Is mobile driving a South African ecommerce explosion?

South Africa’s ecommerce space is set to see a mobile explosion this year, with mobile being responsible for a massive part of that growth.

That’s according to research released on Wednesday by PayPal, which suggests that online shopping in South Africa is expected to reach R37-billion this year.

While that’s significantly more than the R28.8-billion which was spent online in 2015, the number is expected rise even higher — to R46-billion in 2017.

By that stage, the research suggests, mobile will account for around R19-billion of overall online shopping.

“There is no doubt that the rapid penetration of smartphones in South Africa will continue to be the driving force of online shopping in the upcoming years,” says PayPal’s regional director for Africa and Israel, Efi Dahan. “I believe that the smartphone shopping experience will continue to evolve as consumers feel greater comfort and security.”

According to the research, 57% of South Africans internet users (age +18) have shopped online in the past 12 months. While South Africa’s online shopping trend is dominated by local purchases, with 59% of online shoppers only shopping domestically, some 37% say they shop online both domestically and cross border, and a further 5% only shop cross-border.

“Though international shopping is still less popular locally, with the growing variety of products, larger range of prices, improved shipping options and increasing confidence in ecommerce, we believe that South African consumers will continue to purchase online, regardless of physical borders,” says Dahan. “Our aim as PayPal is to make it faster, easier and safer for people to shop online than ever before.”

It’s all about the money

Among those who do shop internationally, price is often cited as the most important factor. In fact, 82% of cross-border online shoppers who have made purchases from websites in China are motivated by price — while the top reason for purchases from the US and UK is access to goods not available in South Africa. This was the second top reason for purchases from websites in China, followed by more affordable shipping costs.

North America is the most popular region for cross-border purchases, with 27% of South African online shoppers having made a purchase there in the past 12 months, closely followed by Europe at 20% and Asia at 19%.

“The research numbers above strongly demonstrate that South African consumers are becoming more avid shoppers, motivated by prices, variety and access to goods.,” says Dahan.

#ShippingFeesMustFall

According to PayPal, cost is both a motivation and a deterrent for online shoppers. The online payments service says that 50% of online shoppers who do not currently shop cross-border claimed delivery shipping costs as the top barrier for starting to shop from websites in other countries. Additional barriers include concerns about not receiving the item purchased (49%) and concerns about fraud (47%).

When it comes to what online shoppers considered would make them more likely to buy from a website in another country, the figures for South Africa are similar to those globally. The number one driver is free shipping (selected by 53% of south African online shoppers vs 50% among the global online shoppers surveyed), followed by a safer way to pay at (52% vs 47% among the global online shoppers surveyed)

“We can see two groups of drivers – delivery related drivers such as free shipping, and security-related drivers such as a safer way to pay,” says Dahan.

For South Africans, the most popular online payment method for cross border shopping is PayPal (68% of cross-border shoppers have used PayPal for online transactions / purchases from websites from another country in the past 12 months) followed by the main competitor, Visa Credit card with 37%.

What are we buying?

Taken as a whole, South Africans are most interested in buying digital and downloadable entertainment and education items, with 44% of cross-border shoppers having purchased these goods from websites in other countries in the last 12 months. They include e-books, applications, digital music, films and videos, online video games, software and media content.

While PayPal doesn’t break that category down further, it’s probably safe to say that apps and the increasing use of streaming media services have driven much of that spend.

The next most popular spend category is fashion, with South Africans also buying more items in this category from other countries than any other. Wrapping up the podium places is consumer electronics, which accounted for 30% of purchases in 2015. According to PayPal, that’s pretty much in line with global trends.