Going online

SA’s eCommerce Industry Is Now Twice Its 2018 Value

By  |  May 18, 2021

In the wake of attention towards African eCommerce, the continent’s “most industrialized economy” flexes bullishness.

In 2018, online stores accounted for only 4 percent of retail sales. Now, though, they sit over twice more, while traditional retailers feel the crunch.

Outpacing predictions

South Africa remains one of the handful of world countries still battling a hard-hitting pandemic. The country, as of now, is bracing for another wave of COVID-19, the third since early 2020 when the health global health crisis began.

The nation endured one of the world’s strictest lockdowns, triggering a doubler for the value of online sales in 2020. According to a study by World Wide Worx, SA’s eCommerce market grew by 60 percent in 2020. The figure outpaces previous estimates evoked by the grim looks of COVID-19.

The output for 2020 is also more than double of the value of South African eCommerce in 2018—when annual sales were worth ZAR 14.1 Bn (≈USD 1 Bn). This has led to a decline in brick-and-mortar retail sales in the country with the highest concentration of malls in Africa.

A 2020 MasterCard study revealed that 68 percent of South African consumers shopped more online since the emergence of the coronavirus pandemic.

According to the study, the same percentage of consumers reckoned that they used most of their stay-at-home time to move their activities online—from banking services to cooking tutorials.

Additionally, over half of the survey’s South African respondents admitted to buying more clothing and groceries in 2020.

It appears mall-loving South Africa is gradually shifting to online commerce. Nevertheless, while eCommerce is expected to continue its upward trajectory to tip ZAR 42 Bn (≈USD 2.9 Bn) in sales this year, the coronavirus-regulated boom may never repeat itself.

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

African commerce nearly reached undermining point, as a result of the struggles of the first company to attempt cracking the market. Nevertheless, since the apparent turnaround of things for JUMIA, Africa’s first tech unicorn, online retail seems to have finally reached the surface.

The rendezvous point?

As foolproof of the South African eCommerce explosion, Takealot—a decade-old local eCommerce platform—realized 41 percent more revenue in 2020 than it did the year prior.

The venture, which is now part of Naspers—the largest company in Africa by market—grossed ZAR 3.7 Bn (USD 238 Mn) in the 6 months than ended September 2019.

After almost forever of giving Africa the go-by, Amazon, the world’s largest eCommerce firm—is finally setting up shop in the continent.

It’s base? 70,000 square metres (17.3 acres) of land on the outskirts of the city centre of Cape Town, a port city in the southwestern coast of South Africa. The retail multinational has set aside USD 200 Mn for this African expansion.

South Africa’s eCommerce market snailed initially, thanks to the consumers’ love for their exotic malls and formal retail outlets.

Platforms like JUMIA and Takealot existed, and even Amazon has been in Cape Town since 2005. But South Africans wouldn’t just betray their malls. In the rankings, the country is among the world leaders in malls per capita, as well as the most formalized retail market in Africa.

Online stores doubled their cumulative market share to 2.8 percent, while the traditional retailers recorded consecutive lows for the 9 months in 2020. As the eTailers make moves and amass revenues, brick-and-mortar competitors are doubling down to capture some of that online market share.

A vivid example is Massmart, the firm which operates the physical and online outlets for the Game, Builders, and Makro brands in South Africa and 12 other African countries. Per the company’s statement, the online sales for three retail brands under its wing rose by 77.5 percent, 111 percent, and 40.2 percent in 2020, respectively.

Other brick-and-mortar retailers like Woolworths, ShopRite, and Pick N Pay, are rolling out not just online platforms, but also same-day delivery services.

For example, Pick N Pay acquired Bottles—an online liquor delivery service—and remodelled it into a same-day grocery delivery service supplying from 95 stores.

While the general African eCommerce potential is definitely colossal, the billion-dollar frenzy’s cradle is likely South Africa.

Image Courtesy: freepik.

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