Wendy Hall

Consumer Industries Reporter

ONLINE shopping is a growing retail trend internationally, with accelerated growth in emerging markets, recent research indicates.

While one-tenth of the world’s population buys goods online, the South African market is lagging behind as a result of slow internet speeds and the high cost of connections.

Arthur Goldstuck, who publishes an annual research report on the South African online retail environment, says there are approximately 300000 active online shoppers in the country.

This accounts for less than 10% of SA’s internet users.

Online retail accounts for about 0,14% of general retail in SA, compared with 1,6% in other parts of the world.

There is a 20%-25% increase in online shopping in SA every year, Goldstuck says, but “as this is off a very low base, it doesn’t mean we are seeing a dramatic increase in numbers”.

Access to higher and cheaper bandwidth is essential for the growth of the South African online retail market, he says.

Unless the telecommunications authorities deregulate the market more effectively, online retail in SA will stagnate, Goldstuck says.

Gary Hadfield, CEO of online book retailer Kalahari.net, says the lack of access to broadband inhibits the local online retail environment.

However, it is anticipated that about 1-million internet users will have access to high-speed access by 2009, “which is good for online shopping”.

Research house ACNielsen says that a recent survey of 38 markets, including SA, shows that 627- million people have shopped online, with 325-million buying goods in the past month.

ACNielsen says Europe and North America have the highest incidence of online shoppers. Germany, Austria and the UK top the list, with 95% of internet users buying goods online.

David Boyd, vice-president of internet industry research at ACNielsen, says that the shopping figures show an upward trend in global e-commerce.

The most popular items bought on the internet are books, which account for 34% of purchases.

This is followed by videos, DVDs and games, which make up 22% of purchases, and airline tickets at 21%. Clothing and accessories account for 20% of purchases.

Airline tickets are the most popular item bought online in SA, and they “dwarf other online retail categories”, Goldstuck says.

Groceries and books are the next most popular online products in this country.

Online motor industry websites are also popular, and they generate leads for real car sales, Goldstuck says.

Websites associated with grocery retailers tend to be the most profitable, such as Woolworths and Pick ’n Pay’s sites.

Colin van Schalkwyk, senior executive of Woolworths’ selling division, says there has been a steady increase over the past few years in the number of online grocery shopping users, with about 100000 registered users.

Van Schalkwyk says Woolworths considers its online business to be a selling channel and an opportunity to maximise sales and does not consider telecommunications constraints the most important criteria when assessing the viability of its online business.

ACNielsen reports that credit cards are the most popular method of payment online.

Cash-on-delivery is also a popular payment method in some Asian markets, ranking second to credit cards in India and Japan.

In less developed markets, the safety of online payment is a major concern.