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Online Retail Brands Report SOUTH AFRICA

Author: Craig Kolb

Date: April 2013

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Contact details: Acentric Marketing Research CC

PO Box 10994

Centurion

0046

South Africa

Tel: 012 6838832

Web: www.acentric.co.za

Email: info@acentric.co.za

Copyright notice All information contained in this publication is copyrighted in the name of Acentric Marketing Research CC and Craig Kolb. All data provided is sourced from Acentric’s proprietary data, unless otherwise indicated. No part of this publication may be reproduced, altered, redistributed, resold in whole or in any part, or used in any form or by any means graphic, electronic or mechanical, including photocopying, recording, typing, or by information storage or retrieval, or by any other means, without the express written consent of the publisher.

Disclaimer Acentric Marketing Research CC makes no representation of warranty of any kind regarding the quality, accuracy or completeness of the information contained in this report. Acentric Marketing Research CC, its members, employees and partners accept no liability whatsoever for losses or damages - whether direct or consequential - resulting from errors, inaccuracies or omissions.

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Contents Contact details ...................................................................................................................................................................................................1

Copyright notice ................................................................................................................................................................................................1

Disclaimer ..........................................................................................................................................................................................................1

List of figures .....................................................................................................................................................................................................3

List of tables ......................................................................................................................................................................................................3

Executive summary............................................................................................................................................................................................5

Methodology .....................................................................................................................................................................................................6

Universe definition and sampling .................................................................................................................................................................6

Selection of brands for inclusion in the study ..............................................................................................................................................6

Rounding ......................................................................................................................................................................................................6

Demographics and weighting ............................................................................................................................................................................7

Adoption of online shopping .............................................................................................................................................................................8

Product category penetration .........................................................................................................................................................................10

Penetration potential by product category .....................................................................................................................................................11

Category purchase-occasion frequency ...........................................................................................................................................................12

Estimated market Size .....................................................................................................................................................................................13

Why a demand-side survey? ......................................................................................................................................................................13

Product category revenue share......................................................................................................................................................................14

Brand awareness, trial, penetration and purchase occasion frequency ..........................................................................................................15

Approximate retail-brand market share ..........................................................................................................................................................22

Illustrating the relationships between brand performance measures .............................................................................................................24

Drivers of store preference..............................................................................................................................................................................25

Need segments ................................................................................................................................................................................................28

Sources of retailer awareness ..........................................................................................................................................................................34

Extent of the correlation between social media and brand awareness ...........................................................................................................35

Access, payment mechanisms and online purchase drivers ............................................................................................................................35

Online-purchase drivers .............................................................................................................................................................................36

Christmas gift purchases ..................................................................................................................................................................................38

Brand positioning charts – relative ..................................................................................................................................................................40

Brand positioning charts - absolute .................................................................................................................................................................59

Strengths and weaknesses of each brand ........................................................................................................................................................78

Attribute differentiation ..................................................................................................................................................................................84

Substitute brands ............................................................................................................................................................................................85

Brand equity: ABM Score .................................................................................................................................................................................90

The sources of each brand’s equity – contribution charts ...............................................................................................................................91

Appendix: Retailer product grid ..................................................................................................................................................................... 139

Works Cited ................................................................................................................................................................................................... 140

Definitions ..................................................................................................................................................................................................... 141

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List of figures

Figure 1: Demographics ............................................................................................................................................................. 7

Figure 2: Consumers adopting online shopping per year - as a cumulative percentage of the online shopper base in 2012 .. 8

Figure 3: Online shopper penetration in the SA population - by household income per month (July 2011 to June 2012) ....... 9

Figure 4: Product category penetration – last 12 months ....................................................................................................... 11

Figure 5: Prompted brand awareness ..................................................................................................................................... 15

Figure 6: Purchase-occasion market share .............................................................................................................................. 22

Figure 7: Market share (monetary) ......................................................................................................................................... 23

Figure 8: Relationships between brand performance measures ............................................................................................. 24

Figure 9: Drivers by household-income bracket ...................................................................................................................... 26

Figure 10: Detailed list of the drivers of store choice .............................................................................................................. 27

Figure 11: Differences in needs between the two segments .................................................................................................. 28

Figure 12: Gender differences by need segment .................................................................................................................... 30

Figure 13: Home ownership patterns differ by need segment ................................................................................................ 30

Figure 14: Age differences by need segment .......................................................................................................................... 31

