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News 2009-06-05 Online shopping picks up speed BY AUDRA MAHLONG , JOURNALIST, ITWeb [ Johannesburg, 4 June 2009 ] - Despite disagreeing on its growth rate, companies say online shopping will experience growth as consumers turn to the Internet to cut shopping costs.
A survey conducted by Neotel's consumer division reveals consumers are turning to online shopping as it offers significant savings. The report concludes that local online retailing is growing at an average rate of 35% a year and consumers can save an average of 20% by migrating to shopping online. According to the survey, consumers experience savings by reducing driving costs, which include petrol wasted sitting in traffic, as well as vehicle wear and tear. Reduced shopping time also incurs savings, as well as the reduction in impulse buys, usually of items strategically placed to tempt customers. Increased awareness of online shopping and a focus on cost saving measures also led to the growth of online shopping, the survey states. Convenience was also a key contributor, as consumers benefitted from 24-hour delivery times from some suppliers. The survey also states online shopping is becoming increasingly safe and this has attracted new shoppers. As Web sites become fraud-proof, with the latest security technology and encryption techniques, online shopping has become secure for consumers, the survey states. Neotel is encouraging people to shop online, because of the savings, and take advantage of the benefits of the Internet, saying: “The Internet not only allows you to harness global information, but also conduct commerce with the click of a button.” Starker realities World Wide Worx MD Arthur Goldstuck says online shopping growth rates are lower than the survey says – but there will be a slow but steady growth over the next three years. He notes that a boom in online shopping was experienced between 2006 and 2008, with a 20% growth rate for 2008 and 10%-15% for 2009. Goldstuck says that, even though consumers are increasingly price conscious, there is no benchmark on how much one can save. That depends entirely on where a consumer shops, he explains. “The saving comes from shopping around. You don't necessarily save money from online shopping. It allows for price comparisons on the Internet, and that's where the savings are,” says Goldstuck. Despite the possibility of saving, South Africans are still cautious of shopping online. Joey da Silva, founder and CEO of Form Function Digital Consultants, says security is a key concern for consumers. He says reports warning consumers of increases in phishing and credit card fraud hinder online shopping. “Online shopping hasn't yet exploded locally. South Africans are always being warned about the security risks of online shopping, so there is a lot of apprehension,” says Da Silva. Da Silva and Goldstuck add that the security threat is often overstated, saying there is more risk in the retail environments than online. Improving access Julie Tomlinson, director of mobile business at Sybase SA, says SA was the fourth-largest user of mobile Internet services and, as the network infrastructure in Africa advanced, e-commerce would be used by more people at the lower end of the socioeconomic scale. Da Silva notes that the uptake of broadband, a growing mobile environment and a youth population that is IT savvy, has positively impacted local e-commerce. But, he adds, for online shopping to grow in SA, there needs to be improved access to purchasing facilities for all income groups and companies need to step up to the challenges brought on by online shopping. “The problem is that even if there is a 20% cost saving, it can be eaten up by courier fees and if you use a standard postal service, you can be subject to delays. Some companies have recognised the challenges facing the SA market and stepped up, but there is still a problem,” explains Da Silva. Goldstuck says that, as SA does not have a century old mail-order culture like the US, there are challenges. The local market is still not educated to a greater extent on the benefits of online shopping, he adds. |
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