SA’s online retail has more than doubled in two years – but the best is probably over

Business Insider SA
online retail South Africa
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  • The value of South Africa’s online retail has more than doubled in two years, says a new study.
  • In 2018, online stores sold R14 billion worth of goods, representing just 1.4% of the total retail market.
  • This grew to more than R30 billion in 2020, spurred by coronavirus-induced lockdowns which kept people indoors.
  • While the growth rate is expected to be more subdued in 2021, online retail is still expected to top R40 billion and account for 4% of all retail in South Africa.
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South African e-commerce grew by 66% in 2020, outpacing earlier estimates thanks to coronavirus-induced lockdowns and a decline in brick-and-mortar retail sales. Although the latest burst has doubled the industry’s turnover in just two years, post-pandemic growth rates are expected to be more subdued.

While many sectors of the economy were crippled by varying degrees of lockdown in 2020, online retailers experienced a boom in sales as South Africans avoided shopping malls and stores in favour of home deliveries. Online sales topped R30.2 billion, 50% higher than totals forecast according to a study by World Wide Worx.

“The most astonishing aspect of this total is that it is more than double the R14.1-billion reached in 2018, in just two years,” said World Wide Worx MD Arthur Goldstruck. In 2018, e-when brought in that R14.1 billion, it accounted for just 1.4% of all retail in South Africa.

The losses incurred by traditional retailers, which recorded consecutive lows for nine months in 2020, correlate with gains made by South African online retailers, which doubled their combined market share to 2.8%. South Africa’s largest online retailer, Takealot, grew its revenue by 41% to more than R3.3 billion.

This growth was predicated by Mastercard’s 2020 study on consumer spending, which found that 68% of South Africans were spending more time shopping online than prior to the pandemic. Apart from data and airtime – which remain the most bought items online – more than half of all South Africans surveyed by Mastercard reported buying more clothing and groceries through e-commerce platforms in 2020.

And while the e-commerce industry is still expected to continue its upward trajectory, tipping R42 billion in sales in 2021 and increasing its total retail market share to around 4%, the coronavirus-induced boom is unlikely to be repeated.

“While equivalent growth cannot be expected for 2021, it can be stated fairly confidently that it will exceed the 30% growth of 2019, when expansion was organic and a factor of the evolution of shopping habits and retail strategies,” said Goldstuck.

This sentiment was echoed by OneDayOnly, which released its ODOmeter index in April. The online retailer, which surveyed more than 9,000 active and infrequent online shoppers, found a 4% drop in young customers since November. The survey also found that only 33% of respondents still shopped online as frequently as they did during lockdown, with the majority of consumers (66%) splitting their purchases between e-commerce platforms and brick-and-mortar stores.

(Compiled by Luke Daniel)

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