Online shopping exceeded R50 billion in 2022

Online shopping in South Africa exceeded R50 billion in 2022, signalling that this way of remote shopping that took off during the pandemic lockdowns, is not slowing down now that all restrictions were lifted.

The growth in online shopping was driven by demand for home deliveries, according to new research findings from World Wide Worx and Mastercard published as Online Retail in South Africa 2022.

The study revealed that the total growth for online retail in South Africa in 2022 came to 35%, bringing the total of online retail in South Africa to R55 billion, after 40% growth the previous year took the total to R42,3-billion in 2021, 4% of the R1,166-trillion total, marking healthy growth from the 2.8% recorded in 2020. In 2022, total retail is expected to reach R1,16-trillion, with online retail making up 4.7% of the total.”

“You can call this the pandemic dividend,” Arthur Goldstuck, MD of World Wide Worx, says. “The 2020 boom in home deliveries continued for the past two years as retailers compete aggressively in every area of online shopping.”

Black Friday also boosted online sales, with all banks reporting massive increases in card and online spending on what has become one of the biggest shopping days of the year. Stellar performers included:

• Checkers Sixty60, which grew turnover by 150% from July 2021 to July 2022
• Mr Price, which reported online retail sales up 48.2% for the year to April 2022 and
• Pick ‘n Pay, which reported in its annual results for the year to the end of February 2022 that online sales had seen annual compound growth of 72.5% over the previous two years.

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Ecommerce growing while retail stagnates

The relentless rise of ecommerce is occurring at the same time as total retail stagnates. According to Stats SA’s Statistical Release for Retail Trade Sales for January 2022, total retail for 2021 reached R1,166-trillion, up from R1,063-trillion in 2020, healthy growth of 9.7%, but after a 4.4% fall in 2020.

However, the data is less promising for 2022, with retail trade sales declining by 0.6% in the year to September and a 1.9% fall in the third quarter, the second quarter of retail decline. One of the biggest decreases of 8.1% was noted in the category of food, beverages and tobacco, but online retail sales benefitted from a fundamental shift in shopping behaviour.

“Since physical shopping was limited during the hard lockdown, we first saw a rise in consumers resorting to online shopping. This helped them to get comfortable with this way of shopping. However, with comfort of use we see emerging consumer needs and expectations that go beyond being able to shop online,” Gabriel Swanepoel, country manager of Mastercard South Africa, says.

This means that growth in online retail comes from consumers shifting existing buying behaviour from physical shops to online stores and apps and not from greater demand.

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Now consumer expectations are also growing

“Based on our observation, consumers are expecting online retailers to offer fast delivery with apps, such as Uber Eats and Superbalist, that offer same day delivery. Additionally, there seems to be an expectation from the highest levels of security before shopping at a particular online retailer.”

Swanepoel adds that consumers want an omnichannel shopping experience, which allows customers to pick up where they left off on one channel and continue the experience on another. “Consequently, consumer attitudes seem to have changed and we anticipate that with those changes we will see the evolution of online shopping and some interesting innovations from retailers responding to these changes.”

The World Wide Worx findings are compiled using accumulated figures and projections from listed companies, interviews with unlisted online retailers and data from card transactions.

“Total online retail comfortably surpassed our previous forecast of R52-billion for 2022,” says Goldstuck. “However, it will fall just below the 5% mark, a milestone that was previously anticipated for the end of 2022, but we are confident it will be reached in 2023.”