In South Africa, groceries, electrical appliances and clothing have generated the most online revenue

Massmart eyes online retail

RETAILER NEWS

Times Live - Jul 5th 2011, 10:54

Massmart, which has just merged with US retail giant Walmart, is slowly gearing up to enter the burgeoning market of online retailing. 

Massmart stores include Game, Makro, Dion Wired, Builder's Warehouse and Builder's Express.

The group's CEO, Grant Pattison, said that the online experience was much deeper and more complicated "than just giving someone a button to press and a credit card to enter and the product is ready to be delivered at home".

As cyber shopping becomes a haven for consumption in comfort for the time-poor and techno savvy, and as South Africans become more digitally aware and happy to pay for convenience, it is essential that shopping portals have a highly reliable delivery and logistics service.

On a global scale, the e-commerce platform in South Africa is small but internet usage has shot up dramatically over the last few years, with online retail sales due to hit R2.6-billion this year as they continue the trend of outstripping growth in the physical part of the sector at a rate of 35% a year.

Walmart, which bought a 51% stake in Massmart for R16.5-billion, will provide it with global expertise as it ventures into areas beyond its traditional trading formats.

Last month, as part of its online strategy, Walmart signed an agreement with the Shanghai municipal government to set up an e-commerce headquarters in the city - this was shortly after the announcement of a plan to buy a minority stake in Chinese online retailer Yihaodian.

Online sales in China, the world's largest web market, hit about R4596-billion last year and the hub will be Walmart's second; the other is in New York.

In South Africa, groceries, electrical appliances and clothing have generated the most online revenue, with online player Pick nPay dominating the market, followed by kalahari.net and Woolworths.

The one-time timidness of South African shoppers has taken a backseat as an increasing number of people turn to the net for retail therapy and bargain-hunting.

According to research company World Wide Worx MD Arthur Goldstuck, online retail sales in South Africa have been growing consistently for the past five years at a rate of between 30% and 35% and passed the R2-billion level last year.

Goldstuck said the growth in online retail sales was due to the rising numbers of South Africans using the internet for online shopping.

He noted that, though there were about 3.6million people using the internet, of a population of about 48million, only half were shopping online.

Most people visiting online retail sites appeared to be "window shopping" and, Goldstuck said, even the most successful online retailers got only between 10% and 15% of their visitors to make a purchase.

"We're focused on learning how to make product info and ranges available online so consumers are able to make a choice and decide how they would like to purchase - whether it's online with delivery, or in-store collection," Pattison said.