South Africa’s online retail sector is on track to reach the R100-billion mark by 2026, having experienced significant growth in 2023.
The local online retail sector surged to R71-billion in 2023, a 29% increase on 2022, a new study, undertaken by World Wide Worx in partnership with Mastercard, Peach Payments and Ask Afrika, has found.
“The overall growth coincides with a slight decline in total retail sales – only the second this century – emphasising the growing significance of online platforms in the retail sector,” the study notes.
The 2023 increase followed the prior year’s 35% growth, which brought the 2022 total to R55-billion.
The study notes that the surge in sales two years ago could be attributed to a so-called “pandemic dividend”, with massive demand for home deliveries starting in 2020.
The continuing rise is now being driven by competitive e-commerce strategies from most major physical retailers, existing e-shoppers moving more of their traditional shopping to the online space and credit card payment processing becoming more streamlined.
The study cites the success of Shoprite Checkers’ Sixty60 service, which saw a 63.1% increase in the latter half of 2023, while Pick n Pay grew online sales by 76% and Woolworths reported a 47% online sales increase. By contrast, the country’s largest online retailer, Takealot, grew sales by only 6%.
“The strategic shift towards competitive e-commerce offerings and enhanced customer engagement, including sophisticated artificial intelligence-driven tools, has fundamentally transformed the retail landscape in South Africa,” says World Wide Worx CEO Arthur Goldstuck.
Mastercard South Africa country manager Gabriel Swanepoel points to collaboration that has enabled streamlined payment processes, which, in turn, makes online shopping easier and more secure, thereby increasing consumer confidence and contributing to this growth.
“The findings underscore how Peach Payments enabled the proliferation of new payment methods, such as Buy Now Pay Later, that meet the evolving demands of the consumer. “In turn, this allows consumers to spend more online with greater confidence,” says Peach Payments CEO Rahul Jain, emphasising the importance of payment solutions in this expansion.
Further, merchants are using Peach Payment’s enterprise- grade infrastructure to make their financial operations more efficient as they continue to capitalise on this growth.
Ask Afrika founder and executive chairperson Andrea Rademeyer highlights how the demographic data supplied by the company’s Target Group Index (TGI) survey underscores a significant shift in consumer behaviour.
“As South Africans move more of their spending online, they also become more confident in the medium term, and increase their individual levels of spending. “Most significantly, they are becoming more aware of the increased convenience and choice available online.