Tag: GfK

Online shopping grows in SA

By Joseph Booysen for Business Report

Although traditional retail stores dominate the South African market, consumers are choosing the online option for cheaper technical goods purchases.

According to the latest research report by GfK (Growth from Knowledge), South Africa, E-commerce 360:Navigating the Technical Goods E-Commerce Market in South Africa, e-commerce retailers grew their share of the South African technical consumer goods market by 52 percent last year, accounting for 6.9 percent of total consumer spending by rand value for the year.

This meant they had nearly doubled their share of the market since since 2015.

Cherelle Laubscher, a senior retail manager at GfK South Africa said e-commerce in South Africa was still in its infancy compared to European markets, where a quarter of technical goods spending goes through digital channels.

“However, growth in South Africa is strong and shows no signs of declining as bargain-seeker flock online to buy technical consumer goods like smartphones, IT, consumer electronics, and major home appliances,” said Laubscher.

She said although traditional stores dominated the market, they were not growing the value of the sales they generated in technical goods as quickly as the digital players and e-commerce retailers were seeing strong growth in smartphones, panel televisions, small domestic appliances, gaming consoles and laptops.

According to the report, survey respondents cited better prices, attractive promotions and wide product selections as major reasons for shopping online rather than at at a traditional store, while by contrast, experiential factors such as getting to see and feel goods motivated shoppers to go to physical stores.

GfK South Africa’s point of sale data showed that the consumer perception that e-commerce prices were lower than in-store prices was accurate. More than two-thirds of the top 100 sellers among technical goods products in South Africa were cheaper through digital stores that at physical retailers.

Across the top 100 products, online prices were an average of 4.7 percent cheaper.

Odette Jardim, a client solutions manager at GfK South Africa, said 45 percent of connected consumers in the survey claimed to increasingly use the internet to buy products online compared to the previous year (2016).

“However, a consumer journey often straddles both physical and digital channels, meaning that the most successful retailers should have an omnichannel strategy,” said Jardim.
Meanwhile, Kevin Tucker, PriceCheck chief executive, said although South African consumers might be lagging in the amount of online shopping they did compared to the US, for instance, with increased innovation and tech security, South Africa would continue to see growth.

“South Africa has seen a boom in cutting-edge e-commerce innovation, and this needs to be celebrated,” he said.

Tucker said although the e-commerce industry had grown by 25 percent in South Africa, only 1.5 percent of online consumers ended up making a purchase.

“Online spending in South Africa is expected to reach R53 billion by the end of 2018, up from R37.1bn in 2017, according to research conducted by PayPal. There is clearly huge untapped potential in this industry,” said Tucker.

Source: Media Update

According to GfK’s international ViewScape survey, which covers Africa (South Africa, Kenya and Nigeria) for the first time, 20% of South Africans who sign up for a subscription video on demand (SVOD) service such as Netflix or Showmax do so with the intention of cancelling their pay television subscription.

The study, which surveyed 1 250 people representative of urban South African adults with Internet access, shows that 90% of the country’s online adults today use at least one online video service, and that just over half are paying to view digital online content.

The study reveals that average user spends around seven hours and two minutes a day consuming video content, with broadcast television accounting for just 42% of the time South Africans spend in front of a screen.

Viewers in South Africa spend nearly as much of their daily viewing time – 39% of the total – watching free digital video sources such as YouTube and Facebook as they do on linear television.

The study also shows that people aged 18 to 24 years spend more than eight hours a day watching video content, as they tend to spend more time with free digital video than people above their age.

Benjamin Ballensiefen, managing director for sub-Saharan Africa at GfK, says, “The media industry is experiencing a revolution, as digital platforms transform viewers’ video consumption behaviour.”

“The GfK ViewScape study is one of the first to not only examine broadcast television consumption in Kenya, Nigeria and South Africa, but also to quantify how linear and online forms of content distribution fit together in the dynamic world of video consumption,” adds Ballensiefen.

The study finds that just over a third of South African adults are using streaming video on demand (SVOD) services, with only 16% of SVOD users subscribing to multiple services.

Around 23% use per-pay-view platforms such as DSTV Box Office, while about 10% download pirated content from the Internet. Around 82% still watch content on disc-based media.

“Linear and non-linear television both play significant roles in South Africa’s video landscape, though disruption from digital players poses a growing threat to the incumbents,” says Molemo Moahloli, general manager for media research and regional business development at GfK Sub Sahara Africa.

Moahloli concludes, “Among most demographics, usage of paid online content is incremental to consumption of linear television. However, there are signs that younger consumers are beginning to substitute SVOD for pay-television subscriptions.”

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