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Poor access stifles online retail in SA

Cultural challenges and less predictable data packages are possibly dissuading consumers from making the shift to online grocery purchases, according to technology experts.

Spiwe Chireka, the manager for the International Data Corporation’s telecoms programme in Africa, said: “I believe it’s more of a cultural issue than anything and that South Africans need to get comfortable with shopping for groceries online.”

Chireka added: “At the moment, grocery shopping is an experience that allows one to trawl the aisles and compare and contrast brands before making a selection. At the moment, online shopping does not necessarily provide that.”

In addition, few robust and well developed shopping portals, especially for foodstuffs, were available in South Africa. The benefits of online food shopping such as free delivery or same day delivery were not apparent either, Chireka said.

“This makes it easier for people to make their way to the shops and buy the goods themselves than doing it online. Access and content are the key challenges,” she said.

Low broadband access and a lack of affordable devices to access the internet are also considered to contribute to low online retail statistics.

According to the Ookla net index for tests conducted between June 26 and July 25, South Africa’s average consumer download speed is 3.54 megabits per second.

Better download speeds could also improve the experience of shopping online.

Last week Arthur Goldstuck, the managing director of technology advisory firm World Wide Worx, said that by the end of the year 11 million South Africans would use the internet but only 4 million would be willing to buy goods online.

An estimated 1.5 million would complete a purchase.

The Boston Consulting Group published a report in March that showed South Africa’s internet economy was growing at a slower rate (12.6 percent) than the average for developing nations (17.8 percent).

The local internet economy was worth R51 billion in 2010 and would double to R103bn over the next four years, it said.

The report anticipated that online buying would account for 1.5 percent of all retail shopping in South Africa by 2016 from 1.2 percent in 2010.

Martin Sprott, a principal at consulting firm AT Kearney, said bandwidth challenges were no longer a concern in South Africa.

“A good enabling factor will be a really well priced, affordable smartphones together with predictable data packages. At the moment data tends to be priced per megabyte. If you have flat rates for data the situation becomes significantly different,” Sprott explained.

Peter Harvey, the managing director of payments solution provider PayGate, said: “I think when we talk online food retail we’re really talking about one or two major players and my guess is that the (in)ability of these stores to deliver efficiently and effectively is what’s causing the slow growth.”

Harvey said South Africa had the connectivity but not the market, which created distribution challenges for retailers.

This could change as more people obtained access to the internet, he said.

Harvey added. “South African banks are very innovative by world standards and are providing more ways for people to pay and get paid online. There is a lot of energy going into online retail from all sectors of the economy and it’s a matter of time before a tipping point is reached.”

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