South Africa has experienced steady growth in its online retail space over the last few years. In 2021, the likes of takealot.com, superbalist.com and woolworths had spearheaded the online retail charge in the country, accounting for 15% of the top 100 online stores’ revenue in South Africa. In 2020, South Africa’s online retail market grew by 66%. This increase was primarily influenced by the restrictions placed on traditional retail stores that led to the reduction of in-store shopping by 30%. Since then, the space has not slowed down. Even Makro had to join the bandwagon.
According to recent research published today, the value of online shopping in South Africa surpassed the R50 billion mark in 2022, driven by a persistent surge in demand for home deliveries. According to a survey done by World Wide Worx and Mastercard, the total growth for online retail in South Africa in 2022 came to 35%, bringing the total to R55 billion.
The analysis found that Black Friday helped improve online sales, with all banks reporting sharp increases in card and online spending on what has grown to be one of the busiest shopping days of the year. It continues that outstanding achievers for the year included Checkers Sixty-Five, whose revenue increased by 150% from July 2021 to July 2022; Mr Price, which reported online retail sales up 48.2% for the year to April 2022; and Pick ‘n Pay, whose report had noted that online sales grew by 72.5% over the previous two years.
World Wide Worx MD Arthur Goldstuck, principal analyst on the research project speaking said: “One can call this the pandemic dividend. The 2020 boom in home deliveries has continued for the past two years, as retailers compete aggressively in every area of online shopping.”
More than 70% of South Africans shop online at least once per month, according to a Deloitte report. Most people listed convenience, COVID-19, and time savings as their top three motivations for doing more buying online. The most popular categories among South African internet consumers are apparel, electronics, footwear, home appliances, and health products, which aligns with global online buying preferences.
The aanlyn (online) lifestyle popular in South Africa depends on the country’s population becoming increasingly technologically aware, especially as the mobile phone steadily becomes more and more integrated into daily life. According to a GeoPoll poll from February 2020, 45% of South Africans use their mobile phones to explore the internet for longer than four hours each day. The mobile phone is so integral that over 70% of South Africans access the internet only through the mobile phone. Mobiles phones simply facilitate the luxury shoppers once thought they couldn’t afford.
Retailers in South Africa are currently aiming to give clients more luxury, flexibility, and purchasing options. E-commerce is becoming a crucial sales channel for an increasing number of companies, including startups and well-established retail giants.
The Amazon Tension
Amazon announced it will be expanding to Nigeria and South Africa by April 2023. Amazon’s African expansion creates a sense of increased degree of freedom for South Africa’s shoppers as it offers another credible online retail option. However, this is probably creating a tension among the big online retailers in South Africa. Although, the Competition Commission claims it is doubtful that it can unseat current leaders like Takealot.
Expanding Amazon to Nigeria and South Africa will help deepen e-commerce in the region. This is because Africa’s growing population needs more. If you think South Africa’s online retail market is attractive now, wait till you see what happens upon the Amazon’s launch. Shoppers can sit this one out and online enjoy the gains that will accrue as a result of the competition between retail giants in the country. Moreover, eCommerce is still 2-5% of total retail in Africa, so an extra player with great service delivery will be a welcome addition.
The R42.3 billion in online sales in 2021 represented 4% of the R1.166 trillion in retail sales, a considerable increase from the 2.8% seen in 2020. Online shopping will account for 4.7% of all retail in 2022.