SA is seeing an explosion in the number of e-tail sites, despite slow sales growth. This is according to the latest "Goldstuck Report: Online Retail in South Africa 2004".
The survey, by research firm World Wide Worx, found that online sales by retailers - which exclude property, cars and travel - increased by 35% in 2003. However, these sales are expected to grow by only 25% in 2004.
A total of R341 million in online retail sales was achieved in 2003 - only 0.14% of the overall retail market in SA. Of this, around R66 million in sales, or 20% of online retail, was recorded over the November-December holiday shopping season. Groceries, apparel and books are the most commonly bought items online, with flowers and gifts growing fast.
Despite the slow-down in growth of online retail in SA, the number of retail Web sites has exploded - from 215 at the end of 2001 to more than 700 at the end of 2003.
However, World Wide Worx MD Arthur Goldstuck says the market is dominated by the top eight online retailers, who between them account for about 80% of all online retail sales in SA.
The dominant online retailers are Pick `n` Pay Home Shopping, kalahari.net, Woolworths Inthebag, NetFlorist, Cybercellar and Streetcar.com, with the M-Web ShopZone dominating the market in online shopping malls, followed by Digital Mall.
"Growth for these players is steady, but not as strong as in past years, when an annual doubling of turnover could be expected. However, most of them are healthier than at any time in the past, and most are generally profitable on an operational level," says Goldstuck.
"The single biggest obstacle to growth identified by all the executives we interviewed was access to higher and cheaper bandwidth. Unless the telecommunications authorities deregulate the market more effectively, online retail in SA will stagnate."
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