E-commerce continues pandemic-proof upward trajectory
South African consumers bought up to 30% more online in 2021, compared to last year, with a significant surge in e-commerce subscriptions.
This is one of the key findings of the global Mastercard Economics Institute: 2022 Economic Outlook, based on critical trends as seen through the lens of the consumer.
The report reveals five fundamental factors − savings and spending, supply chains, digital acceleration and a growing list of economic risks − will come together and shape the ongoing economic recovery, after the pandemic wreaked havoc.
The report draws on aggregated and anonymised sales activity across 32 countries, including SA, in the Mastercard ecosystem, among other sources, to develop a measure of the quantity and prices of goods versus services consumed for economies throughout the world.
According to the study, for retailers, restaurants and other businesses large and small across the globe, being able to sell online provided a much-needed lifeline as in-person consumer spending was disrupted, as a result of the pandemic and governments instituting lockdowns once again this year.
Consumers increased their e-commerce footprint, buying up to 30% more from online retailers compared to last year. This reflects expanded consumer choice – South African shoppers are making purchases at a greater number of websites and online marketplaces than before.
In addition, the report notes that roughly 20% to 30% of the COVID-19-related shift to digital is expected to be permanent,as the pandemic keeps South African consumers at home, accelerating a wide range of online services.
“As e-commerce rapidly became a way to pandemic-proof a business, investment in digital was significant in 2020,” says Bricklin Dwyer, Mastercard chief economist and head of the Mastercard Economics Institute.
“Adoption by older generations and added convenience and lower costs for consumers will likely keep digital demand growing in 2021. The accelerated shift to digital has played out in increasing use of automation, broader sets of industries working from home and more touchless experiences.
“We estimate that about 20% to 30% of the global peak in the COVID-related shift to e-commerce will be a permanent bump in the e-commerce share of overall retail spending.”
Cash no longer king
Mastercard notes, even in store, COVID-19 accelerated the transition to digital − with more consumers moving from plunking down cash to touch-free payments.
According to its analysis of payment forms at brick-and-mortar retail stores and restaurants, the shift from cash to non-cash/electronic payments accelerated by a full year, with 86% of South African shoppers having access to more ways to pay, compared to the same period last year. This led to an acceleration of the shift from cash to electronic payments by a full year.
According to research findings by World Wide Worx, 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.
The study 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 pandemic in 2020.
The Mastercard Economics Institute: 2022 Economic Outlook further found e-commerce subscriptions gained traction in 2021, as nearly 88% of countries across the 32 markets saw a surge in subscription services compared to the previous year. Notably, car companies, online trading, virtual workout platforms, bike rentals, video-on-demand, and pet services are among the businesses that will continue to benefit from this model.
Online and anytime shopping ultimately smooths out the day and time when consumers make the most purchases, with fewer peak periods and fewer high-touch jobs, notes Mastercard.
“While going digital can enable financial inclusion, improve tax revenues and improve business productivity, going digital can also come at the cost of low-skilled employment, which accelerates the demand for lifelong learning and workforce re-training,” notes Dwyer.