E-Commerce In South Africa: Growing At Breakneck Speed

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The South African market is adopting ecommerce at a rapid pace. With more and more consumers becoming comfortable with using online platforms to make purchases, It presents opportunities for businesses and brands especially in an environment of slowing retail sales, as reported by Statistics SA on Wednesday.

According to Claude Hanan, Co-founder of design curated website Citymob.co.za, “Ecommerce in SA is quite a defensive industry at the moment. Even when broader macro trends point to muted consumer spending, the number of shoppers becoming online shoppers is growing faster than the decline in basket sizes as a result of falling disposable income.”

We are still very far away from being in a position where all those who WANT to shop online, can and do shop online. If one takes a deeper look, South Africa has 3% ecommerce penetration (being the % of total population who shop online). This equates to about 1.5m people. This figure is expected to double by 2016 to 6% or 3 million people, but Hanan feels it will more than double.

“ There are 13.2m internet users in SA currently. However, a measure we prefer looking at – which has been identified by Arthur Goldstuck, is the number of internet users who have been online for LONGER than a 5 year period. Currently this sits at 4.6m.” But a point Hanan is eager to make is that no-one is comparing the 1.5m currently active online shoppers to the 4.6m potential user base. If you do, you see that only 32% of people, who are ready to shop online, actually are shopping. Why is this? There are a number of reasons but top contributors are awareness, trust and quality of offering.

E-commerce to reach R4.2b in 2013

The market is growing very quickly. Again, according to research by World Wide Worx, online retail is growing at 25-35% per year and is expected to reach R4.2bn in 2013. “It’s not a case of local online companies getting better in the next few years, they are getting better right now. It’s happening today. More users are online, shipping is faster, product offerings are better, client service is smoother. So the tailwinds in the industry are legitimate and we are benefiting massively from that and are hugely excited about the growth of ecommerce in SA over the next 5 years.”

Citymob took advantage of the opportunity and have seen phenomenal growth across the board.
“All KPI’s are in the green. When we compare y/y growth to where we were 12 months ago the figures are staggering. Since the start of 2013, we have seen user growth in excess of 200%, monthly site visits have more than doubled and orders per month has increased in excess of 120%. As a result of these factors, we have seen substantial revenue growth, which is something we are incredibly excited about” says Claude.

It is estimated that by 2016 there will be 17m internet users in SA and a much bigger 8.5m of those will have been online for 5 years or more or ‘ecommerce ready.’ “This represents a massive opportunity for the ecommerce market, but while there are countless opportunities in the space, you need the necessary experience, skills and the right team in place to succeed. The space is insanely competitive and only the nimble survive.” Concludes Claude.