South Africa’s e-commerce maturity outpaces emerging markets such as India, Brazil, Kenya and Nigeria − having surged from 1% to nearly 10% of retail sales in five years.
However, regulatory fragmentation, digital exclusion and an uneven playing fieldare among key obstacles to the sector’s growth.
This is according to a new report commissioned by the Ecommerce Forum of South Africa, titled “Seizing the moment: Unlocking South Africa's e-commerce promise”.
The findings were delivered yesterday during a gathering of policymakers, business leaders and civil society organisations.
Produced by the Mapungubwe Institute for Strategic Reflection (MISTRA), in partnership with the Takealot Group, the report positions e-commerce as a critical engine for SA’s next phase of growth − with the potential to reduce inequality, drive re-industrialisation and expand participation in the formal economy.
However, despite rapid digital adoption and a competitive e-commerce landscape, several challenges hinder the sector’s growth.
According to the report, SA’s regulatory framework for e-commerce has several foundational laws designed to promote fairness, protect consumers and enable digital trade. These include the Competition Act (1998), the Electronic Communications and Transactions Act (ECTA, 2002), and the Consumer Protection Act (2008).
While these laws offer broad coverage, the digital economy has evolved faster than regulation, leaving key gaps in enforcement, cross-agency co-ordination and protection for emerging domestic players.
The current e-commerce landscape, it notes, is hampered by fragmented oversight and uneven competition between global platforms and local small, micro and medium enterprises (SMMEs). Weak consumer protections and inconsistent taxation further constrain growth, it points out.
“South Africa’s e-commerce maturity is both emerging and expanding. Compared with similar dual economies such as India, China, Kenya and Nigeria, South Africa is well above the average,” notes the report.
“Yet there is ample and immediate opportunity to fast-track South Africa’s maturity index to make it more inclusive. This involves both regulatory and non-regulatory enablers. Oversight is siloed within a range of regulatory bodies with relevant but diverse focus areas. This fragmentation is exacerbated by inadequate co-ordination among key regulatory institutions, which can result in foreign players operating outside of the ambit of SA’s own e-commerce ecosystem.”
Global rivals here to stay
E-commerce is emerging as a key enabler of inclusive growth, industrial competitiveness and regional integration. The past two decades have seen exponential growth, with total international online shopping sales volumes now reaching $6.419 trillion (R120 trillion), or 20.5% of total international retail sales, notes the report.
SA has also experienced rapid e-commerce growth, especially post-COVID-19.
By the end of 2025, SA’s retail sales are expected to reach $6.95 billion (R130 billion), approaching 10% of total retail sales nationally, according to the report.
Dr Alastair Tempest, CEO of the Ecommerce Forum of South Africa, told the audience: “South Africa’s e-commerce share has rocketed from under 1% to nearly 10% of retail in just five years, proof that we’re at a pivotal inflection point.
“If business, government and civil society seize this moment, we can unlock an export opportunity in excess of R1 trillion, which will widen access for every entrepreneur, and anchor South Africa at the heart of Africa’s digital economy.”
The report highlights key concerns, such as dominant global platforms like Shein and Temu enjoying tax concessions, operational scale and low compliance costs, which disadvantage local platforms and SMMEs.
It notes that South African domestic e-commerce firms face significant disadvantages due to cost asymmetries, as foreign digital platforms extract value from local consumers without reinvesting in the local economy.
In 2024, Shein and Temu achieved about R7.3 billion in sales, accounting for 3.6% of the total clothing, textile, footwear and leather market in SA, gaining 37% of the segment’s e-commerce sales within a few years of launching in SA.
According to the report, their market share is projected to amass 20.2% of local sales, or R22.2 billion in 2030, placing more than 34 000 local manufacturing and retail jobs at risk.
“There is also growing concern that international digital platforms may precipitate South Africa’s e-commerce sector into an advanced stage of maturity before foundational elements are fully in place – such as SMME competitiveness, digital skills development, equitable tax policies and cross-border trade readiness.
“If left unchecked, this could trap local firms in low-margin, high-volume product segments, while ceding control of high-value sectors (electronics, mobility and digital services) to offshore companies. Such a scenario would hinder domestic innovation and industrial growth, as well as jeopardise South Africa’s ambition to lead in a digitally integrated African economy,” added Tempest.
A regulatory regime should ensure equitable market participation through consistent taxation, rational foreign direct investment rules, and enforcement of fair competition across local and foreign platforms, the report suggests.
A R900 billion e-commerce market lies untapped in SA’s townships. Focused investment in township e-commerce can unlock inclusive growth, spur local industrialisation and boost national competitiveness, it states.
Unlike the international e-commerce environment, township economies, which host over 1.1 million SMMEs, still rely on cash-based transactions. Over 60% of these businesses operate informally and lack digital on-boarding support (Finmark Trust, 2022).
“Township businesses, while dynamic and central to SA’s informal economy, face structural limitations in meeting the demand patterns that define e-commerce growth.
“They cannot match the scale, technology and supply chain capabilities to compete in strategic categories like electronics, fashion, home and kitchen appliances, beauty products, health and games.
“Most operate as survivalist or micro-enterprises, with minimal capital, industrial equipment and access to formal supply chains. This limits the volume and quality of products they can produce and distribute competitively.”
Instead, township businesses often enter the e-commerce market as resellers rather than as core producers of high-demand goods. Township inclusion initiatives present a unique opportunity to bridge this e-commerce divide, by boosting SA’s local industrialisation and localised e-commerce infrastructure, the report recommends.
Phuthi Mahanyele-Dabengwa, South Africa CEO and executive director of Naspers and Prosus, and chairperson of the B20 Digital Transformation Taskforce, highlighted how advancing digital transformation can position SA for long-term competitiveness.
“Digital transformation is the defining growth engine of our time. It is a catalyst for inclusive progress, and nowhere is this more evident than in e-commerce. Across the world, digital platforms are opening access to markets, finance and jobs − connecting entrepreneurs to a global network of consumers.
“What’s especially exciting is that SA has yet to reach its full potential, and the capacity for e-commerce to drive further growth remains immense,” noted Mahanyele-Dabengwa.
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