Today, 80% of SA's online retail operations are profitable. Of those profitable retailers, 46% are very profitable, 34% are a little profitable, and 19% break even. Only 1% of online retailers in SA are currently running at a loss.
So said Arthur Goldstuck, MD of World Wide Worx, at the SAP and ITWeb Executive Insights Forum, held at Montecasino in Fourways, yesterday.
Based on the initial findings of the Online Retail in SA 2010 survey by World Wide Worx, which surveyed 250 of approximately 1 000 local online retailers, Goldstuck discussed some of the trends shaping online retail in SA.
Based on the above findings, he said SA's online retail landscape was healthy and attributed this to the prevalence of eight success factors.
Goldstuck stated stock availability topped the list of success factors for online retailers. According to the survey, 94% of respondents agreed. He noted it's a simple case of, if a retailer doesn't have stock, the online shopper is likely to go to the next site or a physical store.
Speed of fulfilment ranked next, with 92% of retailers citing it as a success factor. Quality of products followed, with 90% of respondents agreeing. Design and appeal of the site followed, achieving 85%.
Goldstuck explained these findings indicate the consumer wants to replicate the in-store service experience. Not as a 360-degree Web site, but more focused on customer service, he clarified.
Based on these findings, he advised online retailers to take customers seriously. He noted that availability beats range and quality beats price. Speed is paramount, he added. Goldstuck also advised e-tailers to expect a steady demand through to 2012, when the market is set to explode.
Goldstuck predicted 2013 will be the boom year for online retail, when he expects 4,6 million local Internet users will be ready to shop online.
He bases this assumption on a theory he calls the digital participation curve. The digital participation curve reveals the average Internet user needs to be online for five years or more before engaging actively with high-level applications like online retail, he explained.
“It emerges as a combination of experience and comfort with using the medium, confidence in the reliability of the medium, and trust in the medium,” he continued.
Pointing to online statistics from 2001, Goldstuck noted there were 350 000 online users in SA who were ready to shop online. Based on the digital participation curve, he looked back at statistics from 1996, which revealed 354 000 online users in SA.
Similarly, in 2006, there were 2.8 million online users in the country. In 2008 there were 4,6-million people online, he noted, the sharpest growth in many years in the Internet user base, hence the explosion predicted in experienced users in 2013, he concluded.
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