More people are registering for online shopping, as consumers' time comes under pressure due to work requirements, say retailers Pick n Pay and Woolworths.
However, Chris Gilmour, analyst at Absa Investments, says growth of online shopping is limited by SA's lack of broadband.
Warren Marsden, Pick n Pay GM of e-commerce, says its online shopping site is profitable, and sees 2 000 new registrations a month. “In many instances, both partners are now working - where previously only one may have worked. This has resulted in shoppers being hugely time-strapped, with home shopping providing the ideal solution.”
E-commerce also cuts down on impulse buying, he says. “We have found shoppers are not inclined to make impulse purchases via home shopping.”
Craig Ludwig, Woolworths' divisional director of general merchandise, says the site has been running for eight years and the number of online shoppers has grown steadily each year. “In response to the tougher economic environment, customers have notably sought enhanced value in our stores and online.”
Recipe for success
Marsden says a new site offering general merchandise is set to be running by next March. In addition, integrating the site to the online distribution centre will give shoppers access to more variety, and help limit out-of-stock items. Woolworths is also introducing innovations, says Ludwig.
However, Gilmour says growth is off a low base, and does not contribute meaningfully to group profits. In addition, shopping is a social activity in SA, and this would limit the amount of people who want to shop online. Online shopping, he says, is “an unmitigated disaster”.
Marsden says home shopping has taken off, to some degree, but there is room for growth. “We are continually introducing new innovations, a good example of which is our integrated recipe centre, a global first. How this works is that shoppers can select any number of recipes and the programme will not only tailor-make their shopping basket; if they choose more than one recipe that contains rice, for example, it will aggregate the volume required for all the dishes.”
Ludwig says the use of e-commerce is taking off. “The use of the Internet grows among our customers year-on-year - through use at home, at work and on mobile telephones online shopping will continue to grow as well.”
Marsden says, although people use the Pick n Pay site as a comparison tool, its long-standing active base means the site is “much more than just a comparison tool”. Ludwig says the site is used to check prices, with value being a key driver.
Shoprite says it investigated the possibilities of online shopping, but found it was not viable.
Price check
World Wide Worx MD Arthur Goldstuck says there will be a slow but steady growth over the next three years. He notes that a boom in online shopping was experienced between 2006 and 2008, with a 20% growth rate for 2008 and 10%-15% for 2009.
Goldstuck says that, even though consumers are increasingly price conscious, there is no benchmark on how much one can save. That depends entirely on where a consumer shops, he notes. “The saving comes from shopping around. You don't necessarily save money from online shopping. It allows for price comparisons on the Internet, and that's where the savings are.”
A recent survey by MasterCard Worldwide indicated 80% of South African Internet users are shopping online, with items such as CDs and DVDs being the most popular online category. Some 58% of online shoppers said they frequently shopped for these items online.
“Airline tickets” and “books and arts” emerged as the next most sought-after items, with 45% of online shoppers saying they had frequently shopped for these items in the three months prior to when the survey was conducted.
Planning ahead
The survey was conducted a year after the first survey - in December 2007 - and the South African survey comprised the shopping habits of 500 people, all of whom were between the ages of 18 and 64, had a bank account, and accessed the Internet at least once a week.
“Although Internet penetration in SA remains relatively low, over three-quarters of those who do regularly access the Internet have recently made at least one online purchase,” says Anthony West, GM, MasterCard Africa. “In fact, exactly 50% of those surveyed indicated online shopping was one of the main reasons they used the Internet.”
The survey found the majority of online purchases were premeditated, with 88% of SA's online shoppers admitting they planned their shopping in advance and conducted research on their potential purchases. This was supported by the low occurrence of impulse purchases. When asked how often they “had experienced making a purchase impulsively”, 65% of SA's online shoppers said “hardly ever” or “never”.
The research did, however, have one piece of information that will come as a relief to the traditional South African “bricks-and-mortar” retailers. This was the fact that even the “hip and trendy” online shoppers admitted they still do 76% of their shopping the old-fashioned way - by actually going to the shops and walking around.
Related story:
E-commerce rising despite downturn
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