The economic slowdown is driving consumers online in search for affordable gifts, says Bidorbuy.
According to the local consumer-to-consumer online trading company, retail sales have decreased by 1.7% year-on-year in the first eight months of this year.
Bidorbuy expects the trading to ease off before Christmas, after having gained momentum in the January-September 2008 period, when the total turnover on the site recorded a 120% increase in comparison with the previous year.
Traditionally, trading on Bidorbuy follows a fairly established pattern, trailing off in the pre-Christmas period, to pick up again only in January. Driven by the financial squeeze, South African consumers are coming to Bidorbuy's site in search of bargain gifts. Among the most sought-after items are MP3 players, GPS units, jewellery, collectible toys and clothing and accessories.
While not all the Bidorbuy sellers have seen a notable increase, many of them report a positive effect of the Christmas season on their sales. According to Bidorbuy, these economically uncertain times will see many people spending their holidays in front of their computers rather than on the beach, and that trading will continue right through the traditional Christmas slowdown.
Boost in sales
Ryan Bacher, MD of NetFlorist, says his company had, surprisingly, an increase in revenue this season compared with last. “Netflorist's total revenue growth has gone up by 45% from last year and revenue from our flowers has increased by 15%. We've got a larger range and the number of people visiting our site has increased considerably. We are surprised by the results as we didn't forecast a 45% growth. There are more people now with access to the Internet this year from last and we are finding that more people are purchasing goods via the Internet, and we suspect that this has contributed to this growth.”
PushPlay, on online DVD rental company, saw its sales spike over the festive season with increased gift subscription purchases. When compared to the festive season 2007, PushPlay experienced a 10% growth in gift subscription purchases and a 100% growth in their subscriber base.
Debra Wynne, one of the founders of PushPlay, says: “Given that watching DVDs at home is far cheaper than other forms of entertainment and that people still need time out, our service is far more resilient than other businesses during economic downturns. When you have to cut back on luxury items such as going out for dinner and holidays for the family, staying in and watching DVDs is a great alternative for home entertainment.
“So at this stage the economic situation has not affected our subscriber growth negatively, and if we are to look at what has happened to similar services on a global scale, such as Netflix in the US and Lovefilm in the UK, they experience continued subscriber growth, albeit at a slower rate during economic downturns than during a more positive economic climate.
“Other factors, which possibly contribute to our being able to survive the downturn, are the convenience and choice that is bundled with the service, and paying a fixed monthly fee for unlimited DVDs delivered to your door also allows our customers to better manage their monthly budgets.”
The cocoon syndrome
Wynne says an increase in the number of online shoppers in SA as a result of increased broadband connections has increased PushPlay's revenue. In addition, the tendency for people to cocoon during tough economic times, the desire for convenience, choice and value for money means consumers are moving from traditional DVD rental store to online DVD rental.
“Possibly the only factor which impacts negatively on our business at this stage is that some people would rather be on the beach than watching movies,” Wynne says.
According to ComScore, a digital marketing intelligence organisation, globally e-commerce sales have slowed down, however, the spending rate is still on pace with this time last year. A report by ComScore reveals that 9 December saw $887 million in online sales, the heaviest day on record.
December has experienced $19 438 million in online sales compared to last year at $19 487 million.
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