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online retail south africa

Online Retail in South Africa 2023

Stephen Timm | South Africa | 18 September 2023

Online Retail in South Africa 2021

Gary Phillips | South Africa | 06 November 2021

Online Retail in South Africa 2020

Duncan Bekker | South Africa | 17 August 2020

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Report Coverage

This report examines South Africa’s burgeoning online retail industry, focusing on large online only players like Takealot and the increasing ecommerce capacity of the major traditional retailers. It includes information on the state of the industry, major sales categories, recent developments and trends, corporate actions, and influencing factors such as Black Friday and delivery. There are profiles of 47 companies including major players such as Takealot, international players including Alibaba and Amazon and online only companies such as Gumtree and Bob Shop.

Introduction

• Following steep growth during the pandemic, online sales growth has begun to slow.
• South African online sales grew by 30% year on year in 2022, significantly faster than total retail sales which grew by just 1.7%.
• Online sales growth slowed from 40% in 2021 and may well have slowed further in 2023 as total retail sales declined by 1.4% year on year in May 2023.
• This report examines online retail focusing on large online only players like Takealot, and the increasing ecommerce capacity of traditional retailers.
• Amazon’s launch is expected to shake up competition in the sector.
• The Competition Commission has identified practices used by local online retailers that it says are anti-competitive.

Trends

• Amazon’s imminent launch could propel online retail sales and shake up competition in the sector.
• Deliveries to townships are growing.
• Online sales growth is beginning to slow as consumer spending comes under pressure.
• Social commerce and live shopping are growing.
• Use of technology such as AI and chatbots.

Opportunities

• Amazon’s launch could create opportunities for small online merchants.
• Payment solutions such as buy now pay later.
• The Competition Commission’s online platforms inquiry findings could result in more favourable terms for smaller online retailers which use online platforms to sell their goods.
• The Post Office’s decline has given private couriers an opportunity, particularly in rural areas and townships.
• Use of technology to expand and quicken deliveries, including smart lockers and AI.

Challenges

• Ecommerce is dominated by Takealot, major retailers and Uber Eats.
• Foreign-based online retailers with no physical presence in South Africa present a threat, as they are not subject to local laws.
• High data costs make it difficult for many to access the internet.
• Input costs such as electricity and petrol have risen.
• Lack of recognisable street addresses makes it difficult for online retail to expand to rural areas and townships.
• Loadshedding affects sales.
• Online retail remains small at less than 5% of retail sales.
• Robberies, fraud and cybercrime.
• The Post Office’s decline has made delivery more expensive.

Outlook

• Growth in online retail sales has begun to slow following the surge during the pandemic, and as consumers come under financial pressure.
• Retailers are positive as growth continues to exceed traditional retail sales by some measure.
• Despite some challenges, the ecommerce boom will likely continue to transform the retail industry.
• There is strong competition, and online retail is still far from reaching the point of maturity.
• Local online retailers have some way to go to improve availability and prices.
• Delivery costs remain a key challenge.

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Online Retail in South Africa 2023

