Base effect drags down online shopping

Online shopping like the rest of the economy seems to have taken some hit from the squeezed consumers’ wallets.

This is visible from the latest MasterCard Online Shopping Survey which suggested that the number of South Africans accessing the Internet to shop online was down 4% in 2012 when compared to the previous survey. The survey results released yesterday showed that 54% of respondents said they usually use the Internet for shopping.

Philip Panaino, Division President of MasterCard South Africa said “While online shopping continues to be a regular Internet activity for more than half of South Africans who are actively online, there is a slight shift downwards in their online purchasing behavior”. He said this could be attributed to the slowdown recorded in the economy during the survey period. “This is supported by the South African Reserve Bank noting in its fourth quarter review of 2012 that retail activity was disappointing as consumer spending was negatively affected by a pickup in inflation.”

Arthur Goldstuck, MD of World Wide Worx raises another factor. “There has been a rapid rise in the number of South Africans classified as active Internet users – those who fairly recently acquired regular access to the Internet – which means we are seeing a larger-than-ever base of users who have never shopped online before”.

Goldstuck added that “These users add to South Africa’s population of more experienced Internet users – those who have been online for five years or more – which has increased significantly from under four million in 2012 to around 4.6 million this year. This means that even as the amount spent online keeps rising steadily – at more than 30% a year according to our data – the proportion of users shopping online is declining, which ties in with the decline MasterCard has recorded of active online shoppers here.

“The key therefore lies not in the total number of Internet users, but in the behaviour of the experienced users,” said Goldstuck. “And as the new user base gains experience and confidence in online activities, their propensity to shop should convert into a regular online shopping habit.”

The MasterCard survey also revealed that 91% of South Africans who shop online are highly satisfied with their overall experience, a 4% increase from the 87% who said the same thing in the 2012 survey.

The MasterCard statement said South Africans were clear about what sways their online purchasing decisions, with 90% of respondents noting that secure payment facilities and convenient payment methods were the most important considerations when making an online purchase. In addition 89% said that the price of the items to be purchased was a leading consideration, while 86% said that low or no extra charges for delivery or shipping played a role in the decision to shop online.

“Even though shopping online means that consumers are spared the inconvenience of parking, queues and crowds, they still prefer online stores that offer extra added value, with 65% of respondents indicating that promotional offers, discounts or free gifts are important when it comes to choosing an online retailer,” said Panaino.

Nearly half of the respondents said that their favourite online store is, with the next most popular sites being Groupon, Amazon, Bid or Buy and Takealot. Of those who have shopped online in South Africa, only 29% of their purchase occasions have been from foreign sites, down from 34% in the previous survey.

Websites selling books, CDs and DVDs remain the most popular, with 42% of respondents having visited these sites in the last three months. Home appliances and electronics take second place (35%).

The MasterCard statement said there was suggestion from the survey results that shoppers are becoming more accustomed to paying for knowledge or information online and consuming it digitally. Sites offering personal or professional education were the third most popular genre of websites visited by 33% of respondent. This was the first time this category was added into the survey. Travel sites claims 32% and coupon/deal sites 31%.

The survey showed that while South Africans may be shopping online, but they have yet to make a significant move towards shopping via their mobile devices. Of the 93% of survey respondents who can access the Internet using their mobile phones, only 12% use their devices to make purchases. However, the small percentage who are shopping online via their mobile phones bought low value items like mobile phone apps (45%), music downloads (26%), and tickets for cinemas and theatre performances (13%).

The survey also revealed that: 

  • South Africa takes the lead within the African continent in terms of the number of respondents who say that they usually use the Internet for online shopping at 54% – twice the regional average. Thirty-six percent of Egyptians use the Internet for online shopping, 18% of Nigerians, 18.5% of Moroccans, and 8.5% of Kenyans.
  • In almost all countries surveyed in Africa, social networks are yet to be a consideration when shopping online, indicating that online shopping is still a decision that is done individually and personally.
  • The most popular online shopping sites across Africa are music download sites, with 43% of survey respondents having visited these sites during the survey period. Personal education and development sites are the next most popular across the region (31%) – a trend that is in line with the emerging global popularity of “massive open online courses” (MOOCs).
  • There are strong indications that the African continent is prepared for mobile commerce – 17% of African respondents have bought something online via their mobile phones, compared to 10% in 2012. The highest increase was seen in Nigeria (up from 8% to 30%), followed by Egypt (up from 9% to 23%), and Morocco (up from 6% to 18%). However, mobile shopping declined in Kenya, from 17% in 2012 to 3% in 2013. It remained consistent at 12% in South Africa.

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