says that while online shopping is not a new concept, the problem lies in educating consumers about the platform.

In South Africa, online shopping trends are unique and different to those of developed markets. Online shopping and retail stores work in tandem in SA, as consumers still rely on both for their shopping. "While e-commerce remains a small part of South Africans’ buying behaviour – they do turn to technology to inform their decision making," Rice says.

Price Check is an example of the dual-dependency of consumers, says Rice. Consumers use the website to compare prices on goods, and they then make their actual purchases in-store.

In this ever-competitive retail market, businesses need to adapt and bolster their online presence to elevate their position above their competitors. Most businesses, Rice explains, have an online presence that is limited to social networking profiles, email marketing and websites, which is a clear indication of that there’s room for improvement in online shopping.

David vs Goliath

The online shopping market is made up of both big players and new entrants into the market. Big players are those who have an existing, tried-and-tested brand derived from their stores. Woolworths is one of the popular retail outlets that offers online shopping. While most online shopping businesses in the country have clothing, beauty products and books in their product line, Woolworths has used its existing store product line to bolster its online business.

The retail giant says that the number of online shoppers continues to double year on year. Woolworths’ head of online shopping, Nikki Cockcroft, says that the majority of its online purchases are for food and household goods, and nearly half of online users shop more than once a month.

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