wwworxOnline retail in South Africa has entered a phase of sustained acceleration, according to research recently released by World Wide Worx. The Online Retail in SA 2011 study shows that the total spent on online retail goods in South Africa in 2010 passed the R2-billion mark for the first time. It reached R2,028-billion, growing at 30% over the previous year.

Online retailers are even more bullish about 2011, with the industry consensus pointing to 40% growth this year. This will represent the highest rate of growth for online retail in South Africa in almost a decade.

“This dramatic rise in online retail comes in the wake of an ongoing increase in the number of experienced Internet users in South Africa,” says Arthur Goldstuck, managing director of World Wide Worx and principal analyst for the survey. “Last year there were 3.6-mlilion people who had been online for five years or more. By 2015, that figure will be 6.8-million – almost double the potential e-commerce market of today.”

In 2010, traditional, physical retail in South Africa reached R561bn, according to Stats SA. This means that online retail still makes up less than half a per cent of total retail in SA: a mere 0.36%. At the same time, however, the growth rate of online retail in South Africa in 2010 was four times that of physical retail: 30% vs 7%.

Internationally, according to global online retail data analysed in the report, growth slowed in most regions during the global financial crisis, but did not turn negative: total sales never fell anywhere in the world. Industry estimates for the total value of global online retail in 2010 come to an average of about $545-billion. The figure for 2009 was $469-billion.

This indicates that, globally as in South Africa, online retail is recession-proof for now, while it still makes up a small proportion of total retail worldwide.
“This shows us that online retail growth represents not a rise in shopping activity, but rather a shift in shopping activity, from the physical space to the online space,” says Goldstuck.

Mobile Internet unwrapped
The Mobility 2011 research project, conducted by World Wide Worx and backed by First National Bank, reveals that 39% of urban South Africans and 27% of rural users are now browsing the Internet on their phones. The study excludes “deep rural” users, and represents around 20-million South Africans aged 16 and above. This means that at least 6-million South Africans now have Internet access on their phones.

The big winner in terms of sites and services is Mxit, which enjoys the attention of 24% of cellphone users aged 16 and above (29% of urban, 19% of rural users). However, Facebook is catching up fast, reaching 22% of users, and in fact passing Mxit in the urban over-16 market, with 30% reach, versus 13% among rural users.

Twitter will also become a key mobile tool, almost catching up to MXit in the coming year, from a low 6% of cellular users at the end of 2010. The proportion of urban Twitter mobile users is exactly double that of rural users: 8%, against 4%.

The most dramatic shift of all, however, is the arrival of e-mail in the rural user-base and its growth among urban users. There has been a substantial shift among the latter, with urban use rising from 10% in 2009 to 27% at the end of 2010. While the percentage growth among rural users is lower, the fact that it was almost non-existent a year before means the 12% penetration reported for 2010 indicates mobile e-mail becoming a mainstream tool across the population.

While cameras, diaries and games continue to dominate the list of features used on phones, FM radio and music players have become part of a mobile “Big Five”. However, there is a significant difference in the features preferred by urban and rural phone users. Three quarters of urban respondents (75%) use their phone cameras, but little more than half of rural respondents (55%). Music players on the phone get the vote of 53% of urban users, versus 36% of rural users. Surprisingly, the gap is reversed when it comes to games on the phone: 54% of urban users enjoy these, compared to 65% of rural users.

The Mobility 2011 project comprises two reports, namely the Mobile Consumer in SA 2011 and the Mobile Internet in SA 2011. It is based on face-to-face interviews with a nationally representative sample of South Africans.

For more information, contact:
* Arthur Goldstuck, MD, World Wide Worx, on +27 11 782-7003 or by e-mail on arthur@worldwideworx.com

* For more information or to order the reports, request the executive summaries by e-mailing info@worldwideworx.com

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