The growth of e-commerce in South Africa
Updated: Mar 4, 2021
For South African consumers, the shift from brick and mortar stores to e-commerce has been slow. However we have surpassed the tipping point. The rise in e-commerce is making steady progress with many traditional retailers all starting to take on a solid web presence.
Things are changing. According to Euromonitor international, online sales will grow almost 3 times as fast as in-store sales in the period 2018 – 2023. This is driven hugely by the rapid increase in smartphone usage. In order to turn around how retailers online shopping experience is seen and used by consumers, retailers will have to focus on their digital strategy, looking closely at secure technology that is safe and engaging.
Over a five year period, Euromonitor suggests that SA retail should grow at steady rates both in store and online, with online growth being much more rapid.
The current e-commerce landscape in south Africa
There are 5 categories that are considered the largest in SA with regards to e-commerce. Fashion is the largest segment and accounts for 29% of e-commerce revenue in the country. This is followed by toys, hobby & DIY with 27%, Electronics & Media with 20%, Furniture & Appliances with 16% and Food & Personal care with 8%.
The biggest player in e-commerce in SA is Takealot, followed by Woolworths, and Makro. One of the fastest growing stores in the SA market is The Fix with a 211% increase from 2019-2020.
Trends in Ecommerce in South Africa
E-commerce payment option trends
Research shows that South African online shoppers prefer paying cash on delivery (COD), or using credit cards. However, only about 13% of South Africa’s own a credit card. In order to stay competitive, e-commerce stores need a variety of secure payment options, like EFT, PayPal, Debit Card & COD. This ensures that online shopping remains available to all South Africans.
Online security concerns
Concerns about online security and privacy continue to grow and are one of the challenges to growth. To provide shoppers with the comfort they need, 2021 will see a focus on creating safe and secure online infrastructure and being transparent about the use of data.
Increase online ubiquity
The increase in social media retailing demands pervasive online brand presence where shoppers can engaging in a seamless experience with a brand and buy a [product directly from social media, in a contained and accessible environment like Instagram.
Leveraging machine learning
The next 5 years will see an increase in the capabilities of artificial intelligence and machine learning which will provide a much more personalized shopping experience for consumers By using data and search history, merchants can provide more personal experiences to serve the shoppers needs.
The inter relatedness of consumer demands and technology innovation, create one of the central themes of online retail in 2021. A symbiotic relationship between the two will be vital in ensuring growth.