Full Report

R 20 000.00(ZAR) estimated $1044.05 (USD)*

Industry Landscape

R 14 000.00(ZAR) estimated $ 730.83 (USD)*

Historical Reports

Online Retail in South Africa 2021-11-06

R 6 500.00(ZAR) estimated $339.32 (USD)*

View Report Add to Cart

Online Retail in South Africa 2020-08-17

R 1 900.00(ZAR) estimated $99.18 (USD)*

View Report Add to Cart

Table of Contents

[ Close ]
PAGE
1. INTRODUCTION 1
2. DESCRIPTION OF THE INDUSTRY 1
2.1. Industry Value Chain 3
2.2. Geographic Position 5
2.3. Size of the Industry 6
3. LOCAL 8
3.1. State of the Industry 8
3.2. Key Trends 16
3.3. Key Issues 16
3.4. Notable Players 17
3.5. Trade 19
3.6. Corporate Actions 19
3.7. Regulations 20
3.8. Enterprise Development and Social Development 22
4. AFRICA 23
5. INTERNATIONAL 24
6. INFLUENCING FACTORS 26
6.1. Economic Environment 26
6.2. Labour 26
6.3. Environmental Issues 27
6.4. Technology, R&D, Innovation 28
6.5. Input Costs 29
6.6. Black Friday 30
6.7. Delivery 30
6.8. Crime 31
7. COMPETITIVE ENVIRONMENT 32
7.1. Competition 32
7.2. Ownership Structure of the Industry 33
7.3. Barriers to Entry 35
8. INDUSTRY SUMMARY 36
9. OUTLOOK 37
10. INDUSTRY ASSOCIATIONS 37
11. REFERENCES 37
11.1. Publications 37
11.2. Websites 38
APPENDIX 1 40
Summary of Notable Players 40
COMPANY PROFILES 48
Africa Online Retail (Pty) Ltd 48
Alibaba Group Holding Ltd 50
Amazon.com Inc 53
Appetite South Africa (Pty) Ltd 57
Bifrost Distribution (Pty) Ltd 58
Bob Group (Pty) Ltd 59
Bolt Services ZA (Pty) Ltd 61
Bubblestorm Management (Pty) Ltd 63
Caught Online (Pty) Ltd 65
Clicks Group Ltd 66
Cotton On South Africa (Pty) Ltd 70
Dis-Chem Pharmacies Ltd 73
Dreamware Technology (Pty) Ltd 85
Evetech (Pty) Ltd 86
Fashion United SA (Pty) Ltd 88
First Technology IT Suppliers (Pty) Ltd 90
Foschini Group Ltd (The) 91
Gumtree South Africa (Pty) Ltd 96
HomeChoice (Pty) Ltd 97
Jade E-Services South Africa (Pty) Ltd 99
JD Consumer Electronics and Appliances (Pty) Ltd 101
Massmart Holdings Ltd 103
Mr Price Group Ltd 108
Munyhub Online Ticketing Services (Pty) Ltd 114
Naspers Ltd 115
Nedbank Ltd 119
NetFlorist (Pty) Ltd 128
OneCart (Pty) Ltd 129
Onedayonly Offers (Pty) Ltd 131
Pepkor Holdings Ltd 132
Pick n Pay Stores Ltd 137
Quench Delivery (Pty) Ltd 142
Retailability (Pty) Ltd 143
Shopify Inc 147
Shoprite Holdings Ltd 150
SPAR Group Ltd (The) 176
Supper Society (Pty) Ltd (The) 181
Takealot Online (RF) (Pty) Ltd 182
Tetra Computing (Pty) Ltd 187
Truworths International Ltd 188
Uber Technologies Inc 193
VMS Group (Pty) Ltd 196
Vodacom Group Ltd 198
Woolworths Holdings Ltd 202
Wootware Computers (Pty) Ltd 207
Yuppiechef Online (Pty) Ltd 208
Zara Retail South Africa (Pty) Ltd 210

Report Coverage

This report examines the latest trends in South Africa’s flourishing online retail industry, giving particular focus to large online-only companies such as Takealot, growth in online trade among South Africa’s national retailers and key issues for smaller retailers entering online trade. It includes comprehensive information on the state of the industry, growth, innovation and the performance of the major players. There are profiles of 41 companies including global players such as Amazon and Alibaba, the major local companies including Takealot (Takealot, Superbalist and Mr D Food) and Massmart, and retailers that are significantly increasing online sales such as Shoprite, Pick n Pay and Woolworths.

