Now in its fifth year, the study tracks consumer attitudes and activity online, indicating the state of online shopping in South Africa and elsewhere on the continent.
Improving experience
When asked how online shopping could be improved, just over half (53%) of the respondents suggest visible, explicit assurance that their transactions are secure, while 52% recommend 'protection against unscrupulous websites'. A further 48% suggest guarantees by financial transaction companies or banks that websites are safe.
Despite this seemingly negative sentiment towards online shopping, over two thirds (69%) of respondents say they have made at least one purchase online in the last three months and a significant 87% of those reported being very or extremely satisfied with their experience.
"Consumers want to shop online but they are still nervous about doing so," says Philip Panaino, division president, MasterCard, South Africa, "This year's survey confirms that mandating 3D Secure payment card authentication, such as MasterCard SecureCode, is an important measure to ensure the sustainability of South Africa's ecommerce industry."
3D Secure adds an additional layer of authentication between the cardholder and its card issuer, reducing the risk of fraudulent online transactions. Merchants benefit too - in the event that a card is used without permission, liability shifts away from the retailer.
Retaining a human element in the purchasing process also contributes to reassuring consumers, as the majority (82%) of respondents stated that customer service via online chat or telephone is important when shopping online.
"Online retailers must remember that South Africa has a larger-than-ever base of inexperienced Internet users who have never shopped online before, thanks to improved access to smart mobile devices and increasingly affordable broadband services," says Arthur Goldstuck, MD of World Wide Worx. "These users are still familiarising themselves with using the Internet regularly to socialise, communicate and browse for information, so some initial apprehension regarding online shopping is to be expected."
"As the new user base gains experience and confidence in online activities, their inclination to shop should convert into a regular online shopping habit. To aid this conversion, smart online retailers should recognise the value in educating first-time customers about the security measures put in place within their online stores."
Considering the overall online shopping experience, 90% surveyed are influenced by convenient payment methods, 87% by quickly completed transactions and 86% will return to a site offering low or no additional delivery chargers. Pricing, still an important consideration, was mentioned by 89% of respondents last year, compared to 85% this year.
"This year's research indicates that the overall online shopping experience - including convenience, security, good exchange policy, speedy transacting and so on - leads to purchasing decisions. This makes it clear that retailers must consider more than just the pricing of their products," says Panaino.
The survey further reveals that the South African ecommerce industry is growing, as only 24% of local online spend was on foreign shopping sites, down from 27% the previous year and 33% in 2012.
While preference for Kalahari declined somewhat from 47% to 35%, it remains South Africa's favourite online store. Local etailer Takealot enjoyed the greatest increase in consumer preference, as 11% shop most frequently from this store, an increase of 4% from last year's study.
"The products that consumers are buying suggest that online shopping is becoming increasingly mainstream, which also bodes well for local retailers," says Goldstuck. "No longer is online shopping confined to books and DVDs, plane tickets and apps."
Consumers purchasing groceries (38%), clothing (34%) and personal care (20%) brands online increased by 7%, 8% and 6% respectively, with the number of visits to these sites averaging at two per week.
"The increases are encouraging, as shopping for goods in these categories is more complex. Selecting clothing, for example, requires trust in the retailers' garment and sizing descriptions," says Goldstuck. "It is likely that more time is spent on these sites per visit, so retailers have a greater opportunity to engage with their consumers and ensure positive shopping experiences."
The number of respondents feeling that online shopping is costly has declined 13% in 2012 to just 9% in 2013, while only 3% find ecommerce sites difficult to navigate. This, says Goldstuck, further suggests that online retailers are succeeding in making online shopping a compelling alternative to physical stores.
"When contemplating the future of online shopping in South Africa and given that 96% of consumers who own a mobile phone access the Internet this way, it is unsurprising that mobile shopping is attracting tremendous interest," he says.
The study found that 33% of those accessing the Internet via mobile phone intend to shop using their device or have already done so, a jump of 9% from 2012. The likelihood of shopping online using a computer or tablet, or at a physical store, instead of a mobile phone, has declined by an average of 5%.
"Mobile phones are still used frequently to research products and compare prices before purchase in a physical store, but there is a marked increase in the use of mobile banking apps, digital wallets and in-app shopping which indicates increased comfort with the technology," concludes Goldstuck.
The most popular items purchased by those who have made a purchase using their phone in the last three months include mobile phone apps, music downloads, movie tickets, computer software and coupon/deal site offers.
"It is an exciting and challenging time for South Africa's online retailers. In an increasingly competitive environment, it is not enough to offer low prices and comply with minimum security standards. Local shoppers want a holistically positive experience," says Panaino. "While they are demanding, they are also enthusiastic about shopping online, so retailers successfully fulfilling shoppers' needs are likely to enjoy a loyal customer base for years to come."
Now in its fifth year, the annual Online Shopping Behaviour Study, which serves as a benchmark of consumers' propensity to shop online, was conducted in 11 countries across Africa and the Middle East between November 2013 and January 2014. The South African study surveyed banked South Africans aged between 18 and 64 who access the Internet at least once a week.
