The online retail sector in South Africa surpassed 6% of total retail sales in 2023, with a total turnover of R71 billion.
This growth, fuelled by local e-tailers' focus on improving customer experiences, means the sector is poised to cross the R100 billion threshold by 2026.
A report conducted by World Wide Worx, in collaboration with Mastercard, Peach Payments, and Ask Afrika, pointed to a 29% increase in online sales in 2023 compared to 2022 and follows a 35% rise the previous year.
Arthur Goldstuck, MD of World Wide Worx, attributed this growth to competitive e-commerce strategies, shifting consumer habits, and streamlined payment processing.
Improved customer interaction, leveraging advanced AI tools, has transformed the shopping experience.
“Physical retail has been stagnant for many years in South Africa, and now it’s completely flat – as online retail reaches 6.15% of total retail,” Goldstuck said.
“Whereas the boom in sales two years ago could be attributable to what was termed the ‘pandemic dividend’, brought about by a massive demand for home deliveries beginning in 2020, the ongoing rise is driven by competitive e-commerce strategies from most major physical retailers, existing e-shoppers moving more off their traditional shopping to the online space, and credit card payment processing becoming more streamlined.”
Retail giants including Shoprite Checkers, Pick n Pay, and Woolworths have seen substantial increases in online sales.
Checkers Sixty60 recorded a 63.1% increase in the latter half of 2023, Pick n Pay was up 76%, while Woolworths reported a 47% boost. In contrast, Takealot, the nation's largest online retailer, saw a modest 6% growth in sales.
Goldstuck predicts that online retail will constitute 10% of total retail by 2025 in South Africa, marking a critical stage that demands increased investment and innovation.
Andrea Rademeyer, founder and CEO of Ask Afrika, highlighted a notable shift in consumer behaviour based on data from the company’s Target Group Index (TGI) survey.
“As South Africans move more of their spending online, they also become more confident in the medium, and increase their individual levels of spending.
“Most significantly, they are becoming more aware of the increased convenience and choice available online,” she said.
The industry faces challenges such as payment failures and customer service issues, but the potential for growth is underscored by consumer confidence and increased spending in the online space.
With the arrival of Amazon in the South African market, the e-commerce landscape is likely to face further disruption, challenging both local and global players to adapt and innovate.
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