South Africa’s eCommerce sector is rapidly growing now more than it has ever before. In 2020, South Africa eCommerce grew by 66% compared to the year before.
This increase was primarily influenced by the restrictions placed on traditional retail stores that led to the reduction of in-store shopping by 30%. 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 favor of home deliveries. According to Stats SA, the market share of online retail in South Africa grew to 2.8% in 2020, double the percentage in 2018.
While COVID-19 had a role to play, this surge is expected to grow. Much like how the pandemic changed research for the long term, more South Africans got acquainted with shopping online, experienced the convenience of shopping online and may be shopping online more going forward.
According to a Deloitte study, more than 70% of South Africans are shopping online at least once a month. Most cited convenience, COVID-19, and saving time in that order as their reasons for increased online shopping. In tandem with global online shopping preferences, the report also shows clothing, electronics, footwear, household appliances and health products as the most popular categories among South African online shoppers.
The role of the Mobile Phone
Another factor that has increased the growth of eCommerce in South Africa is the fact that people are becoming more ‘digitally savvy,’ and technology, especially the mobile phone, is slowly taking part of their lives. The majority of people who go online mainly do so using their mobile phones. Cell phones have primarily replaced wallets, as banks, card operators, retailers and communications companies provide alternatives to cash as a means of payment.
A GeoPoll study in February 2020 showed that 45% of South Africans browse the internet on their mobile phones for more than four hours every day. The mobile phone is so integral that over 70% of South Africans access the internet only through the mobile phone.
Due to this reason, the US International Trade Administration advises companies to include mobile optimization in their e-commerce offerings to increase the buying experience.
Is Online Retail the Future in South Africa?
E-Commerce is growing at unprecedented rates in South Africa. Some of this growth has undoubtedly been fueled by the coronavirus pandemic, and while it remains to be seen if the demand will hold up, the expectation is that culture is shifting for the long term.
The increased appetite of South Africans for online shopping has not gone unnoticed by retailers as they seek to offer customers greater freedom and more options to transact. More and more businesses, both small businesses and established retail giants are following the demand and are establishing e-commerce as an essential sales channel.
Also, the rise and rise of mobile and internet penetration is laying the foundation of more day-to-day activities, including shopping, going digital.
For this digital revolution to be completed, however, the players in the market need to innovate and invest in overcoming the challenges that belabor the e-commerce sector in South Africa. Data costs remain incredibly high, residential addressing system is not well defined, and access infrastructure such as internal road and rail system is not up to par. Insecurity also remains high, and many South Africans still have trust issues with shopping and paying remotely.
Once these challenges are met, e-commerce in South Africa should be able to break the ceiling and achieve the immense opportunity it holds.
Track e-Commerce and other Retail Metrics with GeoPoll
Retail, in all forms, is highly reliant on data to make actionable decisions and business moves. GeoPoll has worked with major retail players in South Africa and worldwide to collect on-the-ground, actionable insights to drive sales, customer satisfaction, audience measurement, the success of marketing campaigns and other key performance indicators. If you would like to learn more about GeoPoll Consumer Research, please contact us here.