For the first time since the dawn of e-commerce in South Africa, online retail in this country will reach 1% of overall retail during 2016. This is the most significant finding of the Online Retail in South Africa 2016 report, released today by World Wide Worx.
The report shows that online retail continues to grow at a high rate in South Africa, having maintained a growth rate of above 20% since the turn of the century. In 2015, the rate of growth was 26%, taking online retail to the R7,5-billion mark. While the rate is expected to fall a little in 2016, to 20%, growth in Rand terms is expected to remain the same as in 2015, taking the total to above R9-billion. Total retail is expected to remain below R900-billion.
“While 1% represents a very small proportion of overall retail, it is also a psychological barrier for investment in ecommerce initiatives by physical retailers,” says Arthur Goldstuck, managing director of World Wide Worx and principal analyst for the online retail survey.
“The number also masks the extent to which a number of major retailers have exceeded the 1% online mark by a substantial margin, compared to the vast majority that are not yet close to this mark, if they have an ecommerce presence at all.”
Goldstuck points out that online retail in South Africa is often characterised as being undeveloped, behind the curve and lagging behind Western markets.
“Even retailers themselves use this kind of terminology. However, this often also results in an underestimation of the healthy growth rate of online retail in this country.”
However, it should be borne in mind that much of this growth is a result of an increase in the number of experienced Internet users in South Africa who are ready to transact online, rather than the retailers themselves getting it right and convincing shoppers to spend more online.
Forecasts by World Wide Worx for the next five years, from 2016 to 2020, show online retail sales almost exactly doubling over this period.
While this may seem significant, enthusiasm should be tempered by the awareness that the range of business models employed by South African online retailers is still somewhat conventional. This suggests that South African ecommerce has not attained the sophistication of major Western markets, where every category of product is characterised by a wide range of business models.
The report includes data from the Target Group Index (TGI) survey conducted by Ask Afrika, the largest market research organisation in Africa. World Wide Worx collaborates with Ask Afrika in the structuring of e-commerce, digital and electronics components of TGI, which comprises 15 000 interviews across a vast range of consumer topics and behaviours.
* For more information on findings, contents list and ordering information, download the executive summary by clicking here.