Introduction

The South African online retail industry was one of the few winners during the economic restrictions that accompanied the pandemic in 2020. This report examines the latest trends in South Africa’s flourishing online retail industry, giving particular focus to large online-only companies such as Takealot, growth in online trade among South Africa’s national retailers and key success factors for smaller retailers entering online trade. Amid the strong growth in online retail during 2020, the country also warmed to the broader potential of the digital economy and belief in the adoption of online shopping as a key to the future of trading in South Africa grew in importance into 2021. Digital economy commentators believe that 2020 was a “tipping point” for online retailing’s penetration of the retail market. In 2020, online retail exceed 2% of total retail sales for the first time. While optimism among industry stakeholders is high, there is also an awareness of the risks of entering online retail. Online retail adds complexity to the brick-and-mortar retailer’s value chain rather than simplifying it. Success is not guaranteed and the identification of key success factors is vital, especially for new entrants seeking to benefit from the industry’s growth. In addition, as the digital economy has increased its penetration of the overall economy, so new risks to competition have been identified, prompting South Africa’s competition authority to conduct an extensive enquiry into the industry. Consumer spending trends are key to continued growth and investment by retailers into online technology and supply chain systems. However, the long-term impact of the pandemic and shock events like the widespread unrest and looting in Gauteng and KwaZulu-Natal may put pressure on consumer spending.

Strengths

• Increasing investment in online retail platforms, particularly among the established traditional retailers.
• Key online only players like Takealot among the largest and most successful on the continent.
• Long term trend of annual double-digit online sales growth.
• Potential to support small business and greatly ease market access.
• Rising internet penetration.
• Traditional retailers have a wide physical footprint and well-developed national supply chains to support shift to online and omnichannel offerings.

Weaknesses

• For large players, success can depend on significant and ongoing investment in logistics and technology. Such barriers are much lower for small players using third-party solutions.
• High data prices and bandwidth caps.
• Relatively high delivery costs undermine adoption among poorer consumers, and in market segments with generally lower per-transaction spend, like online grocery.
• Relatively small addressable market primarily confined to wealthier middle class.
• South African skills shortage.
• Structural weaknesses in the wider retail sector, linked to sustained low economic growth and pressured consumer expenditure.
• Very poor postal services complicate supply chains and necessitate use of private couriers.

Opportunities

• Continual technological innovation and disruption of traditional retail model.
• Growing acceptance and use of online food delivery, including significant growth in online grocery shopping during the lockdown.
• Growing number of third-party marketplaces have greatly reduced barriers to entry for businesses looking to sell online.
• Innovation in payment technologies allowing a growing number of payment methods in attempt to reach wider customer market.
• Ongoing sustained growth in many categories like electronics, clothing, hardware, pharmacy and groceries.
• Pandemic outbreak and lockdown have driven an unprecedented boom in online retail adoption and spending.
• Rapid adoption of click and collect delivery

Threats

• Consumer hesitancy to adopt ecommerce: shopping mall culture; perceptions of data as a significant cost; ongoing distrust of online payments.
• High delivery costs.
• High real estate costs for warehousing
• Load-shedding and rising electricity costs
• Long term consequences of pandemic and lockdown on consumer spending, economic growth, employment, investment, and incomes.
• Shortages of technical expertise, and difficulties filling high-skilled positions, can significantly undermine potential growth.
• Tendency for intermediation platforms to concentrate online retail market share in the largest player.

Outlook

The pandemic has provided online retailing with an unexpected boost in its growth and development as consumers migrated from instore shopping. While the impact of the demand spike will tail off as restrictions come to an end, analysts expect continued growth, now buoyed by a shift in consumer habits favouring online shopping. It appears that retailers have, by and large, been able to convince shoppers of the trustworthiness and convenience of online shopping. Having displayed agility, scalability and innovation to catch this wave, the future outlook for online shopping will depend on retailers’ ability to capitalise on this new normal. As many have become aware, retaining the customers won to online shopping will require significant investment as will the importance of continually improving user experience. The high rate of innovation and disruption creates some uncertainty. Large companies will continue to look for game-changing acquisitions of innovative tech startups and small companies will continue to invest in increasing the quality of their online service; while everyone will look to scale up. The onerous costs of order fulfilment will continue to be tackled. Retailers will continue to look for ways to include lower income groups and the unbanked in online shopping. South Africa’s growth, internet connectivity, logistics infrastructure and policy environment will continue to have an effect on the sector.