Figure 15: Differences in interests by need segment .............................................................................................................. 31

Figure 16: Household income differences by need segment .................................................................................................. 32

Figure 17: Ethnic group differences between need segments ................................................................................................ 32

Figure 18: Source of awareness differences between need segments ................................................................................... 33

Figure 19: Differences in device used between need segments ............................................................................................. 33

Figure 20: Source of retailer awareness .................................................................................................................................. 34

Figure 21: Assuming you wanted to buy a product, would you buy a product online if the same item was available at the

same price in a 'physical' shop nearby? .................................................................................................................................. 37

Figure 22: Have you ever bought something online from a foreign country? ......................................................................... 37

Figure 23: In relation to Christmas 2012/December holiday season 2012 - did you buy gifts online? ................................... 38

Figure 24: Gifts bought online specifically for the Christmas season ...................................................................................... 38

List of tables

Table 1: Category penetration in 2012 .................................................................................................................................... 10

Table 2: Average product purchase-occasion frequency per 12-month period ...................................................................... 12

Table 3: South African Online Retail Market size - 2012 ......................................................................................................... 13

Table 4: Product category revenue share ................................................................................................................................ 14

Table 5: Brand trial .................................................................................................................................................................. 16

Table 6: Brand penetration (the percentage buying once or more often in 2012) ................................................................. 18

Table 7: Purchase occasion frequency - 2012 ......................................................................................................................... 20

Table 8: Overview of the drivers of store choice ..................................................................................................................... 25

Table 9: How need segments differ in terms of spend ............................................................................................................ 29

Table 10: Correlation coefficients social media & brand awareness ....................................................................................... 35

Table 11: Device used to shop online most recently ............................................................................................................... 35

Table 12: Payment method used to purchase online most recently ....................................................................................... 36

Table 13: Why do you buy online instead of using a physical store? ...................................................................................... 36

Table 14: Brand proximity matrix ............................................................................................................................................ 85

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NOTE: The following sample pages only include a

small selection of the pages available in the full

report, and in no particular order. The report contains

over 140 pages.

To purchase please refer to the last page of this

sample report.

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Methodology

Universe definition and sampling

The online retail brand survey was conducted in January 2013 amongst those South Africans who

had made at least one online purchase in the product categories listed in the tables below. The

survey was conducted using an ISO 20252 certified panel managed by CINT AB Sweden and Acentric

Marketing Research.

The Respondents were incentivised to increase response rates.

A random sample of respondents was drawn from the panel and invited to participate. As is best

practice, post-weighting was applied to improve representation in terms of demographics. In this

case the demographics of those who had made at least one purchase online in the past 12 months

were used as a benchmark. The AMPS household survey was used to provide information on the

demographic profile of this group.

Screening questions were used in order to restrict the survey to online shoppers who had made at

least one purchase online in the preceding 12 months. Given empirical evidence suggesting that a

single general question regarding purchases in a market leads to less accurate results than asking

about individual elements (such as brands or the product segments), a multi-question approach was

used. Respondents were instead shown the full range of product categories to enhance recall and

were asked which categories they had ever purchased, and then were asked to indicate which – if

any - categories had been purchased in the previous 12 months. Those who had not purchased

anything in the listed categories were excluded.

In total 207 interviews were completed, providing a margin of error of 7% (95% confidence level) for

proportions.

Selection of brands for inclusion in the study

There are hundreds of online retailers in South Africa. Brands were included in the main survey on

the basis of: 1.) A small preliminary survey which was used to identify the retailers consumers were

spontaneously aware of and 2.) online research.

Brands above a threshold frequency were included (both local and international). Brands below the

threshold were sometimes included if there were indications they may have growth potential.

Additionally, some smaller brands were included at random to ensure some representation of these

brands. However the overriding aim was to ensure the inclusion of the large brands, who compose

the bulk of the market revenue.

In total 59 online retailers were included as a result. Please note Take 2 changed its name to

Takealot - however both names were included in the survey to avoid loss of information.

Please note: 1.) HMV is no longer operational. 2.) Certain sections of this report only include brands

that passed a threshold in the brand association exercise. As a result only 29 of the 59 brands

measured were included in the following sections: Brand positioning charts – relative, Brand

positioning charts - absolute, Strengths and weaknesses of each brand, Attribute differentiation,

Substitute brands.

