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One-fifth of South African consumers shop online in past 6 months: Synovate

MUMBAI: One-fifth of South African consumers have shopped online in the past six months, according to a recent survey conducted by global market research company Synovate. The most popular choices for online purchasing are movies and music downloads, cited by 44 per cent of respondents as a regularly purchased item.


Synovate surveyed 500 Internet users in the metropolitan areas of Johannesburg, Cape Town, Durban and Pretoria.
 
 
Said Synovate Information Technology and Telecommunications sector head Alicia Gaddin, "With the advent of cheaper and faster Internet access in South Africa, Synovate investigated attitudes and perceptions around banking and shopping online as these activities have become easier for our consumers. However, having Internet access does not necessarily mean that customers will shop online. Convenience, variety and saving money are big push factors when it comes to online shopping."


Of the fifth that do shop online, the main advantages of doing so were mostly around convenience - 43 per cent stated that it was more convenient than offline shopping and 33 per cent stated that they shop online because it is "always open". Further benefits of online shopping include not having to endure a busy shopping environment or having to deal with salespeople (mentioned by 25 per cent and 22 per cent of respondents respectively). Another plus is that one can browse many items at once (18 per cent) and that it‘s easy to compare prices and items (16 per cent).
 
 
Aside from movie and music downloads, the top online purchases were books, travel, CDs and DVDs and mobile content. "Movie and music downloads, as well as mobile content and games are easy to buy online and also provide instant gratification compared to some of the other online purchases," commented Gaddin. "Buying books, CDs and DVDs and even groceries all come with a waiting period while the goods are delivered."


The good news for South Africa is that the majority (68%) of these purchases are made on local sites. World Wide Worx recently released a study revealing that the online shopping amount in rand value in 2010 comes to R2-billion and that there is evidence that consumers are becoming more familiar and comfortable with the process and are therefore spending more online.
 
 
"This is good news for South African retailers and does not necessarily mean that money is being taken away from the traditional (offline) business," states Gaddin. "It offers an extra channel for distribution, one which is growing rapidly. The challenge for retailers now is to build upon their offering so as to increase the amount of local spend further."
The overall experience of shopping online was rated as "good" or "excellent" by 85 per cent of respondents. This was broken down into convenience, security (shopping and goods), the amount and variety of goods online, as well as the quality of customer services and of course the ever-important cost factor.


Mallrats?
Of those who indicated that they do not shop online, 40 per cent stated that the reason for this is they enjoy going to shopping centers. Related to the experience of offline shopping, 24 per cent state that they like to browse in other shops and 23 per cent say they like to be able to touch or try on the items that they buy.


"In South Africa, going to shopping centers is still seen as leisure activity, or a day out," commented Gaddin. "This is because of the fact that there are many brands and outlets that are being introduced to our market. For example, a high-end outlet such as Mango being introduced to the relatively ‘sophisticated‘ shopping market in Sandton. On the flipside there are some areas in South Africa where shopping malls are a brand new phenomenon - take Maponya Mall in Soweto for instance. For most South Africans the experience of shopping in a mall is still very exciting and offers variety that we did not see before."


Other barriers to online shopping:
A third of respondents indicated that security risks acted as a barrier to online shopping - 24 per cent stated that they were worried that their goods would not be delivered. 18 per cent believed that the process is too difficult and 19 per cent claimed that they simply do not have a credit card to do so. "This is a public knowledge issue," says Gaddin. "For many online sites you can pay with a debit card or even do an electronic transfer and so this should not be perceived as a barrier."


Alternative payment options: PayPal
With FNB introducing PayPal into the South African market, Synovate spoke to respondents about awareness and perceptions of the newly introduced service in South Africa. 22 per cent of those interviewed know what PayPal is and of those, only 29 per cent have used this for making an online payment. An even smaller proportion has used PayPal to receive money, having sold something online. The majority (63 per cent) of those who had knowledge of the service agree with the sentiment that it is a safer option compared to giving out card details online and 33 per cent believe that this will encourage further online spending in South Africa.


Putting your money where your mouse is
Respondents were asked to comment on online banking as an alternative to banking in a branch - 44 per cent of those interviewed indicated that they bank online. The majority (35 per cent) bank at least once a week and the most popular online banking activities include checking account balances (88 per cent), paying bills (73 per cent), transferring funds into other accounts (63 per cent) and managing debit orders (36 per cent).


28 per cent of those interviewed go so far as to say that they would actually change banks based on what the bank‘s online offering is like. "Online banking is becoming more important to consumers as they realise the benefits of this service," states Gaddin. "Making sure it is an easy or intuitive process is vital for banks that regard it as a differentiating factor for their brand."


Customers were asked to rate the experience of banking online against a number of factors. The convenience of online banking was rated highest at 92 per cent, followed by ease and user-friendliness of the service (82 per cent).


Of those who do not bank online, 44 per cent say that there is ‘no need‘ to bank online whereas 36 per cent site ‘security‘ as a reason not to. A quarter say that online banking is too difficult and 32 per cent agree that they would be encouraged to bank online if they received ‘training‘ on the service while 23 per cent stated that online banking might be an option for them if it involved ‘rewards and or bonuses‘. "The loyalty model is becoming a pull factor for a lot of businesses in financial services in their aim to attract new customers. This might easily and successfully be applied to the online business world too," concludes Gaddin.


Cellphone banking is slightly more popular than Internet banking with 47 per cent of the full sample stating that they are users of cell phone banking. 42 per cent of those who do not use it say they would consider using it in the future.

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