South Africa e-Commerce for the Online Retailer: Should You Expand?

South Africa e-Commerce – is this something that an e-commerce company should look at? Is online commerce popular? Now that Amazon has expanded to the country (amazon.co.za), a seller looking for lucrative markets to expand to might indeed wonder about the health and value of e-commerce in South Africa. Should you expand? How would you go about it?

The quick answer is, yes, it definitely deserves a closer look. South Africa’s e-Commerce landscape has grown at an incredible rate. It’s a young market that’s expected to grow exponentially in the next few years, and a huge opportunity for an online seller. Essentially, digital shopping is quickly becoming the norm in South Africa.

However, to truly succeed in South Africa e-Commerce, sellers must adopt a localized approach. Understanding buyer behavior, preferences for promotions, and the importance of mobile optimization are all crucial. It’s important to tailor offerings to the cultural and logistical needs of the market.

Let’s explore the opportunities behind this growing eCommerce market, and see how to go about expanding to South Africa e-Commerce.

If this worldwide snapshot interests you, read up on the Asian Online Marketplace Review, too!

1. The Growth of South Africa e-Commerce

Statista reports that there is a 34% penetration rate of the e-commerce market in Africa, with a US93+ average spend per customer. According to the International Trade Association, online sales increased 66% from 2019 to 2020. Seventy percent of online shoppers use smartphones to make their purchases.

Gen Z is leading the adoption of new payment methods, with 98% of them owning smartphones and relying heavily on their devices for online shopping and daily transactions. With over 22 million smartphone users in South Africa, a recent Meltwater report ranked the country as the third highest globally for mobile internet usage, highlighting the growing preference for mobile e-commerce over web-based shopping.

Let’s take a look at the most popular product and services among e-commerce users in South Africa, according to Aftership. Here are the estimate sales amount across various categories:

1. Home & Garden with 62.81% of sales
2. Apparel with 6.73% share of sales
3. Health with 4.58% share of sales
4. Food & Drink with 2.73% of sales
5. Gifts & Special Events with 0.76% of sales

Other categories include business & industrial, toys & hobbies, travel, beauty & fitness, and computers. Total estimated sales were at US$2.30 thousand.

Now, what if you want to put up an e-commerce site in Africa? WooCommerce leads the market with total sales of $1.51 trillion, making up 65.63% of the region’s platform sales. Shopify follows with $543.72 billion in sales, accounting for 23.60% of the total. Custom Cart also holds a notable portion, with sales reaching $188.21 billion, representing 8.17% of the overall market.

Similarweb showcases the top 5 platforms for shopping online:

1. Takealot.com
2. makro.co.za
3. amazon.com (note that the statistics show the American site, not the South African site)
4. Temu.com
5. Woolworths.co.za

In 2022, the South African government implemented the Electronic Communications and Transactions Act (ECTA) to regulate South Africa eCommerce. The Act regulates electronic communications and transactions to ward against cybercrimes and encourage consumer protection. Ecommerce businesses must also adhere to the Protection of Personal Information Act (POPIA).

So, what does this mean for the eCommerce seller? South Africa is expected to keep up its love for online retail, spearheaded by the youth – unsurprising, given this looks to be the case for most markets all over the world. The e-commerce market is South Africa is growing, but dominated by local players that are giving Amazon a run for its money.

Curious about how to market to Gen Z? We’ve got you covered.

2. Buyer Behavior & Preferences in the South Africa e-Commerce Market

Go-Globe reports that South Africa is the 42nd largest global market for e-Commerce, and the predicted revenue is expected to reach US$6.56 billion in 2024, according to Statista. The number of users is expected to reach 21.5 million users by 2029.

South African businesses are increasingly utilizing technology to enhance customer engagement. By adopting omnichannel strategies and AI-driven personalized marketing, they are meeting consumer demands for a more flexible and seamless online shopping experience.

A significant advancement boosting the e-commerce landscape is the deployment of infrastructure like the Equiano subsea internet cable. This improvement in internet access is expected to transform online shopping, expand digital payment capabilities, and attract a larger consumer base to the digital marketplace.

Nielsen released the following insights on the consumer behavior of South Africans last 2022:

• Cautious spending habits: Consumers are increasingly budgeting, opting for lower-priced products, and preferring larger packs to manage expenses, weakening brand loyalty.
• Mental wellness and financial security: Mental health (84%), future planning (82%), and job/financial security (81%) are top concerns for South African consumers.
• Shifting brand preferences: Consumers now seek products that align with their changing priorities, creating opportunities for agile and solution-oriented companies to cater to evolving needs post-pandemic.

Here’s additional data from WeeTracker:

• Cross-border e-commerce: South African online shoppers are increasingly purchasing from international websites, with 34% buying from the US, 28% from China, and 16% from the UK. Popular platforms include Amazon, eBay, and Alibaba, with Amazon being the third most visited site in South Africa.
• Payment preferences: Credit and debit cards are the dominant payment methods, preferred by 66% of consumers. E-wallets are also used, and the 2014 introduction of 3D Secure helped address credit card fraud concerns.
• Shopper demographics: 25% of online shoppers are 60 and above, while 57% fall between 25-44 years, mainly well-educated and high-income earners. Most (66%) shop online once every three months, with only 6% shopping weekly. Over 70% of users rely on price comparison sites, indicating price sensitivity. Females account for 55% of all eCommerce visitors.
• Geography: Johannesburg and Cape Town have the most active online transactions
• Mobile commerce: Two-thirds of South African internet visits are mobile-based, with many consumers skipping the desktop stage. Mobile-friendly websites and integrated payment systems are boosting online shopping via smartphones.
• Niche categories: E-commerce is moving towards niche product portals, moving away from multi-product stores to more specialized offerings.