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Brand equity: ABM Score The AcentricTM Brand Model (ABM) Score is a measure of what brand theorist Keller calls “consumer

based brand equity”. It is psychological in nature. In essence, the score combines each brand’s

awareness levels, positioning in the market and the value of the specific positioning to consumers. It

indicates the potential of the brand to penetrate the market and to gain market share against

competitors carrying similar product lines. It is highly correlated with online-retail brand penetration

such that 83% of the variation in penetration can be explained by the ABM Score.

The score can also be broken down to show to what extent each positioning attribute is currently

contributing to the ABM Score. This is shown in the section with the title ‘

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Brand positioning charts - absolute The charts below indicate differences between brands – in terms of the percentage of respondents

who associate each brand with the attribute shown. For instance, almost 60% of shoppers

associated Amazon with a ‘wide range of products’ in the chart below.

These charts are ideal for determining communication targets, as they indicate what percentage of

the population associates your brand with a specific attribute currently. Targets can then be set

based on where you wish to focus (for instance you may decide to focus on the attribute ‘trendy’).

You can then conduct follow-up surveys once your campaign completes (or you could track during

the campaign) to ensure your targets are met.

Improvements in response to an advertising campaign, can be modelled statistically in order to

predict changes based on the amount of advertising (typically expressed in terms of GRP).

One limitation of simply reporting the percentage of consumers who make a particular association

with your brand (i.e. absolute) is that they are not useful for assessing performance, since the

percentage is affected by both how many are aware of the brand, and how top of mind the attribute

is. In order to assess brand performance - see ‘Brand positioning charts - relative’.

0%

10%

20%

30%

40%

50%

60%

CumMweb mall

The Online PC Store

Laptop.co.za

Playstation

Buy247

Herbalife

Take 2

Loot

Arcadia

Interflora

Dion

Netflorist

Barnes & NobleVerimark CNA online

Checkers online

Takealot

Homechoice

Makro

Pick n Pay online

Zando

Olx.com

Gumtree

Woolworths online

eBay

Kalahari

Bid or BuyAmazon

Wide range of products

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Brand positioning charts – relative The following charts are ‘relative’, as they indicate the percentage of shoppers associating each

brand with an attribute, relative to an expected percentage. The results are standardised in such a

way that differences due to brand and attribute awareness have been eliminated. This allows brands

to be compared on the same footing, in terms of the performance perceived by consumers.

Interpretation: For instance, even though Amazon scores highest in terms of the ‘absolute’ number of

consumers associating it with a ‘wide range of products’ - once Amazon’s extremely high awareness

is factored in, Amazon does not perform as well as Loot and Buy247.

-100%

-80%

-60%

-40%

-20%

0%

20%

40%

60%

80%

100%

CumMweb mall

The Online PC Store

Laptop.co.za

Playstation

Buy247

Herbalife

Take 2

Loot

Arcadia

Interflora

Dion

Netflorist

Barnes & NobleVerimarkCNA online

Checkers online

Takealot

Homechoice

Makro

Pick n Pay online

Zando

Olx.com

Gumtree

Woolworths online

eBay

Kalahari

Bid or BuyAmazon

Wide range of products

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The sources of each brand’s equity – contribution charts The following charts provide insight into the sources of each brand’s equity. In particular, what

percentage of the total brand equity (as measured by the ABM Score) is contributed by each

attribute. For instance in Amazon’s case, the attribute that contributes most to its brand equity is a

‘wide range of products’ (15% of Amazon’s ABM Index Score is from this attribute - in South Africa),

followed by the perception that Amazon offers ‘value for money’.

Note: The percentages sum to 100% on each chart (although this may not be apparent due to

rounding to the nearest whole percentage).

15%

9%

7%7%

5%5%

4%

2%3%

5%

3%

6%

3%

8%

3%3%

4%5%

3%

0%

2%

4%

6%

8%

10%

12%

14%

16%

18%

Amazon

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Substitute brands The following matrix (spread over a number of pages) indicates the proximity of each brand to every

other brand measured during the survey - in terms of positioning on the 19 attributes. Values range

from 0 to 1. Values of 1 would imply the brands are exactly the same in terms of positioning and

therefore are perfect substitutes (direct competitors). Values of 0 mean there is no pattern between

the brands in terms of positioning - and are therefore not likely to be direct competitors. Negative

values mean the brands tend to do the opposite and are even less likely competitors (e.g. if brand A

is ‘trendy’ brand B generally tends to be the opposite ‘not trendy’). The closer to -1, the more

opposite they tend to be.

