Has group buying given e-commerce a boost?

Research conducted during 2011 has revealed a significant upturn in e-commerce in South Africa over the last year. It’s been suggested that the recent explosion of group-buying sites, and the success of companies like Groupon, may be at least partially responsible for this growth spike.

SA e-commerce by the numbers

The MasterCard Worldwide Survey 2011 revealed that 50% of South Africans with access to the internet are now making purchases online.

Research from World Wide Worx shows that online spending in 2011 accounted for 0.36% of South Africa's total retail market, up from 0.13% in 2010. According to World Wide Worx, South Africans spent about R2.6 billion online in 2011 - a 30% increase on the figures from 2010.

Another interesting statistic is this: 87% of Kalahari.com's customers indicated that they would be doing their Christmas shopping online in 2011. In early December, the company predicted a 30% increase in sales over the holiday period compared to the previous year.

The effect of group-buying sites

"E-commerce in South Africa is in an early-stage growth phase, and the emergence of group-buying sites like Groupon is definitely helping," says Jonathan Smit, CEO of payment processing company Payfast. "It's a relatively low-cost way for people to test out buying online."

By February 2011, there were already more than 40 group-buying sites and aggregators serving the South African market. Although such oversaturation of the market was never sustainable, all the bargains on offer certainly seemed to attract people's attention - and their credit cards.

"We had a large number of group-buying sites sign up with us. Some of them have now closed down and their customers have probably moved to the winners, like Groupon, UbuntuDeal and CityMob," says Jonathan. "Group buying was an ideal first entry into the online market, and those new customers may be more comfortable making purchases in the future."

This should come as good news to anyone involved in e-commerce in South Africa.