Johannesburg, 10 Feb 2006
The drop in online spend growth recently reported by World Wide Worx would appear concerning to those operating in South African cyber space. But not to eBucks CEO, Lezanne Human, who believes the online future is bright.
"In December, eBucks experienced its best month ever, with R17.3 million worth of eBucks spent by members. November wasn`t far behind that with R15.5 million. Our total spend in 2005 increased by 47% from 2004 while our membership base grew by 19%," said Human.
eBucks is South Africa`s leading multi-partner rewards programme. The business model is based on partner companies allocating free eBucks to their customers to reward them for their loyalty. These customers then have a variety of ways to `spend` their eBucks on a wide range of products and services, thereby experiencing the reward and getting `stuff for free`. A measure of success for the eBucks rewards programme is thus the level of spend activity.
"While our figures incorporate the eBucks card spend, the majority of our activity is still off our Web site. And our statistics are significant. They tell us that eBucks` members are embracing the online environment. We expect this trend to continue, provided we continue to be secure, relevant, innovative and ultimately provide users with a rewarding experience they won`t find elsewhere," she says.
Since launching in October 2000, eBucks has quickly become South Africa`s most popular - and successful - multi-partner rewards programme. Last year, which was eBucks` fifth birthday year, saw a number of initiatives completed. The highest profile ones were the launch of eBucks for businesses and the hugely successful competition in which a space trip was up for grabs. The programme continues to grow and over R500 million worth of eBucks have been allocated by partner companies to members over the five years.
On the issue of the World Wide Worx statistics, which some have seen as a sign of a go-slow in South African cyber space, Human believes we need to look at the figures in context.
In 2005, South African online shoppers spent a total of R514 million online (2004: R428 million), according to World Wide Worx. Not bad considering that as per the latest figures available on Internet World Stats there are a maximum of 3,6 million, out of a potential 48,8 million, Internet users in SA - as opposed to the 203,8 million (out of a potential 299,0 million) Internet users in the USA who, eMarketer says, spent $30 billion in November and December last year alone. So, not only does the US have significantly more shoppers, but each shopper also spends more.
The huge spend in the US has largely been attributed to the spread of broadband Internet access. eMarketer reported that in 2005, 60% of Internet users went online with a high-speed connection and it estimates this figure will grow to 83% by 2008. In South Africa the reported numbers of broadband users vary from 40 000 to 147 000, but even the biggest estimate is less than 1% of our online market. However, BMI-TechKnowledge expects this to increase quite dramatically to 870 000 users in the next five years.
According to a survey by Nielsen//Netratings, broadband consumers are likely to spend more online, convert from shopping to buying at a higher rate, and visit retail Web sites with greater frequency than their dial-up counterparts.
"A 20% growth, even if the rate of growth is down by 5%, is still a pretty significant figure - especially for a country that is limited by both the lack of access to telecommunications services and restricted bandwidth. I think another main reason for the slowing growth rate is the poor fulfilment track record of many South African online retailers. Consumers have been burnt and are slow to give a second chance. On the other hand those online retailers who delight their customers with excellent delivery will continue to show strong growth," she says.
Of course, she also acknowledges that technology and fulfilment are not the only limiting factor - security issues and our attitude towards shopping online are also holding South Africans back. Unfortunately, this is a bit of a vicious cycle - the less exposed we are to the concept of shopping online, the less we trust it. As soon as the exposure increases, the trust will come.
Security has always been an issue that played into eBucks` hands. From the beginning eBucks was about being an alternative, safe way to transact online in that customers paid with eBucks and not with their credit cards. eBucks remains one of South Africa`s most secure sites.
Also working well in South Africa`s favour, considering its burgeoning youth market - is the maturation and growing buying power of today`s Web-savvy teens and young adults.
Top of the list, however, is the continued growth in demand for time-saving, convenient services. And when it comes to new technologies that make our lives easier, our rapid uptake of mobile telephony shows that there is a definite demand for such services in South Africa.
So, Human concludes, while online retail may appear to be but a drop in the ocean of retail sales today, there is no doubt that this drop will grow into a wave as the barriers of access and adoption break down. It`s only a matter of time.
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