SA’s online retail more than doubles in two years
SOUTH Africa’s online retail has more than doubled in only two years, which could be attributed to the explosion in demand for home deliveries as a result of the Covid-19 pandemic, a new study released yesterday found.
“Online Retail in South Africa 2021”, a study conducted by World Wide Worx, with the support of Mastercard, Standard Bank and Platinum Seed, found that the total growth of online retail in South Africa reached 66 percent last year and brought the total online retail sales in South Africa to R30.2 billion.
World Wide Worx managing director Arthur Goldstuck, the principal analyst on the research project, said the most astonishing aspect of this total was that it was more than double the R14.1bn reached in 2018 within two years.
“It is also 50 percent higher than the total forecast for 2020 three years ago, when online retail in South Africa was expected to reach R20bn by 2020,” said Goldstuck.
This figure was put in context when compared to traditional retail. In 2018, the R14.1bn in online retail represented 1.4 percent of total retail, which at the time was estimated at R1.07 trillion.
Online had outpaced traditional retail growth over the past 20 years, because it came off a low base, but traditional retail still grew every year until 2019. Last year, it slumped as a result of the lockdown and the economic pressures on consumers.
Preliminary data from Statistics SA showed that, at current prices, total retail fell by 4.2 percent to R1.05 trillion. The percentage of retail made up by online retail sales came to 2.8 percent, twice the percentage for 2018.
Goldstuck said although equivalent growth could not be expected this year, it could be stated with confidence that it would exceed the 30 percent growth seen in 2019, when the expansion was organic and a factor of the evolution of shopping habits and retail strategies.
He said these factors remained in place, along with the massive boost given to both areas of evolution since the pandemic began.
“This means we can expect to see total online retail sales of around R42bn in 2021, taking the online percentage of total retail to around 4 percent, assuming traditional retail returns to its previous growth path.”
The findings were not seen as a surprise, because in November last year Mastercard released the findings of a survey of 1 000 South African consumers, which found that 68 percent of respondents had tended to shop online since the pandemic struck.
The categories experiencing the highest growth, aside from data and airtime top-ups, were clothing at 56 percent and groceries at 54 percent.
More than two-thirds (68 percent) of these consumers said they used the time during the pandemic as a positive learning experience, while the demand for online entertainment also surged, with 52 percent of respondents saying they had spent more money on virtual experiences than they did before the pandemic.
The majority of respondents had participated in video calls for work or leisure (88 percent), three-quarters (75 percent) had watched TV or films through an online subscription service, and nearly half (47 percent) had taken part in a virtual cooking class.
Mastercard South Africa country manager Suzanne Morel said this trend appeared to be here to stay, because 71 percent of respondents said they would continue to shop online after the pandemic.
Standard Bank’s South Africa head of digital, e-commerce and voice, Andrew van der Hoven, said the firm had noted that its customers’ online transactions had peaked at 30 percent but had not yet reduced to the 17 percent of 2019. He said they were 24 percent last year.