Online shopping will exceed R50 billion in 2022

Online shopping in South Africa surpassed R50 billion in 2022, suggesting that this style of distance shopping, which got its start during the pandemic lockdown, is not slowing down now that all restrictions have been lifted.

Growth in online shopping has been driven by demand for home delivery, according to new research from World Wide Worx and Mastercard, published as Online Retail in South Africa 2022.

The study found that the overall growth of online retail sales in South Africa was 35% in 2022, bringing the total number of online retail sales in South Africa to R55 billion, after a 40% growth the previous year bringing the total to 42.3 billion rand in 2021, up 4% of the total of 1,166 trillion rand, representing healthy growth from 2.8% in 2020. In 2022, total retail is expected to reach R1.16 trillion, with online retail accounting for 4.7% of the total. “

“You can call that the pandemic dividend,” says Arthur Goldstuck, MD of World Wide Worx. “The 2020 home delivery boom has continued for the past two years as retailers compete aggressively across all facets of online shopping.”

Black Friday also boosted online sales, with all banks reporting massive increases in card and online spending on one of the biggest shopping days of the year. Standout performers included:

  • Checkers Sixty60, which grew sales by 150% from July 2021 to July 2022
  • Mr. Price, who reported a 48.2% increase in online retail sales for the year to April 2022 and
  • Pick ‘n Pay, which reported in its annual results for the year ended February 2022 that online sales had experienced a 72.5% compound annual growth over the past two years.

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E-commerce is growing while retail is stagnant

The inexorable rise of e-commerce comes at the same time that retail as a whole is stagnating. According to Stats SA statistical release for retail sales for January 2022, total retail sales for 2021 reached R1,166 trillion, up from R1,063 trillion in 2020, a healthy growth of 9.7% but after a 4.4% decline on the year 2020

However, the data for 2022 is less promising, with retail sales down 0.6% in the year to September and down 1.9% in the third quarter, the second quarter of the retail contraction. One of the largest declines of 8.1% was in the food, beverage and tobacco category, but online retail benefited from a sea change in shopping behavior.

“With physical shopping restricted during the harsh lockdown, we initially saw a surge in consumers resorting to online shopping. This helped them become familiar with this type of shopping. However, in terms of convenience, we see emerging consumer needs and expectations that go beyond the ability to shop online,” says Gabriel Swanepoel, Country Manager of Mastercard South Africa.

This means that the growth in e-commerce is due to consumers shifting existing buying behavior from physical stores to online stores and apps, rather than higher demand.

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Now consumer expectations are growing too

“Based on our observations, consumers expect online retailers to offer fast delivery with apps like Uber Eats and Superbalist offering same-day delivery. In addition, the highest level of security seems to be expected before making a purchase from a particular online retailer.”

Swanepoel adds that consumers want an omnichannel shopping experience that allows customers to pick up where they left off on one channel and continue the experience on another. “Consequently, consumer attitudes appear to have changed and we expect that with these changes we will see the evolution of online shopping and some interesting innovations from retailers responding to these changes.”

World Wide Worx findings are based on aggregate numbers and forecasts from publicly traded companies, interviews with unlisted online merchants, and card transaction data.

“Total online retail has significantly exceeded our previous forecast of R52 billion for 2022,” says Goldstuck. “However, it will fall just below the 5 percent mark, a milestone previously expected for late 2022, but we are confident it will be reached in 2023.”

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