Growth in SA Internet use to give e-commerce a boost

Online activity in South Africa has doubled in the last two years which has led to e-commerce services outpacing sectors such as publishing, writes JP FARINHA of Property24.com explains.

Things have been heating up in the South African internet industry lately and the time is right for our nascent e-commerce industry to start flourishing.

Debates around accurately measuring online audiences aside, according to the Digital Media & Marketing Association (DMMA) we’ve seen online activity in South Africa double in the last two years. The DMMA reports in excess of 14 million local unique browsers active in March 2011, compared with 6.6 in March 2009. For various reasons this shouldn’t be interpreted as individual users – actual South African internet users are probably hovering at the 6.5 million mark ‚ but in relative terms this growth is still significant.

In recent years, there have been two primary drivers of this growth in online activity: the increase in broadband capacity to South Africa, as well as the prevalence of 3G services with Vodacom having the largest number of broadband subscribers in the country compared to any Internet Service provider.

The impact of the increase in bandwidth is less about speed and more about the improved accessibility of always-on connectivity. This, more than anything else is the step change required to transform consumers’ internet experiences into full online engagement – at which point they become very interesting for companies exploring e-commerce.

I would argue that 3G internet access, although widespread, is still at an early stage of development, due to its high cost per megabyte. As prices drop there will be a further hike in mobile internet activity and audience engagement.

Online engagement in emerging markets

Global research firm, TNS, reported last year that users in emerging markets are typically more engaged online than those in developed markets. This is true of South Africa, with 51% of online users having high levels of engagement, compared to 26% in Finland. In addition, 65% of South Africans expect their social media use to increase in the next year both on mobile and PC.

E-commerce adoption operates slightly differently to social media engagement. Because e-commerce involves a financial transaction, a higher degree of trust is required before people start spending money online. However the level of social media engagement in South Africa, especially the popularity of Facebook, will do a huge amount for introducing new ideas to people and providing a foundation for more engaged e-commerce activities to take place.

Classified services in South Africa are already growing fast, outpacing other more established sectors such as publishing. A quick review of the most visited sites in South Africa shows a number of classified and e-commerce based sites.

Property24.com, for instance, has more than doubled in size in terms of audience and leads generated in the last six months. Using property listings as an example, there are a number of compelling reasons for the rapid uptake of online listing services and classifieds:

1. Convenience: without getting in their car, speaking to an agent or waiting for the weekend newspaper’s property pages, house hunters can do very detailed research using the internet about the properties available in locations of interest.

2. Immediacy: consumers don’t have to wait for the weekend newspapers or for the estate agent to call them. They can get detailed property information about the property market, day or night, at the click of a mouse.

3. Coverage is broader: property seekers can easily get a good overview of what is available from all estate agents in an area via a property portal without having to contact each agent directly.

4. Information: property information available online is more detailed. It’s quicker and easier to get a comprehensive overview of the property market and to compare the offerings from different estate agents. The number and quality of images available are a big improvement on newspaper adverts with limited photographs.