Current state of ecommerce in South Africa

Ecommerce is growing and expanding all over the world, but what about South Africa specifically? Is home-grown ecommerce blooming? What challenges does it face? Will the local retail industry be adversely affected by the expansion of ecommerce? This blog post aims to answer these questions and highlight the trends that are likely to influence ecommerce in South Africa.

Online shopping is currently experiencing a positive shift thanks to several developments:

  • The advancements in technology in general (e.g. fast internet);
  • The prevalence of smartphones, which has made online shopping easy and convenient;
  • The increase in the variety of products that are available online to consumers, greatly expanding purchasing choices; and the expansion of delivery options and shipping destinations.

However, there are a few notable issues that currently stand in the way of an even more robust ecommerce growth. These issues include product delivery problems as a result of high delivery fees and dropshipping. Another very critical issue, especially significant in South Africa, is internet access. As South Africa is a developing country, internet access is still not available to all, ultimately holding the ecommerce industry back.

According to the Online Retail in South Africa 2016 report released by technology consultancy World Wide Worx, online retail should reach 1% of overall retail during the course of 2016. One percent can seem insignificant in the overall retail environment, however it is extremely important for businesses that make the largest contribution to that one percent. We are likely to see an increase in these numbers during 2017 as technology, internet access and product variety continue to make online shopping more attractive for South Africans.

There are some trends that are likely to influence ecommerce in South Africa. Due to the erratic nature of South African postal services, a gap in the market opened for reliable postal and courier services. Independent courier businesses now offer fast and convenient delivery services. Over the years, the speed of delivery has definitely increased and will continue to increase in future.

As mentioned before, product variety is a huge advantage  of ecommerce, both in terms of product types and  the variety within product lines. However, online shopping does not only include the purchase of products, but also services. You can book your flight ticket or even book your laptop in for repairs. If you wish to attend a concert or perhaps book a holiday – all of this can be done online.

A huge contributing element to the growth of ecommerce in South Africa is the rapid development of technology. Consumers are now able to browse as well as purchase items using their smartphones  and mobile apps make shopping extremely easy and convenient. Easy payment methods are also a contributor to the success of ecommerce.

To comment on the current state of ecommerce in South Africa, experts believe it is possible to increase online retail from 1% of overall retail to 5% in a short period of time if certain elements are implemented correctly. I won’t keep you in suspense any longer, these elements are discussed below.

The very first thing is ease of payment and payment methods. Online payments are very safe due to extensive anti-fraud management implemented for online purchases. As more payment options become available on mobile apps as well, online payments as a whole will become more seamless and possibly contribute to the growth of ecommerce in South Africa.

You might say that a huge disadvantage of online shopping is the lack of physical touch. Consumers are not able to pick up, feel and hold the item they are purchasing. This is becoming less of a concern as online stores provide detailed descriptions of the item and multiple images. Online retailers are also more inclined to accept returns and give refunds in order to address customers’ fears of being stuck with an item of clothing in an incorrect size.

Overall, ecommerce can only and will only improve with advances in technology. This is the key to seamless online shopping. To answer the burning question asked in the introduction: yes, the retail industry will be affected by the continuous expansion of ecommerce. The impact will not be extremely high, but will definitely increase gradually over time. It seems that things are looking up for ecommerce in South Africa.