Online shopping on the rise: Price, convenience, security key

According to the latest MasterCard Worldwide Online Shopping Survey, online shopping has increased significantly and continues to show potential for growth, with price, convenience and security key factors to consider making a purchasing decision.

The survey revealed that even in an emerging market like South Africa shopping online has steadily increased over the past two years, with 58% of respondents in a survey of active internet users saying that they use the internet for shopping. This is an increase from the 53% that said that they shop online in 2010, and the 44% that gave the same answer in 2009.

When choosing an online retailer from where to make their purchases, the majority of respondents cited lower prices (91%), payment convenience (90%) and secure payment facilities (90%) as their main motivators for doing so. They also said that websites should have a good reputation, be user-friendly, and that the online retail provider of choice should offer low or no extra charges for delivery.

“The numbers speak for themselves,” says Anna Jones, General Manager, South Africa, MasterCard Worldwide. “The latest MasterCard survey found that among those shopping online, a majority 89% of respondents are satisfied with their overall online shopping experience, with 73% likely to make a purchase in the next six months. While these responses have remained static since last year, they show that the level of satisfaction has remained consistent as the number of online shoppers has grown.”

The survey, which serves as a benchmark that measures consumers’ propensity to shop online, was conducted across 25 markets between 5 December 2011 and 6 January 2012. The South African report surveyed banked consumers who access the internet at least once a week. They were asked questions about their online shopping habits.

People who shop online do so because they find it convenient and easy, and that the wide range of goods available is appealing. They also look to online portals to research purchases they are planning on making with 78% of online shoppers saying that they look at online reviews before they purchase, while 73% said that they investigate online reviews of the retailer themselves before making a purchase. In a show of confidence for the online retail environment, 74% of respondents said that they would return to an online retailer from which they had already made a purchase.

Among the most popular purchases made online were products and services related to coupon/deal sites, online gaming, applications, music downloads and tickets to arts or music events.

95% percent of respondents mentioned that they had visited deal or coupon websites, which have made a noisy entrance onto the local online environment since the last survey was conducted. 25% of visits to these sites ended in the purchase of a deal.

The research also revealed increases in the number of people who are shopping online (versus offline) for travel purposes: 87% of respondents (up 10% from 2010) have made purchases from airlines and 71% (up 9% from 2010) have made hotel bookings online in the last three months.

On the opposite side of the coin, South Africans revealed that they prefer not to shop online for their groceries, with only 9% making this their first choice to avoid the chore of grocery shopping. This is a decrease to the previous survey’s result of 27%, showing a 18% decline.

When it comes to paying for online purchases, the majority of respondents (84%) use payment cards or EFTs or a combination thereof. Encouragingly, security is less of an issue than it has been in the past years with 38% of respondents saying that they are not convinced that the medium is safe. This is down from 47% in the last survey, which itself was a drop from the 59% of the 2009 results.

Introducing MasterCard Mobile
To provide even greater access, convenience and security for online shoppers, MasterCard, in collaboration with local mobile-centric payments and financial services company – Oltio – have introduced MasterCard Mobile to the South African market.

MasterCard Mobile is a payment platform that will enable MasterCard and Maestro cardholders to use their PIN-based debit, cheque or credit cards issued by Absa, Nedbank and Standard Bank, and a mobile phone on the MTN or Vodacom network to pay for online purchases. A key feature of MasterCard Mobile is that it enables these Maestro cardholders to make secure online purchases for the first time, which in the past has not been the case. In addition, the relevant debit and credit cardholders will also be able to use the payment platform.

To make an online payment, a cardholder can select to use the MasterCard Mobile payment option on participating e-commerce sites – similarly to how they would select to pay by credit card, debit card or EFT. For first-time users of the system, the user will be securely prompted to register their payment card of choice where they will enter their PIN-based debit or credit card or Maestro debit card number, the expiry date of the card and CVC number. They will also be required to enter their mobile phone number. Once this is done, the cardholder’s mobile phone number is used to initiate subsequent payments. Authorisation of payments is done by entering the cardholder’s PIN on their mobile phone.

“MasterCard Mobile is currently being piloted and we are looking to roll-out the platform to most e-commerce sites in South Africa in the near future. In addition, MasterCard Mobile is currently used by MTN for air time purchases,” adds Terry Timson, CEO of Oltio.

Although the functionality is currently not available in South Africa, MasterCard Mobile can also enable person-to-person payments and be used at traditional/brick-and-mortar merchants that are MasterCard Mobile-enabled.