In general, the brighter the red, the more substitutable. For instance ‘Gumtree’ and ‘Bid or Buy’ have

very similar positionings; while ‘Woolworths’ and ‘Bid or Buy’ are almost exact opposites.

Table 1: Brand proximity matrix

Proximity Matrix Amazon Arcadia

Barnes & Noble

Bid or Buy Buy247

Checkers online

Amazon .477 .444 .175 .249 -.412

Arcadia .477 .406 .045 -.257 -.210

Barnes & Noble .444 .406 -.399 .014 -.525

Bid or Buy .175 .045 -.399 .448 -.038

Buy247 .249 -.257 .014 .448 -.175

Checkers online -.412 -.210 -.525 -.038 -.175

CNA online -.188 .420 .212 -.465 -.377 .161

Cum -.203 -.117 -.124 -.265 .116 .328

Dion -.094 .124 .647 -.641 -.304 -.169

eBay .774 .283 .170 .541 .299 -.291

Gumtree .230 -.061 -.461 .865 .334 .129

Herbalife -.304 -.253 .150 -.421 .079 -.029

Homechoice .302 .230 .862 -.221 .088 -.635

Interflora -.299 -.007 .217 -.625 -.262 -.069

Kalahari -.408 -.035 -.568 .116 -.072 .150

Laptop-.co.za -.120 .251 .484 -.116 .038 -.214

Loot -.033 .006 -.252 .059 -.010 .468

Makro -.276 .050 -.466 -.196 -.283 .377

Mweb mall -.190 -.115 .303 -.588 -.275 -.098

Net-florist -.462 -.182 -.066 -.653 -.362 .243

Olx.com .071 -.360 -.437 .622 .340 .330

Pick n Pay online -.547 -.092 -.533 -.330 -.435 .580

Playstat-ion -.126 -.179 .385 -.620 -.185 -.034

Take 2 .011 .102 .006 -.483 -.630 -.052

Takealot -.356 -.185 -.679 .085 -.163 .612

The Online PC Store -.255 .187 .135 .126 .167 -.302

Verimark -.213 .144 .271 -.263 -.298 -.316

Woolworths online -.307 -.157 .411 -.911 -.427 -.061

Zando -.265 -.610 .117 -.321 .094 -.377

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Product categories included in the full report:

Airline tickets

Apps or ringtones

Audio entertainment devices (e.g. iPod, Hi-Fi)

Books (paper)

Books (electronic - i.e. eBooks)

Camping/hiking products

Car purchase

Car rental

Cell phones/smartphones

Clothing/shoes/fashion accessories

CDs

Computer - PC/laptop

Computer peripheral

Cosmetics

DVDs

Electronic goods not listed elsewhere

Entertainment (e.g. tickets to shows, DVD rentals)

E-reader (e.g. Kindle)

Flowers/flower accessories

Furniture - indoors and garden furniture

Groceries

Homeware (excl. kitchen)

Hotels/vacation packages

Kitchenware

Software for a laptop/PC

Sporting goods

Tablet (e.g. iPad)

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TV or projector

Other

Brands included in the full report - in total 59 brands were measured:

Align247

Amazon

Arcadia

Barnes & Noble

Bfore

Bid or Buy

Bigvalue Depot

Boots

BrainBug

Buy247

CaCELL.co.za

Cafepress

Checkers online

CNA online

Crown Imports

Cum

EASi

Etsy

Excellular

Galoot

Gumtree

Herbalife

HMV.co.uk

Homechoice

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iGear

Interflora

Kalahari

Laptop.co.za

Lokisa

Loot

Lulu

Dion

eBay

eShopper

Olx.com

O2 Store

Makro

Mweb mall

Netflorist

Nivo interactive shopping

Perkal

Pick n Pay online

Playstation

Richmart

Rocket Shop

Sainsbury

Sammy Dress

SFI Market.

Shopdirect

Simplicity online

Sybaritic

Take 2

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Takealot

The Online PC Store

Think Geek

Verimark

Woolworths online

Zando

Zazzy

*Brands in bold receive additional detailed analysis, and are included in the following sections listed in the table of

contents: Brand positioning charts - relative, Brand positioning charts - absolute, Strengths and weaknesses of each brand,

Attribute differentiation, Substitute brands. The brands not in bold are excluded from these sections - however they do

receive coverage in all the other sections.

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