Seismic shift in South Africa’s e-commerce market

E-commerce expert Justin Drennan said South Africa’s online shopping landscape is witnessing a seismic shift, with Temu and Shein leading the way.

Drennan is an e-commerce and venture capital veteran who has helped many of South Africa’s top online ventures succeed.

He founded many prominent e-commerce companies, including Wantitall, Parcelninja, Youinsure, and Insurance.co.za.

He was also an early investor in Justplay, Ozow, and Superbalist, and helped these companies to grow and succeed.

Drennan explained that Amazon, the world’s largest e-commerce player, has recently declared Temu and Shein as its primary competitors.

This bold assertion came after Amazon launched a dedicated section where users can purchase products directly from Chinese warehouses.

Although the delivery period of 9 to 11 days is longer than for local products, it is still poised to disrupt the market dynamics.

The South African e-commerce market has enjoyed some protection due to the inefficiencies of the SA Post Office.

The collapse of the Post Office has hindered international sellers from offering cost-effective delivery to South Africa.

However, the rapid advancements in global logistics and the private sector’s efforts to overcome governmental shortcomings are destroying this protective moat.

As international shipping becomes more reliable and affordable, South African consumers will have unprecedented access to a broader array of products from overseas.

Good examples of this shift are Temu and Shein. They have carved out a niche and become some of the most popular iOS and Android apps in South Africa.

Despite a reputation for cheaper or lower-quality items, both platforms offer a range of products from budget-friendly to higher-end.

It raises the question of whether their products are truly low-quality or merely deliver exceptional value.

The latest statistics, especially from iPhone users, who clearly have money, suggest that South Africans think Temu and Shein offer great value.

The popularity of the two Chinese online shops put tremendous pressure on local e-commerce players like Takealot and Makro.

Local players will likely leverage their excellent distribution networks to facilitate factory-to-customer shipping in South Africa. In fact, it is already happening.

South African clothing retailer Zando partnered with Buffalo Logistics to launch an import service called Zando Global.

Zando explained that South Africans are concerned about Shein and Temu’s product quality, delivery reliability, and returns processes.

Zando Global offers a trustworthy alternative for shoppers who want to buy international products without uncertainties.

The change in the South African e-commerce market extends to the rapidly expanding marketplace ecosystem.

Local marketplace sellers have traditionally sourced products from abroad. However, the rise of factory-to-customer services is disrupting this traditional model.

The shift presents South African marketplace sellers with a challenge and an opportunity.

The days of simply importing and reselling items are numbered. To remain competitive, sellers must innovate and find new ways to add value for their customers.

Kerry Clark, an e-commerce consultant and retail specialist, echoed Drennan’s view on the changing landscape.

She said South African retailers would have to invest in innovation and think bigger to compete against Chinese players.

A key component is broadening their product ranges to include items not currently available in South Africa.

“Variety is a key driving factor here that entices consumers to shop on these platforms,” she said.

She said South African consumers buy products from other international companies outside Temu and Shein because they can’t find what they want locally.

Wherehouse founder Giovanni Joubert, who directly works with marketplace sellers in South Africa, said they are seeing the impact of Temu and Shein.

“In the new landscape of a democratized marketplace, to stay competitive, it’s no longer enough to just drive down prices,” he said.

“We see sellers succeed when they focus on sourcing high-quality, trending products responsibly.”

They also need a streamlined inventory and distribution process that allows for easy returns and exchanges.

He said the biggest challenge for South African companies will be to maintain a competitive edge through quality, reliability, and customer satisfaction.