Criminals making online shopping more expensive in South Africa

While South Africa has not had a fully functioning Post Office for over a decade, it has been able to grow its e-commerce penetration significantly over the past five years.

This is thanks to a competitive and innovative private sector that has filled the gap and taken over the country’s business-to-consumer and consumer-to-consumer logistics demands.

However, according to a World Wide Worx and Ask Africa report published earlier this year, South Africa’s e-commerce penetration — the percentage of total retail comprised by online shopping — is roughly 6.8%.

While this may appear to be a small fraction of retail in South Africa, it has more than tripled since 2019, when e-commerce penetration sat at 1.9%, according to data from Ububele Kopo, citing Stats SA and Euromonitor.

The onset of Covid-19 played a significant role in boosting e-commerce adoption in South Africa.

As a result, e-commerce penetration doubled in 2020 to 3.8% of all retail.

The adoption of e-commerce immediately slowed again, with penetration increasing by 0.5 percentage points in 2021 and 0.6 percentage points in 2022.

By 2023, penetration had increased to 6.3%

Shipping costs have been identified as hindering the industry’s growth. This is occurring in two ways.

The first is that increased crime targeting the logistical operations fulfilling the delivery of online shopping orders is pushing up the costs of these services to all South Africans.

FarEye CEO Kushal Nahata pointed out that between 20 and 25 delivery vehicles are hijacked daily in South Africa, forcing delivery companies to invest in increased security and driving up operating costs.

On the other hand, South Africans living in townships and regional areas are charged a premium on top of the standard delivery fee by the couriers willing to deliver to these areas.

Many platforms, such as Takealot, don’t offer delivery to these areas at all. However, the Naspers-owned online shop is currently trialling township delivery in Mpumalanga.

Zulzi CEO Donald Valoyi said that while private postal and courier services have filled the gap left by the Post Office, the state utility caters to all South Africans, especially those in lower-income segments.

This would solve part of the above problem.

However, it raises the question of whether a functioning post office with the mandate to serve all South Africans would encounter the same difficulties as the private sector is currently experiencing.

Valoyi admits that the South African Post Office, as we know it, which is on the verge of collapse, won’t do.

Bob Group managing director Andy Higgins previously highlighted the crucial role the Post Office played during the platform’s first few years.

“In the early days of bidorbuy, the South African Post Office was a key enabler of shipping, providing the most cost-effective solution for moving goods purchased on the marketplace,” Higgins said.

“A dependable postal service can be a powerful driver for e-commerce, particularly in reaching underserved or remote areas where private courier services may not be economically viable.”

Although he believes the private sector has done a significant job of stepping in and filling the gap left by the underperformance of the Post Office, he advocates for an industry where there is more balance between the public and private sectors.

“In many ways, the lack of performance by the Post Office created an opportunity for the private sector to thrive, albeit at the cost of limited affordable shipping options, especially for smaller businesses and underserved regions,” Higgins says.

“A more balanced ecosystem, where both the Post Office and private players operate effectively, would likely have been more beneficial to the industry as a whole.”

One way the private sector has tackled the problems of delivery costs, dangers, and a lack of street names in some neighbourhoods is through smart locker services, such as those operated by Bob Box and The Courier Guy’s Pudo.

This entails password-protected steel lockers that allow senders to deposit a parcel in a locker and deliver it to another elsewhere in the country, removing the need for a to-door delivery.

Online retailers have adopted a similar strategy by offering pickup points for shoppers to collect their items without paying for delivery.

For instance, Amazon said 3,000 pickup points will be available nationwide during its November Black Friday promotion.