eBucks shows optimism for South African e-tailing

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By: Wise Marketer Staff |

Posted on February 16, 2006

eBucks shows optimism for South African e-tailing

The drop in South African online spending growth recently reported by World Wide Worx could be of concern to those operating in the country's cyber space, although Lezanne Human, CEO for the eBucks multi-partner loyalty programme, believes that the online future in South Africa is still bright.

According to Human, "In December 2005, eBucks experienced its best month ever, with R17.3 million (approx. US$2.8 million) worth of eBucks spent by members. November wasn't far behind that with R15.5 million. Our total spend in 2005 increased by 47% from 2004 while our membership base grew by 19%."

Since launching in October 2000, eBucks has grown quickly. In 2005, the programme completed the introduction of a number of initiatives, including the launch of eBucks for Business and a competition for trip into space. To date, over R500 million worth of eBucks have been given out by partner companies.

Confident The eBucks coalition loyalty model is based on partner companies allocating free eBucks to their customers to reward them for their loyalty. Members then redeem eBucks for a range of products and services. Human explained: "While our figures incorporate the eBucks card spend, the majority of our activity is still from our website. And our statistics tell us that eBucks' members are embracing the online environment. We expect this trend to continue, provided that we continue to be secure, relevant, innovative and ultimately provide users with a rewarding experience they won't find elsewhere."

Room for growth In 2005, South African online shoppers spent a total of R514 million online (compared to R428 million in 2004), according to World Wide Worx. However, there are estimated to be 3.6 million internet users in South Africa (out of a population of around 48 million). Compared to the USA, which has 203.8 million internet users (out of 299 million people) who spent US$30 billion in November and December 2005, South Africa still has significant room for near-term growth in online spend.

But The Wise Marketer observes that the internet infrastructure in South Africa is still in its infancy, and is both unreliable and slow in many areas; this factor alone could potentially hold back widespread consumer adoption of e-commerce until the problems of speed, reliability, and bandwidth limitations are solved.

Internet development Indeed, the large online spend in the USA is usually attributed to the spread of unrestricted broadband internet access. eMarketer reported that, in 2005, 60% of internet users in the USA went online with a high-speed connection, and estimated that this figure would grow to 83% by 2008. In South Africa the reported numbers of broadband users currently vary from 40,000 to 147,000, but even the biggest estimate is less than 1% of the country's online market. This situation is expected to improve significantly over the next five years, making South Africa an e-commerce market to watch until 2010.

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