Read More..
Online Retail in South Africa 2021

Full Report

R 6 500.00(ZAR) estimated $339.32 (USD)*

Industry Landscape

R 4 550.00(ZAR) estimated $ 237.52 (USD)*

Historical Reports

Online Retail in South Africa 2023-09-18

R 20 000.00(ZAR) estimated $1044.05 (USD)*

View Report Add to Cart

Online Retail in South Africa 2020-08-17

R 1 900.00(ZAR) estimated $99.18 (USD)*

View Report Add to Cart

Table of Contents

[ Close ]
PAGE
1. INTRODUCTION 1
2. DESCRIPTION OF THE INDUSTRY 1
2.1. Industry Value Chain 8
2.2. Geographic Position 9
3. SIZE OF THE INDUSTRY 10
4. STATE OF THE INDUSTRY 32
4.1. Local 32
4.1.1. Corporate Actions 36
4.1.2. Regulations 36
4.1.3. Enterprise Development and Social Economic Development 38
4.2. Continental 39
4.3. International 43
5. INFLUENCING FACTORS 45
5.1. COVID-19 45
5.2. Economic Environment 46
5.3. Rising Input Costs 48
5.4. Technology, Research and Development (R&D) and Innovation 50
5.5. Environmental Concerns 52
5.6. Labour 53
6. COMPETITION 57
6.1. Barriers to Entry 59
7. SWOT ANALYSIS 59
8. OUTLOOK 61
9. INDUSTRY ASSOCIATIONS 61
10. REFERENCES 62
10.1. Publications 62
10.2. Websites 63
APPENDIX 1 64
Summary of Notable players 64
COMPANY PROFILES 69
Alibaba Group Holding Ltd 69
Amazon.com Inc 72
Bidorbuy (Pty) Ltd 76
Bolt Services ZA (Pty) Ltd 78
Bubblestorm Management (Pty) Ltd 80
Carbonite Inc 82
Caught Online (Pty) Ltd 84
Clicks Group Ltd 85
Cotton On South Africa (Pty) Ltd 89
Dis-Chem Pharmacies Ltd 92
Evetech (Pty) Ltd 103
Fashion United SA (Pty) Ltd 105
Foschini Group Ltd (The) 107
Gumtree South Africa (Pty) Ltd 112
HomeChoice (Pty) Ltd 113
Jade E-Services South Africa (Pty) Ltd 115
JD Consumer Electronics and Appliances (Pty) Ltd 117
Loot Online (Pty) Ltd 119
Massmart Holdings Ltd 121
Mr Price Group Ltd 127
Munyhub Online Ticketing Services (Pty) Ltd 133
Naspers Ltd 135
NetFlorist (Pty) Ltd 138
OneCart (Pty) Ltd 139
Onedayonly Offers (Pty) Ltd 140
OrderIn (Pty) Ltd 142
Pick n Pay Stores Ltd 144
Quench Delivery (Pty) Ltd 149
Shopify Inc 151
ShopLi (Pty) Ltd 154
Shoprite Holdings Ltd 155
SPAR Group Ltd (The) 161
Spoiler Tags (Pty) Ltd 167
Takealot Online (RF) (Pty) Ltd 168
Truworths International Ltd 173
Uber Technologies Inc 179
VMS Group (Pty) Ltd 182
Woolworths Holdings Ltd 184
Wootware Computers (Pty) Ltd 188
Yuppiechef Online (Pty) Ltd 189
Zara Retail South Africa (Pty) Ltd 191

Introduction

This report examines South Africa’s burgeoning online retail industry, with a particular focus on large online only players like Takealot, and the increasing ecommerce capacity of the country’s leading traditional retailers. Despite enjoying double-digit sales growth for many years, online retail’s share of overall retail trade was still below 2% in 2019, and stakeholders maintain that the industry has huge long-term growth potential. Investment in technology and supply chains is increasing, and the coronavirus outbreak and lockdown has driven an unprecedented boom in online spending and adoption. However, the longer-term impact of the crisis may have an adverse effect on the economy, employment, investment, and incomes and put pressure on consumer spending throughout the retail sector.

