All indicators reflect that e-commerce in SA is still in its infancy compared to the rest of the world, but industry is hopeful the stumbling blocks are being whittled away.
This is according to local Internet service provider (ISP) SA Gateway, which believes SA's e-commerce lag is the reason two of the country's leading e-commerce companies - Takealot and Kalahari.com - recently merged.
"Both were still making losses and they are hoping that the increased critical mass will catapult them into better growth as a union," says the ISP.
SA Gateway MD Dieter Febel says, compared to the rest of the world, SA is "not even close" when it comes to e-commerce uptake. "Research shows that there are a number of reasons for this. But, hopefully, over the next few years, these stumbling blocks will be overcome."
Practical problems
Some of the practical obstacles, according to Febel, include "the unfortunate fact" that delivery charges are still too expensive. "[Also], consumers think they cannot shop without a credit card, and would rather visit a store than spend money on delivery."
Security and education around it is an issue, he adds. "Consumers are also still worried about security, specifically related to credit card fraud."
Return of items, and a perception that the process is an onerous one, is another factor which puts consumers off venturing into the online shopping world, says Febel.
Finally, where site content is thin or lacking, Febel says consumers would rather go in-store to physically check out the products, for touch and feel. "This is why it is important for e-commerce companies - and retailers - to develop sites with good content."
Low budget offerings
However, says Febel, these things can be overcome. "This is not the death knell for e-commerce in SA.
While 2012 saw an e-commerce boom, growth in general has been strong and ongoing in SA, although - as MD of World Wide Worx Arthur Goldstuck points out - this growth is from a low base, which is why SA lags the user numbers its developed counterparts boast.
According to World Wide Worx, the past nine years have seen the local e-commerce industry growing by 30% to 35% - with a peak of 40% in 2011. "The impact of this steady growth is a huge rise in the overall total and we will eventually see it having a massive impact," says Goldstuck.
Febel notes this "fast growth" is part of the problem when it comes to South Africans turning to virtual shop-fronts. "Many of the sites out there are just not good enough and this turns consumers off. These low budget sites usually make use of an off-the-shelf product, with an off-the-shelf theme. Indeed, very little thought is given to the customer experience, as companies try to cut costs as much as possible - yet they still expect sales to be good."
Febel advises companies looking to enter the e-commerce space to "give your site a lot of thought". It doesn't have to cost an arm and a leg, he says, "but at least provide enough info, and make the site user friendly".
"While e-commerce might not have created fireworks for most retailers yet - with online retail sales only accounting for 3% of total sales - there are positive signs that it is a growing market.
"However, consumers are spending more every month. They are, increasingly, becoming more comfortable with e-commerce. While it has not exploded yet, it definitely will, given that SA inevitably follows the technology trends of the rest of the world. We just take a few years longer," says Febel.
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