A new study by global payments processor MasterCard shows signs of a growing e-commerce sector in SA, with rising online retails sales as a result of the pandemic and its subsequent lockdowns.
Online retail, a part of the broader e-commerce trend, has been on the rise globally for the past decade. That said, in SA, where the retail culture has traditionally been characterised by high foot traffic at shopping centres and malls, as well as informal and township economies, online retail made up less than 2% of total retail sales before Covid-19 affected our way of life in 2020.
E-commerce has been given a huge boost during pandemic, driven by a reluctance of shoppers to visit retail locations as they normally did. Prosus-backed fintech platform PayU estimates that this now accounts for 5% of total retail sales.
However, new data shows that more and more South Africans are shopping online, an indication that the sector has potential to grow further. The job of retailers now is to convert that momentum to a larger chunk of the total retail pie.
The Mastercard study on consumer spending showed that 68% of SA consumers are shopping online, with 54% buying groceries online since the onset of the Covid-19 pandemic.
Recent moves by the country’s retail giants over the past year seem to back these findings.
Checkers quickly scaled up its Sixty60 app, a mobile grocery delivery platform that allows a customer to shop in as little as 60 seconds and get their groceries delivered in 60 minutes, when lockdowns came into effect. The retailer launched the service at eight stores just before the lockdown, ramping up to more than 88 by June 2020.
Pick n Pay Bottles, a start-up providing on-demand alcohol delivery, has partnered with the grocery store giant.
On the whole e-commerce is on the rise around the world. According to Mastercard, in 2020 e-commerce made up roughly $1 out of every $5 spent on retail, up from about $1 out of every $7 spent in 2019.
“As Covid-19 kept consumers around the world at home, nearly everything from groceries to gardening supplies was purchased online,” said the report. The data shows that this growth amounted to an additional $900bn being spent in retail online globally in 2020.
Mastercard said consumers increased their e-commerce footprints, buying up to 30% more from online retailers, which reflects greater consumer choice. In SA, consumers are said to be supporting their favourite local small businesses, with 63% saying they are making a conscious effort to shop online at these stores, said the report.
Bricklin Dwyer, Mastercard’s chief economist and head of the Mastercard Economics Institute, said: “While consumers were stuck at home, their dollars travelled far and wide thanks to e-commerce.” He said this had significant implications, with the countries and companies that have prioritised digital channels continuing to reap benefits. “Our analysis shows that even the smallest businesses see gains when they shift to digital,” he said.
In addition to increased online sales, Mastercard said the shift had resulted in greater electronic payments adoption. The payments company said 75% of South Africans in their study said they use contactless payments, with 71% preferring to shop at merchants where contactless engagement was accepted.
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