Online shopping to exceed R50 billion by 2022

Online shopping in South Africa is set to exceed R50 billion by 2022, indicating that this remote way of shopping that took off during the pandemic lockdowns is not slowing down now that all the restrictions

Growth in online shopping was driven by demand for home deliveries, according to new World Wide Worx and Mastercard research findings published as Online Retail in South Africa 2022.

The study revealed that the total growth of online retail sales in South Africa by 2022 reached 35%, bringing the total online retail sales in South Africa to 55 billion rupees, after 40% growth in the previous year took the total to 42.3 billion rand in South Africa. In 2021, 4% of the total to 1.166 trillion rupees, marking a healthy growth from 2.8% recorded in 2020. In 2022, total retail trade is expected to reach 1.166 trillion rupees, and the sale of online retail represents 4.7% of the total. “

“You can call this the pandemic dividend,” says Arthur Goldstuck, MD of World Wide Worx. “The 2020 home delivery boom continued over the past two years as retailers aggressively compete in all areas of online shopping.”

Black Friday also boosted online sales, with all banks reporting massive increases in card and online spending in what has become one of the biggest shopping days of the year. Star performers included:

  • Checkers Sixty60, which grew turnover by 150% from July 2021 to July 2022
  • Mr Price, which reported that online retail sales rose 48.2% in the year to April 2022 and
  • Pick ‘n Pay, which reported in its annual results for the year to the end of February 2022 that online sales had seen compound annual growth of 72.5% over the previous two years.

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E-commerce is growing while retail is stagnating

The relentless rise of e-commerce is happening at the same time as overall retail is stagnating. According to Stats SA’s Retail Sales Statistical Release for January 2022, total retail trade for 2021 reached 1.166 trillion rupiah, up from 1.063 trillion rupiah in 2020, a healthy growth of 9.7 %, but after a 4.4% drop in 2020.

However, the data is less promising for 2022, with retail sales falling 0.6% in the year to September and falling 1.9% in the third quarter, the second quarter of the decline of retail trade. One of the biggest declines of 8.1% was seen in the food, beverage and tobacco category, but online retail sales benefited from a fundamental change in shopping behaviour.

“Since physical shopping was limited during the hard lockdown, we first saw an increase in consumers turning to online shopping. This helped them feel comfortable with this way of shopping. However, with the convenience of use we see emerging consumer needs and expectations that go beyond being able to shop online,” says Gabriel Swanepoel, Country Manager for Mastercard South Africa.

This means that online retail growth is coming from consumers changing their existing shopping behavior from brick-and-mortar stores to online stores and apps and not from increased demand.

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Consumer expectations are now also growing

“Based on our observation, consumers expect online retailers to offer fast delivery with apps, such as Uber Eats and Superbalist, offering same-day delivery. Additionally, there appears to be an expectation of higher levels of security before to buy from a particular online retailer.”

Swanepoel adds that consumers want an omnichannel shopping experience, which allows customers to pick up where they left off in one channel and continue the experience in another. “Consequently, consumer attitudes appear to have changed and we anticipate that with these changes we will see the evolution of online shopping and some interesting innovations from retailers responding to these changes.”

World Wide Worx’s findings are compiled using aggregate figures and projections from listed companies, interviews with unlisted online retailers and card transaction data.

“Total online retail sales comfortably exceeded our previous forecast of R52 billion by 2022,” says Goldstuck. “However, it will fall just short of the 5% mark, a milestone that was previously forecast for late 2022, but we are confident will be achieved in 2023.”

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