The low Internet penetration rate in SA is hampering growth of the online shopping industry in the country, says Thomas Pays, MD at online auction company Smokoo.
According to Pays, it is likely that more than 70% of SA's Internet users still restrict themselves to sending and receiving e-mails and perhaps dabbling on social networks.
“Although SA may be similar in size to other economies, its Internet connectivity infrastructure leaves much to be desired. Out of a population that is fast approaching 50 million, no more than 5.3 million can afford and have access to an Internet connection,” he says.
Pays adds that in many instances, South Africans' access to the Internet is confined to the workplace where private usage may be restricted.
Security fears
Describing other hurdles, Pays says there is also a great deal of distrust regarding the use of credit and debit cards over the Internet. “Many fear fraud or identity theft, or believe that online shopping is only possible for card holders.”
He adds that local vendors have been slow to capitalise on online opportunities, probably because they fear the local market is still not ready for this step.
However, Pays believes the online shopping market will probably grow sooner than most expect. He explains that the escalating rental, payroll and stock maintenance costs will inevitably create a need for a cheaper means of delivery. This is required if retail growth is to be maintained and prices are to remain affordable.
“Online shopping is the perfect solution. Hosting an Internet server costs a tiny fraction of renting business premises and retailers can enjoy global reach with just a skeleton staff. Stock holding is left to the manufacturers with couriers completing the supply chain. More abundant and cheaper bandwidth will facilitate the transition,” says Pays.
Power handover
Pays adds that online shopping will hand consumers the power that has traditionally been under the stranglehold of the retailer.
“The consumer will not be told what he or she must buy but will tell the retailer what he or she requires. Furthermore, knowing full well how much cheaper it is to operate an online shop, Internet shoppers will demand significant savings and shop only where they can get them,” he adds.
On the advantages of online shopping, Pays says there is no driving, parking or walking involved and, consequently, the ever-present fear of hijacking or mugging is also eliminated.
“Online shopping is all about convenience and, the only real downside is that, having made your purchase, you must still wait for delivery”.
According to a 2010 MasterCard survey on online shopping in SA, 77% of South Africans who have access to the Internet are shopping online, signifying a 3% decline since the previous survey.
The survey reveals that South African online shoppers prefer it mainly because of convenience, as well as user-friendliness.
“The numbers speak for themselves,” says Anthony West, GM of MasterCard Africa. “The survey revealed 83% of South African online shoppers are satisfied with their overall online shopping experience.”
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