SA online retail to be valued at R100 billion by 2026

World Wide Worx has released a report on the online retail industry, saying it will be valued at R100 billion by 2026.

The report, conducted in collaboration with Ask Afrika, concerns the online retail landscape, success factors, and demographics of South African shoppers.

It looked at long-term trends by conducting face-to-face interviews with 16,000 consumers and telephonic interviews with retailers.

Since the Covid-19 online shopping “boost” in 2020, which saw a 66% increase in growth, it has been on a steady but convincing upward trajectory, growing by 29% in 2023.

“The strategic shift towards competitive e-commerce offerings and enhanced customer engagement, including sophisticated AI-driven tools, has fundamentally transformed the retail landscape in South Africa,” said World Wide Worx CEO Arthur Goldstuck.

Of the 16,000 consumers that Ask Afrika interviewed, 36.6% said they shop online.

Though this may seem high, e-commerce transactions only make up 6.15% of all retail transactions in South Africa, with the market valued at R71 billion in 2023.

This is expected to grow to 10% by the end of 2025 and be valued at R100 billion by 2026.

Online retail was most prevalent among 25-to 35-year-olds, with just under half of this age group shopping online.

People over 65 have become more comfortable shopping online; over a quarter of this age group now do so.

The use of online retail is evenly spread throughout the socioeconomic levels, although usage is just below 50% in all except SE1.

The fact that this data does not directly reflect disposable income can be because more than half of the devices used for online shopping are smartphones, lowering the barrier to access.

The most commonly accessed category of online retail is clothing at 30%.

Second is groceries, which make up 22.3% of the market.

“The study points out the success of Shoprite Checkers’ Sixty60 service, which saw a 63.1% increase in the latter half of 2023,” the report stated.

“Pick n Pay grew online sales by 76%, and Woolworths reported a 47% online sales increase.”

“By contrast, the country’s largest online retailer, Takealot, grew sales by only 6%.”

The categories in which Takealot saw success, such as electronic goods, children’s toys and games, and audiovisual, each make up less than 12.5% of the market.

Over a quarter (28.5%) of respondents still find the in-store shopping experience more appealing than doing so online.

In contrast, only 14.5% of respondents find shopping online more pleasant than conventional shopping.

Trust was a significant factor in ditching physical shopping carts for online ones, which could explain why people still prefer the in-store experience.

Over a quarter of users abandoned a shopping site at checkout because they did not trust the site with their banking information. This was second only to the user’s card being declined.

Evolving payment technology is a significant factor that will enable the industry to become more confident with online retail, according to Peach Payments CEO Rahul Jain.

“[T]he proliferation of new payment methods such as Buy Now Pay Later that meet the evolving demands of the consumer [in turn allows] consumers to spend more online with greater confidence,” Jain said.

The e-commerce sector is very favourable towards its future, with over 90% of businesses saying they are either optimistic or very optimistic.

Online retail businesses have performed well in recent years, with 76.7% of respondents saying they are either somewhat profitable or very profitable.

Only 5.1% are making a slight to significant loss.

Goldstuck pointed out that low-cost sites such as Temu and Shein are not destroying the market for other competitors.

This is because most businesses surveyed are making a profit and remaining optimistic about their future.