Is South Africa headed for online retail explosion?

South Africa has been witnessing an increase in the number of online marketplaces, leaving Internet enthusiasts debating whether an online retail explosion could happen in the country.

Buyers in Africa have been noticeably reluctant to carry out transactions online, despite the penetration of Internet and mobile on the continent. However, this seems to be changing drastically in South Africa, now the home of some of the largest online marketplaces in Africa.

A report released by World Wide Worx shows that South Africa recorded the highest online retail sales in a decade, with sales going up by 40 percent in 2011 alone.

“This dramatic rise in online retail comes in the wake of an ongoing increase in the number of experienced Internet users in South Africa,” World Wide Worx MD Arthur Goldstuck said in a statement.

According to the Digital Participation Curve, a model developed by World Wide Worx, it takes up to five years before new Internet users gain the confidence and experience in the medium to become active participants in the Internet economy.

By 2011, there were 3.6 million people who had been online for five years or more in South Africa, hence the gradual increase in trust in online shopping.

The South African online market is dominated by the likes of Kalahari.net and Exclusive Books (for online books), Digital Planet (the largest online electronics store), M-Web Shopping, The eBucks Shop and Digital Mall (the three largest online malls), Pick ‘n Pay Home Shopping (online grocers) and BidorBuy (largest auction site).

Some of the recently launched online retails have also received a tremendous growth, with Mr Price, a leading clothing retailer in SA, starting an online store to boost sales as well as serve target customers who have become ‘incredibly tech-savvy’.

Despite e-commerce sales making up less than 0.5 percent of the total retail sales in the country, analysts believe that South Africa is headed for an online retail explosion.

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