South African online retail growth rates fell by 5% in 2005, according to a report released yesterday by World Wide Worx.
At R514 million, the total revenue of online retail goods in 2005 rose by 20%; the growth rate in 2004 was 25%.
The slowdown can be attributed primarily to the high cost of broadband access, says Arthur Goldstuck, MD of World Wide Worx.
He believes the stagnation in the number of home Internet installations is not a pervasive factor in the falling online retail rates, because most people who shop online are more experienced users.
"One of the areas seeing substantial growth is housewives discovering the benefits of online grocery shopping," he says.
Goldstuck adds that 'executive-type` products, such as DVDs, MP3 players and hi-tech toys, have also proven to be increasingly popular in 2005.
The report found a 25% decrease in the number of sites selling alcohol and tobacco, with 26 such retailers, down from 35 last year. The number of online florists fell by 8% in the face of market domination from NetFlorist.
Grocery sales represented around R110 million, up 15% from the previous year, but the number of online grocers fell from 62 to 52 due to the growth of heavyweights Pick 'n Pay and Woolworths.
Though it is difficult to accurately monitor whether people visit online retailers directly or whether they are directed to them by links from other sites, Goldstuck comments that search engines in particular have become increasingly important as drivers to shopping Web sites.
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