E-commerce in South Africa has more than doubled over the period from 2018 to 2020.
By Steve Briggs, chief sales and marketing officer at Seacom
The Covid-19 pandemic has boosted demand for home deliveries, with research by World Wide Worx revealing that online retail grew from R14,1-billion in 2018 to an incredible R30,2-billion in 2020.
This upward trend is set to continue, with forecasts putting online retail sales at around R42-billion by the end of 2021. In a Mastercard survey of 1 000 South Africans, 71% of respondents said that they would continue to shop online post-pandemic, and Rand Merchant Bank also estimates that ecommerce will grow by 150% by 2025.
It’s clear that this sector is primed to accelerate, but what can we do to make online retail more inclusive, allowing more South Africans to participate in our growing digital economy and benefit from the time, cost, and efficiency savings that online retail can offer?
E-commerce and our economy
Consumer activity is an important driver of South Africa’s economy. The pandemic has resulted in decreased retail spend both in our country and globally, and although retail spending is on the rise in South Africa again, recent unrest will certainly hurt these figures.
Online spend in South Africa only accounted for 2,8% of all retail sales in 2020, which may make some people dismiss it as insignificant.
But with a low base comes potential for incredible growth, and as general retail spending suffers, high consumer interest could make this an area that can provide our economy with a much-needed boost.
Accenture has highlighted that South Africans have embraced the use of digital technologies at a rapid rate over the past five years, which is why retailers need to pursue both in-store and online retail strategies to make the most of the coming ecommerce expansion.
Deloitte’s latest State of the Consumer Tracker shows that consumers are more likely to spend money on groceries, medicine and healthcare, utilities, Internet and mobile services, and household goods.
Amid public health concerns, ecommerce has provided some consumers with a safer alternative when it comes to shopping for these essential items and goods, as well as the convenience of at-home or at-work delivery.
Unfortunately, many South Africans have been unable to engage in the e-commerce boom and reap these rewards as they lack access to the tools needed to participate. As well as access to adequate payments and delivery infrastructure, one of these tools is affordable Internet – a fundamental barrier between retailers and millions of potential online customers.
The state of South African connectivity
The recent dramatic increase in ecommerce adoption has been more prevalent in developed countries, in part due to widespread access to fast and affordable Internet. As of January 2021, 59,5% of the global population was connected to the Internet.
South Africa’s Internet penetration, at 57,5%, is lower than the global average. Compared to Northern Europe, which has an Internet penetration rate as high as 96%, it is abundantly clear that we still have a way to go to make nationwide Internet access – and therefore access to e-commerce – more inclusive.
The digital divide is also much more worrying among South Africa’s low-income communities. In 2019, Stats SA reported that only 1,2% of households in rural areas had access to Internet at home, which means that they have to either use more expensive mobile subscriptions, or use the Internet when they visit bigger towns.
Fibre, with its unmatched affordability and reliability, is key to getting more South Africans to participate in today’s digital economy, so that more of us can benefit from the range of products and services it provides.
E-commerce in underserved areas
Connectivity can be an enabler of more inclusive economic growth as it can improve consumers’ ability to find products and services at more competitive prices – and have them delivered to a desired location, freeing up their time for other work.
Network-based trading platforms can also help new sellers reach new markets, enabling entrepreneurs. But e-commerce offerings themselves also need to change to make this inclusive digital growth a reality, with many retailers forced to focus their online efforts on more affluent markets due to access to payment platforms and infrastructure.
We can see signs of this starting to change. As secure payment methods provide customers with a greater variety of trustworthy payment options, and mobile phones become “the sole payment channel for many consumers in developing countries”, we will hopefully see more retailers expanding their offerings.
Ecommerce platforms like Yebo Fresh are helping to develop an inclusive retail space in South Africa, providing townships and informal settlements in Cape Town with affordable home delivery of groceries. The success of this start-up has demonstrated the untapped opportunity in underserved markets.
With the cost-savings on travel expenses and the convenience of ecommerce, township residents – who represent at least 40% of the national grocery market – can join the digital age and shop safely online.
Retail’s digital future
With more inclusive ecommerce, consumers can benefit from more competitive offerings, while businesses stand to perform better with an established online presence.
Improving digital literacy is also crucial for making this happen, but this cannot be achieved without first making Internet access more widespread and affordable within low-income communities.
A report by Accenture found that “countries with lower broadband data costs have higher penetration rates and enjoy stronger e-commerce sales”, highlighting the importance of lowering the costs of Internet access.
For e-commerce to both boost the economy and benefit our citizens, the online world of retail cannot be accessible only to some. If the future of retail is going increasingly digital, we need to get more South African businesses and consumers on board to drive our digital economy forward.