With the festive season officially in full swing, South African online retailers are seeing sales buoyed by higher Internet penetration in the country and more digital savvy consumers.
Local online retailers cite the increase in bandwidth availability as one of the main reasons they are seeing huge sales growth this year, as more consumers have access to Internet content and are becoming comfortable online.
Online retailer Take2 expects to see 30% growth in sales during the festive season, compared with last year, having already noticed 25% growth in October.
“We believe that online commerce in SA is only just beginning and will be boosted by an increase in broadband penetration, and more and more users are becoming accustomed to the ease of use and convenience of online shopping,” says marketing manager Neil Smith.
Loot.co.za says November was its busiest month since the company started trading in 2003, but did not provide specific figures.
Kalahari.net head of marketing Liz Hillock says that, while exact numbers are “confidential, the site is seeing a healthy increase in sales this festive season”. She also believes it is due - for the most part - to cheaper bandwidth and faster Internet speeds.
According to Hillock, a poll conducted by Kalahari on Facebook showed that 87% of respondents would be doing some or all of their festive season shopping online this year.
Digital curve
World Wide Worx MD Arthur Goldstuck explains that, while broadband penetration is certainly helping, the growth is part of a curve that emerged since broadband first became commonly available to the consumer in 2006.
Called the digital participation curve, it shows that after an average of five years online, users are confident enough to participate in activities like online shopping. Goldstuck stresses that the curve works across all digital media, including mobile. The 30% sales leap this year was predicted by World Wide Worx a few years ago.
“The number of South African Internet users has now reached 6.3 million,” Goldstuck says. “Of that 6.3 million, 3.6 million have now been online for five years or more.” This means the majority of South African Internet users are reaching the height of the digital curve, and are gaining enough confidence to engage in online retail.
However, World Wide Worx expects the boom year for SA online retail to be in 2013, when 4.6 million local Internet users are expected to reach that point on the curve. Its research shows that today, 80% of SA's online retail operations are profitable, with only 1% running at a loss.
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