Kathy Gibson reports – Online shopping has reached the tipping point, having doubled in volume and value in just one year.

This isn’t the end of the traditional bricks-and-mortar store, says Arthur Goldstuck, MD of World Wide Worx, although it will start losing some ground to the online channel.

“Traditional retail has grown every single year in this century,” he points out. “In 2020 it reached R1,05-trillion. This was a 4,1% drop from 2019 but, considering it is still above the R1-trillion mark, we can say that brick and mortar is not going away.”

However, 2020 marked the true beginning of the online revolution, he says.

“In 2020 online retail reached R30,2-billion – 50% higher than what we had anticipated just two years before. This was a 66% growth over 2019 – a massive two-thirds growth.

“So we have reached the tipping point for online retail to take off in this country. Online retail now makes up 2,8% of total retail – exactly doubling in two years.”

World Wide Worx expects 40% growth in 2020, to reach R42-billion. This will be driven by the fact that lockdowns are still broadly in place, with people not comfortable shopping in malls.

Online retail growth is expected show solid 30% in 2020, reaching a massive R50-million – close to 5% of total retail sales.

Goldstuck points out that, back in 2017, the online retail market in South Africa had reached R11,29-billion, growing by 25% over 2016. This 25% growth was maintained in 2019, making up R14,1-billion.

At the same growth rates – which was expected – online sales would have reached 2% of total retail by 2022.

In April 2020, however, traditional retail sales plunged as South Africa went into its first Covid-19 lockdown.

“Into that gap, came the online retail revolution,” says Goldstuck. “Every online retailer found ways to get to your front door more quickly because, in many cases, you couldn’t get to their front door.”

Takealot grew 85% in the third quarter of 2020, generating a massive R1,065-billion in sales. From January to June 2020, Woolworths also grew 87,8%.

Meanwhile, Mobicred grew its number of transactions by 40% – and by 90% for over-60s. PayFast saw grocery retailers increase their turnover in the first two weeks of lockdown by 357%.

“That plunge in sales because of lockdown was immediately embraced by online retailers,” Goldstuck says.

One of the big shifts seen in online retail was the age of shoppers. Back in 2018, online shopping was fairly strongly defined by age, with numbers dropping off after about 35 – although online shopping was characterised by pretty low penetration in general, with only about 3,5% of South African shoppers going online.

In 2020, the average penetration shot up to more than 27%, with shopping online also normalised across all age groups, at about 30% up to age 64. Even after 65, it was at 19%.

“So the first big takeaway of this report is that online shopping normalised across age groups,” Goldstuck says. “But it also normalised across gender.”

Online shopping prevalence shows a strong correlation to income groups, with the higher income groups shopping online more.

However, the most direct correlation is with socio-economic level, with the highest levels shopping online more – at 56% – and declining to just 22% for socio-economic level 5.

Possibly the most direct correlation comes with education level. The survey shows that those with a tertiary education are most likely to shop online, at 39%, and declining at lower education levels.

In the lower income segments, people are most likely to be buying airtime (15%), followed by other at 2% and other categories (books, groceries etc) at around just 1%.

For a higher-level socio-economic, airtime is still the biggest purchase (13%), then books (11%), business purchases (7%), groceries (6%), clothing (5%), computer software and games (3%), e-books (3%), electronic goods (3%), tickets for events (3%), womenswear clothing (2%), lotto online (2%), news applications and subscriptions (2%), medicine (2%), and other purchases at around 1%.

Peoples’ attitudes to online shopping still follows age, with younger people likely to look to the Internet for their key source of information, and declining as people age.

The age groups normalise when it comes to being influenced by online product reviews, with a 33% to 37% likelihood for people from 15 to 64 years.

Up to the age of 44, people have the same high level of confidence in entering personal details online, at around 47%.

Interestingly, although they are less likely to shop online, over-65s find online shopping more pleasant that conventional shopping (46%), compared to the other age groups at 31% to 36%.