Online retail doubles in two years
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SOUTH AFRICA’S online retail has more than doubled in just two years, a factor attributable to the explosion in demand for home deliveries brought about by the Covid-19 pandemic, a new study released yesterday found.
Online Retail in South Africa 2021, a study conducted by World Wide Worx with the support of Mastercard, Standard Bank and Platinum Seed, revealed that the total growth for online retail in South Africa in 2020 reached 66 percent and brought the total of online retail in South Africa to R30.2 billion.
World Wide Worx managing director Arthur Goldstuck, the principal analyst on the research project, said the most astonishing aspect of the total was that it was more than double the R14.1bn reached in 2018 in a space of two years.
“It is also 50 percent higher than the total forecast for 2020 three years ago, when online retail in South Africa was expected to reach R20 billion by 2020,” said Goldstuck.
This figure was said to come into context when compared to traditional retail. In 2018, the R14.1bn in online retail represented 1.4 percent of total retail, estimated at the time at R1.07 trillion.
Online had outpaced traditional retail growth throughout the past 20 years, since it came off a low base, but traditional retail grew every year until 2019. In 2020, it slumped as a result of the lockdown as well as economic pressure.
Preliminary data from Statistics SA showed that, at current prices, total retail fell by 4.2 percent to R1.05 trillion. The percentage of retail made up by online retail sales came to 2.8 percent, twice the percentage for 2018.
Goldstuck said that while equivalent growth could not be expected for 2021, it could be stated with confidence that it would exceed the 30 percent growth seen in 2019 when the expansion was organic and a factor of the evolution of shopping habits and retail strategies.
He said the factors remained in place, along with the massive boost given to both areas of evolution since the pandemic began.
“This means we can expect to see total online retail sales of around R42 billion in 2021, taking the online percentage of total retail to around 4 percent, assuming traditional retail returns to its previous growth path.”
The findings were not seen as a surprise as, in November last year, Mastercard released the findings of a survey of 1 000 South African consumers, that found that 68 percent of respondents tended to shop online since the the pandemic struck.
The categories experiencing the highest growth, aside from data and airtime top-up, were clothing at 56 percent and groceries at 54 percent.
More than two-thirds (68 percent) of these consumers said they used the time during the pandemic as a positive learning experience, while the demand for online entertainment also surged, with 52 percent of respondents saying they had spent more money on virtual experiences than they did before the pandemic.
Most had participated in video calls for work or leisure (88 percent), three quarters (75 percent) had watched TV or films through an online subscription service, and nearly half (47 percent) had taken part in a virtual cooking class.
Mastercard South Africa country manager Suzanne Morel said the trend appeared to be here to stay as 71 percent of respondents said they would continue to shop online even beyond the pandemic.
Standard Bank’s South Africa’s Head for Digital, eCommerce and Voice, Andrew van der Hoven, said the firm had noted on the bank’s customers that online transactions had peaked at 30 percent, but not yet reduced to the 17 percent of 2019.
He said for the year 2020, they stood at 24 percent.
BUSINESS REPORT ONLINE