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E-commerce in South Africa

Globally, e-commerce is booming. More and more people are shopping online, and even small businesses are rushing to set up fully fledged e-commerce sites. This trend has been accelerated by the pandemic – but it appears unlikely to lose momentum, even once COVID-19 is fully behind us.

E-commerce in South Africa is unique in some ways. It offers both specific opportunities and challenges.

The term electronic commerce (ecommerce) refers to a business model that allows companies and individuals to buy and sell goods and services over the Internet.
– The Global Merchant

The rapid growth of e-commerce in South Africa

The South African e-commerce sector has seen massive growth since the start of 2020. This has been spurred by the COVID-19 pandemic. Business Insider cites FNB reporting a 30% growth rate in the first half of the year compared to 2019.

Online retail giants reported massive increases in sales and revenue. Takealot had revenue growth of 28%, while OneDayOnly recorded a 128% increase in sales.

According to research conducted by Mobicred, SA’s largest digital credit facility, the growth was in adoption rates and product selection. The study revealed some interesting trends. Consumers over 60, who have been traditionally hesitant to shop online, showed an increase in Mobicred applications of 90%.

Predicted growth of e-commerce in South Africa

Despite the massive growth, online shopping still only accounts for 2% of South Africa’s total retail spend. This is 14% less than the global average.

Online shopping is beneficial to small businesses and consumers. If the full potential of the e-commerce sector can be harnessed, it can have a positive impact on the economy.

Advantages of e-commerce for small businesses

Online shopping is an increasingly viable option for entrepreneurs. Many small businesses are turning to online sales due to the low entry barriers. Setting up a shopping website is easy and affordable compared to setting up and operating a physical shop.

Also, it’s easy to target consumers via social media and search engine advertising. Once a business has established a client base, it can build a reputation online, with reviews and ratings.

E-commerce is unique in that it helps level the playing field. It gives small businesses the opportunity to compete against much bigger players – not just locally, but nationally and internationally too.

Why consumers benefit from online shopping

Consumers across all age groups have adopted e-commerce because it’s so simple. Product information is readily available, so it’s easy to make product comparisons. During lockdowns, home delivery has been available.

Products are often cheaper online because retailers transfer their reduced expenses down the supply chain.

Overall, shopping online has become safer and more convenient than shopping at brick and mortar retail outlets. There’s no need to face traffic, navigate or pay for parking or waste time.

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