South Africans are becoming more confident digital shoppers, and a recent Ipsos International study shows that locals have spent at least R28.8 billion shopping both online and while using their mobile devices.
Efi Dahan, PayPal’s regional director for Africa and Israel, said the company, which manages 68% of all digital payments, expected the rate of online and mobile shopping to grow by 29% to R37.1 billion by the end of this year, compared with 37% growth last year.
The Ipsos study also estimated this would increase by 24% by the end of 2017 to R45.9 billion as the online and mobile shopping experience evolves, making customers feel more secure when making digital payments.
“South Africans are more attracted by the price of the products they see online, the service they get and the surety that their items will be delivered on time. If retailers wake up to this fact and include it in their customers’ experience, they will reap the rewards by not being left behind,” said Dahan.
South Africa was one of 29 countries chosen for the study, which sampled more than 800 online shoppers from each country.
Dahan said South Africans were mostly interested in fashion items, and became more confident to shop more online and use their mobile devices to buy products when the experience they had was good.
“There are lots of opportunities for entrepreneurs locally to take advantage of this growth and invest in delivery and shipping as there are gaps there. They can work with online merchants to ensure goods get to buyers because shipping costs and the surety that their items will arrive are a concern for consumers,” said Dahan.
However, the figures have been questioned by Arthur Goldstuck, a technology analyst and MD of World Wide Worx. He said the figures were inflated with items that should not be considered under the Ipsos study.
Goldstuck said that while he agreed with the study’s estimates that online and mobile shopping was on the rise, he was challenging PayPal’s inclusion in the study of the money spent on cellphone airtime, airline tickets, and travel and leisure products.
“We agree that online shopping is becoming huge in South Africa, and we estimate that it will grow by between 20% and 30% a year. But we feel that it is widely exaggerated that you include those items that consumers themselves do not feel are online or mobile purchases.
When international companies do these studies, they do not differentiate between actual retail online shopping and other types of spending. Cellphone airtime, which has been included in this study, should be kept separate. We also feel that the 810 people they interviewed were highly active internet users. They should have mixed a variety of internet users, including new users, and the picture would be very different,” said Goldstuck.
The reason online sales were up was because merchants such as Mr Price, which posted an increase of 111% in local online sales in 2015 to R96 million with 13 million visits to its site, were starting from a low base and this made for a “dramatic” increase, he said.
While South African online and mobile sales are increasing rapidly, they were only 0.3% of the R868 billion total local retail sales last year, as reported by Stats SA.