Shoppers increase online spending

By Damaria Senne, ITWeb senior journalist

Johannesburg, 26 Aug 2005

The South African online market is still small, representing only 0.14% of the retail market, delegates at an online business conference organised by Marcus Evans heard this week.

However, it is growing and online revenue in 2005 increased from R480 million to R580 million, indicating a 25% growth, says World Wide Worx MD Arthur Goldstuck.

Goldstuck also predicts that 3.6 million people would have five years` experience using the Internet, with a million of them shopping online by 2010.

He says the potential accelerator to Internet access is the Telkom undersea cable, which links 25 African countries and links directly to Europe and Asia.

Southern Africa-Western Africa has a system capacity of 120GBps ultimately, allowing for 5.8 million simultaneous phone calls, while the Southern Africa-Far East cable has a capacity of 130GBps, allowing for 6.3 million simultaneous phone calls.

Bidorbuy MD Andy Higgins agrees that the lack of inexpensive, fast broadband inhibits the growth of e-commerce. He says the advent of broadband becoming mainstream will increase the number of people online and fundamentally change consumer behaviour, making shoppers more willing to make online purchases.

Despite the limited market and other challenges that online businesses face, there are still opportunities for growth and success in e-commerce, says Anton Gaylard, GM of the ASP division at MWEB Business and chairman of the South African Forum for E-tailers.

Gaylard cites Kulula.com as an example. The company conducts 70% of its business online and experienced 50% growth over the past three years.

Gaylard also points out the benefits of taking the next step and selling online. It is cost-effective, reaches a global market, is always accessible, enables self-service and the results are measurable, he says.

Organisations that have successfully set up virtual businesses include Bidorbuy and Netflorist. Bidorbuy has over 5 000 transactions taking place every month, while Netflorist has 84 000 people on its database and has shown about 35% growth in the last couple of years.