Good news about online shopping in South Africa

Grocery and FMCG e-commerce in South Africa has considerable growth potential, but retailers must offer good value and convenience to win over budget-conscious, online-savvy shoppers.

This is according to Gareth Paterson, director of client strategy at Nielsen IQ (NIQ) South Africa, who moderated a panel discussion at Converge 2025 on 8 May.

Today, consumers are more aware of the cumulative effect of inflation on their cost of living and are becoming increasingly intentional in their purchasing decisions.

For retailers to capitalise on this market, they must provide an optimal mix of value and convenience for consumers who feel they are paying more and getting less.

Paterson said that international experience shows that the opportunity for FMCG retailers and brands grows rapidly as the e-commerce market matures.

“Despite the growth of ‘quick commerce’ grocery deliveries in South Africa since the pandemic, the market remains in the early phases of its maturity,” Paterson added.

Checkers Sixty60, the first grocery delivery service of its kind in South Africa, was launched in November 2019. Other grocers were not long behind, launching Woolies Dash, SPAR2U, and Pick n Pay asap! In the following years.

Paterson said that in more mature e-commerce markets that NIQ tracks, the e-commerce share of value for FMCG is comparable to the e-commerce share of the value of tech and durable (T&D) goods.

In South Africa, however, FMCG’s share of the value of e-commerce is only around 2%, much lower when compared to 17% for T&D.

This gap between the value share in FMCG and T&D shows that the e-commerce market in South Africa is far from saturated.

This presents exciting opportunities for FMCG manufacturers and broad-based retailers. NIQ data shows that online T&D sales grew 11% in 2024 as consumers sought better deals online.

“We expect to see a similar appetite among grocery shoppers for finding value and convenience on digital platforms,” he said.

“However, growth will likely vary significantly by category – items like personal care, diapers and fragrances are poised to grow faster, while fresh produce may continue to lag due to higher barriers to entry.”

Budget-friendly shopping

“The South African e-commerce market will be shaped in the months to come by a shift towards greater intentionality in consumers’ shopping habits,” Paterson said.

“Consumers worldwide are becoming more vigilant in their purchasing decisions, but the trend is especially pronounced in South Africa.”

NIQ research showed that the cost of living, reflected in food and energy prices, puts consumers under pressure and reduces their confidence.

Paterson noted that South African consumers exhibit more value-conscious behaviours in response to ongoing economic anxieties.

A recent NIQ Consumer Outlook Report highlights that consumers increasingly focus on cost savings and leverage loyalty programmes, private label brands, and promotions to stretch their rands.

Paterson said that amid these shifting behaviours, e-commerce in South Africa is demonstrating resilient growth.

“Echoing the global trend, many consumers are gravitating towards digital channels to compare prices and save money.”

“Our research indicates that 27% of global consumers shop online as a saving strategy, considering the channel a good option to get better deals and save money.”

The popularity of online shopping, especially as a method of saving money, was evident during 2024’s Black Friday to Cyber Monday period.

The Ecentric 2024 Black Friday Index revealed that the proportion of online transactions rose from 7.9% of 2023’s 1.91 million total transactions to 10.3% of 2024’s 2.51 million. This reflects a 30.4% increase in share.

The proportion of online revenue grew by 23.8%, rising from 10.1% of 2023’s R358 million to 12.5% of 2024’s R596 million total holiday revenue.

Social commerce

E-commerce is rapidly evolving and today encompasses a multitude of channels and touchpoints under the banner of omnichannel commerce.

This evolution is driven by the increasing pace of technological change, the pervasive influence of social media, and the growing demand for convenience.

“We’re expecting to see social commerce and other emerging e-commerce models gain traction in the months ahead,” Paterson said.

Social commerce is a rapidly growing form of e-commerce that leverages social media platforms to facilitate online transactions. It allows businesses to sell products directly to consumers through social media apps.

“Consumers who are active on social media platforms may find it natural to shop as part of their online experience,” he added.

“Similarly, as logistical infrastructure develops, demand for quick commerce solutions may increase in urban centres. Retailers must be nimble to keep up with changes in tech and consumer behaviour.”

Paterson explained that several key developments are shaping the South African e-commerce landscape. First, consumers now expect seamless omnichannel integration.

This means that customers expect that their shopping experience should be smooth and consistent across online and in-store platforms.

Social commerce is also gaining ground, with platforms like TikTok becoming spaces where users discover and engage with brands and make purchases.

The rise of quick commerce, driven by a growing demand for rapid delivery, is especially prominent in urban areas. Price and promotions remain central to buying decisions.

However, other factors such as a wide product range, time-saving convenience, fast delivery, and access to niche or premium items increasingly influence online shopping behaviour.

“For suppliers and retailers in South Africa, understanding these evolving consumer behaviours and the shifting e-commerce landscape is paramount for future success and growth,” Paterson said.

“To accurately track sales, understand consumer preferences, and identify growth opportunities, businesses need to adopt a full view approach across all relevant channels.”

This involves investing in robust e-commerce platforms and partnerships, optimising for mobile, and understanding the nuances of “discount” beyond just price to meet consumers’ broader value expectations.

It also includes monitoring and engaging with emerging channels like social commerce and integrating online and offline operations.

Finally, leveraging data analytics to gain insights into consumer behaviour across different channels, personalise offerings, and optimise pricing and promotional strategies is essential.

“The key lies in understanding that the path to purchase is no longer linear and that a holistic view of the consumer journey is essential for staying ahead of the curve,” Paterson said.

This article was first published by Daily Investor and is reproduced with permission.