Strengths

• Increasing investment in online retail platforms, particularly among the established traditional retailers.
• Key online only players like Takealot among the largest and most successful on the continent.
• Long trend of annual double digit online sales growth.
• Potential to support small business and greatly ease market access.
• Rising internet penetration.
• Traditional retailers have a wide physical footprint and well developed national supply chains to support shift to online and omnichannel offerings.

Weaknesses

• For large players, success can depend on significant and ongoing investment in logistics and technology. Such barriers are much lower for small players using third-party solutions.
• High data prices and bandwidth caps.
• Relatively high delivery costs undermine adoption among poorer consumers, and in market segments with generally lower per-transaction spend, like online grocery.
• Relatively small addressable market, primarily confined to wealthier middle-class.
• South African skills shortage.
• Structural weaknesses in the wider retail sector, linked to sustained low economic growth and pressured consumer expenditure.
• Very poor postal services complicate supply chains and necessitate use of private couriers.

Opportunities

• Business failures like Edcon and DionWired present opportunities for market consolidation.
• Continual technological innovation and disruption of traditional retail model.
• Coronavirus outbreak and lockdown have driven an unprecedented boom in online retail adoption and spending.
• Growing acceptance and use of online food delivery, including significant growth in online grocery shopping during the lockdown.
• Growing number of third-party marketplaces have greatly reduced barriers to entry for businesses looking to sell online.
• Innovation in payment technologies allowing a growing number of payment methods in attempt to reach wider customer market.
• Ongoing sustained growth in key categories like electronics and clothing.
• Rapid adoption of certain omnichannel services like click and collect.

Threats

• Entrenched barriers to ecommerce adoption including: shopping mall culture; perceptions of data as a significant cost; ongoing distrust of online payments.
• High delivery costs.
• Load-shedding.
• Long term consequences of pandemic and lockdown on economic growth, employment, investment, and incomes.
• Shortages of technical expertise, and difficulties filling high-skilled positions, can significantly undermine potential growth.
• Tendency for online retail industry to concentrate market share in the largest player.

Outlook

After years of double-digit growth, the online retail market in South African is undergoing an unprecedented boom, partly driven by the effects of the coronavirus outbreak. Many players initially struggled under South Africa’s economic lockdown and the prohibition of non-essential retail. However, since May, South African ecommerce has experienced rapid sales growth and a huge increase in online adoption among consumers and businesses. Players of all sizes, and across all market segments, have reported triple digit increases in sales compared to the same period last year. While the currently elevated spending is likely to normalise, analysts expect that the uptick in online activity will be permanent due to more consumers becoming accustomed to online channels, and an ongoing concern regarding health and social distancing. However, the increased demand is also expected to test players’ supply chains and overall ecommerce readiness. Takealot CEO Kim Reid identifies consistently excellent customer service, from ordering to delivery, and ongoing investment in technology as the key factors which will differentiate successful competitors. Online retail’s share of total retail was expected to break 2% in 2020, but a number of stakeholders now expect that the online market’s actual growth could be between 40% and 100% higher than previously anticipated. There is however also growing concern that the pandemic and lockdown will have severe long-term economic consequences for South Africa, and deepen many of the structural challenges facing the country and wider retail sector. A growing number of economists expect a severe contraction in GDP, an ongoing recession costing potentially millions of jobs, falling tax revenue and rising debt, and growing pressure on state finances, private sector investment, and consumer spending.

