The boom in online shopping is continuing unabated, with Internet research firm World Wide Worx predicting at least a 35% growth this year, compared with a 33% rise in 2006.
In its latest report, "Online Retail in South Africa 2007", World Wide Worx forecasts that total online retail spend is expected to rise to R929 million, from last year's R688 million.
These figures exclude the online sale of air tickets, which continue to dwarf the numbers for online retail. The five South African airlines selling tickets online - kulula.com, FlySAA.com, Mango, 1Time and Nationwide - between them accounted for R2.3 billion in e-commerce in 2006, almost four times the size of conventional online retail. The figure is expected to rise above R3 billion in 2007.
World Wide Worx MD Arthur Goldstuck says these numbers indicate a dramatic turnaround in online retail in SA, which appeared to be stagnating in 2005. The 2006 recovery is being sustained in 2007, with indications of even more dramatic growth in 2008.
"There are two major factors behind this growth. The first is the rise of broadband, which by the end of next year will see more than a million users in SA.
"The second is a phenomenon called the 'experience curve', which shows that only once users have been online for around six years, are they comfortable with the more challenging aspects of the Internet, such as e-commerce. And the number of people who have been online for six years or more has finally reached the level where it is making a substantial impact on online retail," he says.
Conservative forecast
Taketwo.co.za marketing manager Neil Smith says Word Wide Worx's forecasts are conservative. "We have already had a 50% increase in our annual sales for this year compared to 2006 and we are just going to hit our peak shopping season that lasts from about now until the middle of December."
World Wide Worx says the number of online retail sites has also grown substantially, from 826 in 2005 to 1 014 in 2007. This is despite 310 sites - more than a third of those online at the end of 2005 - closing down from 2005 to 2007. However, 498 new sites came online during this time.
The research firm says the online retail market is dominated by 12 sites, which between them account for more than three-quarters of online retail sales in SA, according to "Online Retail in South Africa 2007".
Smith and Goldstuck agree it takes time for Internet users to start trusting online shopping, but once they do, they appreciate the convenience, although pricing may come into play at times.
"Online shopping is not always cheaper than normal retail shopping," Goldstuck says.
Smith says there is also a slight difference in the types of shoppers: "We find that, for example, hardcore gamers are inclined to buy their games from us, while the normal retail stores still do well in selling the family-oriented games."
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