Online Retailing in South Africa: An Overview

Abstract

Online platforms and e-commerce have revolutionized retail, expanding the opportunities for companies and businesses to reach a wider range of customers, personalize preferences, lower prices and enhance consumer experiences. Online stores provide routes to market for smaller businesses and could potentially result in lower transaction costs. In South Africa, e-commerce has grown rapidly but at 1-2%, accounts for a small proportion of total retail spend, and lags behind other developed markets. The growth of e-commerce in South Africa is reported to have been hindered historically by the high prices and poor quality of internet services, and the reliability and cost of delivery mechanisms. However, e-commerce is growing rapidly from a small base and, as data costs come down, logistics improve and trial increases it can be expected to grow even faster. It is therefore important that South Africa considers the implications of e-commerce for its own industrial strategy and growth plans. This paper aims to provide an overview of online retailing South Africa. It outlines the patterns and trends in online retailing in South Africa as well as segments in the value chain including payments and logistics systems. It also identifies some of the opportunities and challenges in the sector and provides policy recommendations for future industrial policy.