Record eCommerce performance offers some hope for domestic economy
JOHANNESBURG – eCommerce has provided a ray of hope for the ailing South African economy, ravaged by the Covid-19 pandemic, with transactions hitting record highs in May and June.
South Africa’s largest payment provider, DPO South Africa said on Tuesday that while there would be some levelling off, the new love affair with eCommerce was unlikely to fade in coming months, offering some relief in an otherwise grim economy.
“The last weekend in May saw transactions per minute hit four times that of the busiest minute experienced during Black Friday last year. June was similar to May and we expect our monthly volumes for the rest of the year to settle at around 40 percent higher than last year,” said Peter Harvey, managing director of DPO South Africa.
Harvey said the adoption of eCommerce should be seen as a very positive sign after the depressing financial metrics published over the past weeks.
Following the government’s move to lift restrictions on eCommerce South Africans are no longer limited in terms of the products that they would like to buy online.
E-tailer Loot.co.za, along with several other eCommerce platforms, had called for the government to widen the definition of essential goods and services, driven by the spike in demand for online shopping since the start of the lockdown.
Loot.co.za chief executive Greg le Roux said: “We are looking at increases in volumes that are as high as Black Friday. Which means that more and more South Africans are now looking at Ecommerce to provide a safe solution to their retail requirements.”
Unlike anything the world has seen before, the Covid-19 pandemic fuelled a sudden digital surge that catapulted global and domestic eCommerce traffic to unprecedented levels. The closest comparable example – while on a much smaller geographical scale – would be the 2003 SARS crisis, which is today recognised as kickstarting Alibaba’s eCommerce success in Asia.
This was according to Matthew Leighton, a spokesperson from OneDayOnly.co.za, who said the accelerant role that Covid-19 and the ensuing lockdown had played in boosting eCommerce uptake across South Africa.
“While eCommerce has been gaining gradual traction across the country over the past decade, there is no denying that Covid-19 has served as a catalyst for rapid progress in this regard,” he said.
The BankservAfrica Economic Transaction Index (BETI), calculated by Economists.co.za, which measures transactions between South Africa’s banks, experienced its sharpest decline in history in the three months to May with a transactional value drop of 20 percent compared to the same period in 2019.
“Although the latest bank transactions numbers paint a grim picture, we believe the eCommerce transactional numbers prove that South Africans are still spending online and, with some innovative thinking, there is certainly room for optimism for local entrepreneurs,” said Harvey.
Harvey said the Covid-19 lockdown had catapulted eCommerce forward by at least five years, but also said it was part of a greater retail revolution which had been happening for some time.
“Years back all the focus was placed on the formal retail sector. However, we have seen a marked shift. Our partners in the broader payment space have confirmed that the informal sector, including our spaza shops and informal vendors, are fast approaching the same monthly revenues as the formal sector.
“And, while digital retail currently only accounts for a small percentage of the formal sector’s monthly trade, both the informal and digital sectors are the solid areas of growth opportunity which should be appealing to the savvy entrepreneur,” Harvey said.
Historically, one of the biggest obstacles to transacting online for many consumers was the trust aspect of eCommerce. Harvey said the stellar performance of South African online businesses this year, as well as the signs that there was still room for growth, could offer the country an economic lifeline.