Online Retail in South Africa 2020

Full Report

R 1 900.00(ZAR) estimated $99.18 (USD)*

Industry Landscape

R 1 330.00(ZAR) estimated $ 69.43 (USD)*

Historical Reports

Online Retail in South Africa 2023-09-18

R 20 000.00(ZAR) estimated $1044.05 (USD)*

View Report Add to Cart

Online Retail in South Africa 2021-11-06

R 6 500.00(ZAR) estimated $339.32 (USD)*

View Report Add to Cart

Table of Contents

[ Close ]
PAGE
1. INTRODUCTION 1
2. DESCRIPTION OF THE INDUSTRY 1
2.1. Industry Value Chain 3
2.2. Geographic Position 5
3. SIZE OF THE INDUSTRY 6
4. STATE OF THE INDUSTRY 18
4.1. Local 18
4.1.1. Corporate Actions 35
4.1.2. Regulations 37
4.1.3. Enterprise Development and Socio-Economic Development 39
4.2. Continental 40
4.3. International 43
5. INFLUENCING FACTORS 44
5.1. Economic Environment 44
5.2. Input Costs 45
5.3. Technology, Research and Development (R&D) and Innovation 47
5.4. Labour 49
5.5. Environmental Concerns 51
5.6. Barriers to Ecommerce Adoption 52
6. COMPETITION 53
6.1. Barriers to Entry 56
7. SWOT ANALYSIS 57
8. OUTLOOK 58
9. INDUSTRY ASSOCIATIONS 59
10. REFERENCES 59
10.1. Publications 59
10.2. Websites 61
APPENDIX 1 62
Summary of Notable players 62
COMPANY PROFILES 67
ALIBABA GROUP HOLDING LTD 67
AMAZON.COM INC 70
BIDORBUY (PTY) LTD 74
BOLT SERVICES ZA (PTY) LTD 76
BUBBLESTORM MANAGEMENT (PTY) LTD 78
CARBONITE INC 80
CLICKS GROUP LTD 82
COTTON ON SOUTH AFRICA (PTY) LTD 86
DIS-CHEM PHARMACIES LTD 88
EVETECH (PTY) LTD 98
FASHION UNITED SA (PTY) LTD 100
FOSCHINI GROUP LTD (THE) 102
GUMTREE SOUTH AFRICA (PTY) LTD 107
HOMECHOICE (PTY) LTD 108
JADE E-SERVICES SOUTH AFRICA (PTY) LTD 110
JD CONSUMER ELECTRONICS AND APPLIANCES (PTY) LTD 112
LOOT ONLINE (PTY) LTD 114
MASSMART HOLDINGS LTD 116
MR PRICE GROUP LTD 122
MUNYHUB ONLINE TICKETING SERVICES (PTY) LTD 127
NASPERS LTD 128
NETFLORIST (PTY) LTD 131
ONECART (PTY) LTD 132
ONEDAYONLY OFFERS (PTY) LTD 133
ORDERIN (PTY) LTD 134
PARCELNINJA (PTY) LTD 135
PICK N PAY STORES LTD 137
QUENCH DELIVERY (PTY) LTD 141
SHOPIFY INC 142
SHOPLI (PTY) LTD 144
SHOPRITE HOLDINGS LTD 145
SPAR GROUP LTD (THE) 150
SPOILER TAGS (PTY) LTD 156
TAKEALOT ONLINE (RF) (PTY) LTD 157
TRUWORTHS INTERNATIONAL LTD 161
UBER TECHNOLOGIES INC 166
WOOLWORTHS HOLDINGS LTD 169
WOOTWARE COMPUTERS (PTY) LTD 173
YUPPIECHEF ONLINE (PTY) LTD 175
ZARA RETAIL SOUTH AFRICA (PTY) LTD 177