Boom or bust: which direction is the South African ecommerce space headed in?

Speak to some people and they’ll tell you South Africa is on the verge of an ecommerce revolution. Talk to others and they’ll tell you not to put too much hope on the space. So who’s right?

Well, the numbers are fairly encouraging, but there’s plenty to be said for tempering that optimism with a little caution and placing it in the right context.

For instance, a recent study conducted in South Africa by research company Ipsos, on behalf of PayPal and FNB, shows a growing interest by South African internet users to shop online. Out of South Africa’s internet users, 22% have said they have made purchases online and 48% expect to do so in the future.

“Ecommerce penetration in South Africa is still relatively low by global standards”, says Efi Dahan, Regional Director for Africa and Israel at PayPal. “However, the number of online shoppers is expected to nearly triple in South Africa, making the country a significant e-commerce force in the region”.

According to the study, the key drivers that would encourage South African online shoppers to shop on line more often are lower product costs (88% of online shoppers say this would make them more likely to shop online), faster delivery (selected by 85% of online shoppers), flexible delivery options (selected by 82% online shoppers) and safer ways to pay (selected by 75% online shoppers).

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In fact, 71% of current online shoppers indicated that if they did not have to keep re-entering payments or delivery details, they would be more likely to shop online more often. Meanwhile, one out of two (51%) South African online shoppers indicated that not having to register to a website to make a purchase would make them shop online more often.

When asked about main barriers for online shopping, 67% of non-online shoppers indicate that online security of payments is a reason for not shopping online, while 58% of those who have not shopped online say that concerns about not receiving items they have ordered is a reason they don’t shop online.

Savvy, niche shoppers

Those who do shop online though seem to have a nose for a good deal. The study shows that 85% of online shoppers indicated that coupons and discounts would encourage them to shop online more often. This focus on promotions and online safety makes South African online shoppers savvy.

The most popular shopping categories for South Africans online are digital goods (purchased by 52% of online shoppers in the past 12 months), event tickets (purchased by 50%), travel or transportation (45%), and fashion, consumer electronics and physical entertainment (all purchased by 38%). Looking at future behaviour, 58%-70% of online shoppers indicate that they expect to spend the same or more on those categories online next year.

Read more: South African ecommerce won’t be a big force: here’s why

That South African ecommerce purchases are dominated by a few categories shouldn’t be all that surprising, they’ve always been the mainstays of the ecommerce space.

According to Gary Novitzkas (CEO of specialist health, wellness and fitness e-tailer juniva.com), that could change as the country’s appetite for nice offerings grows: “In my view, these are the new principles of eCommerce in South Africa: specialised, valuable, and convenient.”

According to the former Kalahari head, the market has an increased appetite for information coupled with a quest to live well. “Forget flashing your shiny new car around the neighbourhood; rather post a selfie on Facebook after completing your first parkrun,” he says.

This kind of attitude, he says, has helped his site see 30% month-on-month growth.

Mobile first

There’s also evidence to suggest that mobile will play as strong a role on the South African ecommerce space as it has in connecting the country’s population. According to the IPSO study, about 50% of online shoppers who own a smartphone or a feature phone have used it to shop online, while an additional 21% expect to do so in the future.

Significantly, mobile phones are making shopping more convenient. 70% of mobile shoppers use their phone to shop from their home or office. Searching on mobile devices when shopping is also a common trend with 94% of mobile shoppers saying they use their phone to search for information about products, stores or businesses. In addition, 62% of mobile shoppers use their phone to compare product prices while shopping in store.

Read more: From powerhouses to peers: how the balance of power has shifted in ecommerce

In regard to browser preferences, 45% of mobile shoppers prefer to shop by using an app while 26% of mobile shoppers prefer to shop from a mobile browser.

However, some barriers remain to mobile shopping, including 51% of those who have shopped on a mobile stating that the experience is not user friendly while 42% flag security concerns when shopping from mobile.

Playing catchup

While all of that is promising, it’s pretty clear that South Africa could afford to catch up with at least one other African country. With 70% of South African internet users shopping online or expecting to shop online in future, South Africa, has the second largest number of potential online shoppers, compared to Nigeria (89%) and Kenya (60%).

Interestingly South African ecommerce sites are popular destinations for shoppers from Nigeria- the research shows 30% of Nigerian cross-border shoppers (online shoppers who have made purchases online from another country) have purchased goods from South Africa in the past 12 months.