South Africa - ECommerce South Africa - eCommerce
E-Commerce is making steady progress in the South African retail environment, especially in far-flung areas where traditional distribution channels are too costly. Traditional retailers have almost all taken on a web-presence to compete with mail-order companies; many outsource delivery to a service provider. South African online spend forecast projected annual growth rate of 15% through 2021. This accounts for 1% of the country’s retail sector as a whole and indicates immense potential for growth and opportunity. Internet user penetration is at 47% and expected to reach 60% by 2021 and mobile penetration is 65% and growing. In South Africa, generally B2B customers are also B2C customers, so interaction is generally the same. Both have become accustomed to performing consumer product research online. As a result both types of customers are using consumer and B2B websites to purchase products and services for their companies or as individuals.
Current Market Trends
The top e-Commerce product category in South Africa is media products, including books, CDs, DVDs, and games. Consumers are also price conscious, favoring online promotions and coupons. South Africans are spending more time online researching better prices and seeking product recommendations on social media.
South Africans purchase mostly from South African websites, but 27% purchase from the United States, and 14% from Europe. The U.S. version of Amazon.com is the third most visited e-commerce website in South Africa.
Credit card and debit cards are the most preferred payment methods. Consumers also use e-wallet services for online payment. Due to the growth of credit card fraud, the Payment Association of South Africa mandated the use of 3D Secure in 2014. Merchants have reported that increased flexibility in the application of 3D Secure to online transactions in recent years has reduced cart abandonment by consumers.
Cell phones have largely replaced wallets, as banks, card operators, retailers and communications companies provide alternatives to cash as a means of payment. M-commerce, where cell phones are used to pay for goods and services, has advanced beyond mobile banking to debit and credit transactions. M-commerce is particularly attractive in South Africa due to the rapid increase in the number of cell phones, limited access to the Internet, and poor fixed-line infrastructure. This provides an immense opportunity for online retailers, as mobile spend is projected to increase by 123% by 2018.
Social media platforms are becoming more pervasive as marketing tools in South Africa. More than 90% of South African major brands advertise on social media platforms. On a consumer level, growth for most networks has slowed down, but engagement by users has intensified.
Major Buying Holidays
International online sale days such as Black Friday and Cyber Monday are popular in South Africa and offer opportunities for retailers to reach more customers.