South Africa’s e-commerce boom

This past year has been a significant one for South Africa’s e-commerce industry, which is also expected to comprise 10% of all retail in 2025.

However, some local players may struggle to find a silver lining in a year of disruptive events.

The disruptions have primarily been due to the entry of overseas players such as Amazon and the increased popularity of low-priced platforms, such as Temu and Shein.

The Competition Commission’s chief economist, James Hodge, highlighted this dramatic change in the watchdog’s Intermediation Platforms Market Inquiry report that was released in July 2023.

Hodge noted that when the report was being created, the focus was on market dynamics.

The report found Takealot to be the market leader with a dominant share of online transactions — defined as more than 35%.

However, much has changed since then, with Competition Commissioner Doris Tshepe warning the government to employ all its tools to create a fairer playing field in the e-commerce sector.

The irony is that this statement followed a submission by Takealot — identified as the dominant e-commerce firm in South Africa in 2023 — to the South African Revenue Services with several demands that should be imposed on foreign online shopping platforms.

These included requiring all foreign-owned e-commerce businesses to establish local offices and distribution centres.

Whereas many perceived Amazon’s launch as underwhelming, the rise of platforms like Temu and Shein has placed significant pressure on local players.

This ties into the affordability of the products sold on these platforms, making online shopping more appealing to South African consumers.

These platforms had such a significant impact on South Africans that many protested against Sars’ decision to increase import taxes on low-value imports.

This followed Temu and Shein’s exploitation of a 2007 concession that allowed for a 20% flat duty with no VAT on all parcels with a value under R500.

A report by the Marketing Research Foundation found that Shein dominated South Africa’s second most popular e-commerce category: clothing.

Shein held a 35% market share in women’s clothing, dominating the second and third-place stores, Mr Price (7%) and Superbalist (3%)

A MyBroadband analysis in 2024 found that a basket of women’s clothing from the most affordable South African online clothing retailer, Clothing Junction, cost R320.

The same basket from Shein cost R259. For reference, the baskets of platforms known to sell trendy items, such as Woolworths or Cotton On, cost R768 and R890, respectively.

As a result of increased competition and economic pressure from Temu and Shein, three online stores in South Africa were shut down or sold within months.

First Takealot sold its fashion retailer Superbalist on 1 September after rumours that Superbalist was for sale emerged earlier in the year.

A few days later, low-cost, off-brand Chinese tech importer Snatcher confirmed it had ceased all operations and entered voluntary liquidation after more than eight years in business.

Shein and Temu’s most recent victim was clothing retailer Zando, an online store that had operated in South Africa for twelve years before parent Jumia announced the local operation would be shuttered.

While the entry of platforms like Temu and Shein has hurt South African businesses, many consumers are grateful for the more affordable pricing.

It is, therefore, no surprise that the Competition Commission has said its focus has shifted to international players to ensure the South African business environment is fair for all participants.