Online retail boom in South Africa as Amazon launches locally
Global retail giant Amazon’s launch in South Africa is perfectly timed, with the country experiencing a massive boom in online retail.
New research shows that South Africa’s online retail sector grew to R71 billion in 2023, a 29% increase from the previous year, positioning the sector to break the R100 billion mark by 2026.
The 2023 rise comes after 35% growth the previous year (R55 billion in 2022).
The research was conducted by World Wide Worx in partnership with Mastercard, Peach Payments, and Ask Afrika.
“The strategic shift towards competitive e-commerce offerings and enhanced customer engagement, including sophisticated AI-driven tools, has fundamentally transformed the retail landscape in South Africa,” said Arthur Goldstuck, CEO of technology market research firm World Wide Worx.
According to the study, same-day delivery services have experienced a particular boom.
Shoprite Checkers’ Sixty60 service saw a 63.1% increase in the latter half of 2023, while Pick n Pay grew online sales by 76% and Woolworths reported a 47% online sales increases.
By contrast, the country’s current largest online retailer, Takealot, grew sales by only 6%.
Andrea Rademeyer, founder and CEO of Ask Afrika, highlighted a notable shift in consumer behaviour based on data from the company’s Target Group Index (TGI) survey.
“As South Africans move more of their spending online, they also become more confident in the medium, and increase their individual levels of spending.
“Most significantly, they are becoming more aware of the increased convenience and choice available online,” she added.
Looking at the survey, retailers highlighted the importance of customer service (73.9% agreement) and product variety for online success. Competitive pricing and personalized offers were deemed less essential, though AI is expected to boost the latter’s significance.
The study also looked at most significant operational challenges for the industry, which they listed as payment failures (18,2%) and managing customer queries and complaints (16,8%).
However, the major issue for cart abandonment by consumers was reported to be declined credit cards (52,2%). Concerns over the security of credit card information and complicated checkout processes were also significant factors leading to abandoned carts.
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