Online entertainment, cooking classes, clothing & groceries drive R30bn e-commerce boom

13 May 2021 - 12:27
By TimesLIVE
SA online retail leapt to R30bn last year, as the Covid-19 pandemic drove consumers to e-commerce experiences.
Image: 123RF/Christian Mueller SA online retail leapt to R30bn last year, as the Covid-19 pandemic drove consumers to e-commerce experiences.

Online retail jumped to R30.2bn in SA in 2020, thanks to the explosion in demand for home deliveries and entertainment brought about by the Covid-19 pandemic and periods of lockdown.

This is according to a study conducted by World Wide Worx with the support of Mastercard, Standard Bank and Platinum Seed.

The total growth for online retail in SA in 2020 came to 66%. “The most astonishing aspect of this total is that it is more than double the R14.1bn reached in 2018, in just two years,” says World Wide Worx MD Arthur Goldstuck, principal analyst on the research project.

The figure is most dramatic when compared to traditional retail, he said.

In 2018, online retail represented 1.4% of total retail, estimated at the time at R1.07trillion.

Online had outpaced traditional retail growth throughout the past 20 years, since it came off a low base, but traditional retail still grew every year until 2019. However, in 2020, it slumped as a result of lockdown and economic hardship.

According to preliminary data from Stats SA, at current prices, total retail fell by 4.2%, to R1.05trillion. The percentage of retail made up by online retail sales came to 2.8% – exactly double the percentage for 2018.

“While equivalent growth cannot be expected for 2021, it can be stated fairly confidently that it will exceed the 30% growth of 2019, when expansion was organic and a factor of the evolution of shopping habits and retail strategies,” said Goldstuck. “Those factors remain 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 about R42bn in 2021, taking the online percentage of total retail to about 4%, assuming traditional retail returns to its previous growth path.

In November, Mastercard released the findings of a survey of 1,000 South African consumers, which found that 68% of respondents were shopping more online since the onset of the pandemic.

The categories experiencing the highest growth, aside from data and airtime top-up, were clothing, at 56%, and groceries, at 54%.

More than two-thirds – 68% – 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% of respondents saying they had spent more money on virtual experiences than they did before the pandemic.

The majority had participated in video calls for work or leisure (88%), three quarters (75%) had watched TV or films through an online subscription service, and nearly half (47%) had taken part in a virtual cooking class.

“This trend appears to be here to stay, as 71% of respondents say they will continue to shop online post-pandemic,” said Suzanne Morel, Mastercard SA's country manager.

Subsequent phases of the Online Retail in South Africa 2021 study, to be released later in the year, will include an analysis of the performance of online retailers, and an insight into global trends.