E-commerce reaches tipping point, but physical remains strong

Sibahle Malinga
By Sibahle Malinga, ITWeb senior news journalist.
Johannesburg, 12 May 2021
World Wide Worx MD and principal research analyst Arthur Goldstuck.
World Wide Worx MD and principal research analyst Arthur Goldstuck.

SA’s e-commerce sales reached a tipping point in 2020, growing by 66% from 2018, bringing the total online retail revenue to R30.2 billion, according to new research findings by World Wide Worx.

The study, Online Retail in South Africa 2021, was conducted by independent technology market research firm World Wide Worx, with the support of Mastercard, Standard Bank and Platinum Seed.

It reveals online retail sales in SA more than doubled from 2018, as a result of the explosion in consumer demand for online shopping and home deliveries, brought about by the COVID-19 pandemic in 2020.

The study is being released in three phases, with the first focused on overall market size and online consumer demographics. It is based on data drawn from the Target Group Index consumer survey of 16 000 participants, conducted by Ask Afrika over six months.

According to the study, SA’s e-commerce sales are poised to reach R42 billion this year, taking the online percentage of total retail sales to around 4%, as more local merchants digitise their retail channels.

Speaking at a virtual event this morning on the research findings, World Wide Worx MD and principal analyst on the research project, Arthur Goldstuck, explained that while SA’s retail sector has reached a tipping point, growing by 66%, physical retail remained steady in 2020 – a sign that it is not going anywhere, anytime soon.

“The most astonishing aspect of this total [R30.2 billion] is that it is more than double the R14.1 billion reached in 2018, in just two years,” says Goldstuck.

“It is also 50% higher than the total forecast for 2020 three years ago, when online retail in SA was expected to reach R20 billion by 2020.”

When compared to brick-and-mortar retail in 2018, the R14.1 billion in online retail represented 1.4% of total retail sales, estimated at the time to be at around R1.07 trillion.

In 2020,physical retail sales slumped as a result of lockdown as well as economic stress, falling by 4.2%, to reach R1.05 trillion.

The percentage of retail made up by online retail sales came to 2.8% – exactly double the percentage for 2018.

“For the first time in 20 years we saw physical retail falling in 2020, although not dramatically over the full year. Online had outpaced traditional retail growth, since it came off a low base, but traditional retail still grew every year until 2019.The fact that it’s still above the trillion rand mark, tells us that bricks-and-mortar are not going away, but it is the true beginning of the e-tail revolution in SA,” noted Goldstuck.

Also speaking at the virtual event, Suzanne Morel, country manager at Mastercard South Africa, provided highlights of a previous study conducted by Mastercard in November 2020, which found that 68% of 1 000 surveyed South Africans were shopping more online since the onset of the pandemic.

“This trend appears to be here to stay, as 71% of respondents say they will continue to shop online post-pandemic,” said Morel.

“Now more than ever, people need access to the digital economy and all of us at Mastercard are constantly working to make the online shopping experience more inclusive, simple, seamless and secure for everyone, whether you’re shopping for essentials or experiences.”