In summary, South Africa’s eCommerce is still in its infancy, with wary shoppers, but the forecast is positive. Thanks to internet penetration, e-commerce could improve even more in 2025. The question is, do South Africans purchase mostly from South African websites? Or do they purchase from the United States and China? What should a seller do?

3. South Africa E-commerce Platforms: Local vs. International

The biggest player in South Africa e-Commerce is takealot.com, with a revenue of US$556.6 million in 2022.

Now, what about Amazon? Its South African platform is the second African market for the eCommerce giant after Egypt, and the 21st country to host an Amazon domain. This sets the stage for competition with established local players. South Africa is recognized as Africa’s most developed economy, and often seen as a strategic entry point for companies hoping to expand goods and services to the continent. According to this report from Reuters, analysts believe that this is why Amazon chose South Africa as its newest market.

However, Sasfin Wealth senior equity analyst Alec Abraham said, “I don’t think Amazon’s takeover of the South African retail market is guaranteed.” He’s not the only one that believes that South Africa’s consumer market may have reached its peak post Covid-19, with many Africans returning to brick and mortar stores.

In fact, Takealot’s CEO, Mamongae Mahlare, believes that Takealot’s extensive delivery network and strong local presence will ensure its position as the top e-commerce digital marketplace in South Africa. It’s unclear how Amazon will configure its platform to meet local regulations, which require a separation between retail operations and marketplace activities.

Mastercard disagrees with this assessment. The company’s findings believe that South Africa’s e-commerce sector is on the cusp of substantial growth, driven by innovation, enhanced infrastructure, and a strong emphasis on customer experience. In 2022, the sector experienced a notable 30% rise in online sales, surpassing R50 billion, while overall retail growth lagged at just 1.7%. These figures signal the beginning of a new era in digital commerce, offering vast opportunities for both businesses and consumers.

In other words, although South Africa e-Commerce looks to be doing quite well for such a young market, and m-commerce is particularly attractive, market dynamics and poor fixed-line infrastructure make ecommerce in South Africa an unstable phenomenon. It’s definitely worth watching this space before you consider expanding, especially given that South Africans also shop from online platforms around the world.

The fact is, local marketplaces offer familiarity and logistical advantages, which is something that Amazon sellers need to take into consideration if they choose to tap into this growing market.

4. Localization: A Key to Success for the e-Commerce Industry in South Africa

WiFi Talents reports that 47% of the consumer market in South Africa prefers local online retailers over international ones, and that 36% of them abandon their carts due to hidden costs. While many consumers enjoy the convenience of online shopping, local pride takes precedence over international goods, and price sensitivity affects online spend.

Given a robust market size of 11.3 million online shoppers, and growing access to the internet, South Africans are quite interested in e-Commerce.

Yet, to tap into this growing market, it’s absolutely crucial to localize your online store.

Let’s start with preferred payment methods. 61% of South African consumers use their credit or debit cards to pay for their purchases, and 38% of consumers also use e-wallet services. The South African Reserve Bank (SARB) is encouraging merchants to adopt 3D Secure payment systems to enhance transaction security, as overseen by the Payment Association of South Africa. This division of SARB ensures that all payment platforms and gateways comply with regulations. It also acts as a guardian, preventing transactions involving illegal goods such as ammunition and cigarettes.

Furthermore, don’t forget that many of the 11 million e-Commerce users in South Africa shop on their mobile devices, so it’s crucial that you optimize your store for mobile use.

Now, it’s absolutely necessary to localize your product listing for South African customers. Helium 10 doesn’t offer keyword research for African markets yet, but the good news is that amazon.co.za operates in English.

South Africa is a melting pot of many different cultures and ethnicities, because of an intricate history with considerable colonial rule: 80% of South Africans are black, 8.8% are mixed (mixed black and white), 7.8% are white, and 2.6% are Asian or of other ethnicities.

Britannica reports the below snapshot:

• Apartheid Racial Classification (1950-1991): The Population Registration Act categorized South Africans into four racial groups—Black, white, Colored (mixed race), and Asian—determining status under apartheid. These classifications were arbitrary and based on factors like family background and appearance.
• Khoekhoe and San Peoples: The original Khoekhoe and San peoples have mostly intermarried, forming part of the Colored population along with slaves from Madagascar and Southeast Asia, Bantu-speaking Africans, and Europeans.
• Colored Population: Descendants of Khoisan, slaves, Europeans, and Africans. Some subethnic groups like the Malays and Griquas still identify as Colored, while others reject the label. They are concentrated in Western, Northern, and Eastern Cape provinces.
• Indian and Asian Population: Descended from indentured workers and traders brought by the British in the 19th century, primarily living in KwaZulu-Natal and urban areas in other provinces.
• White South Africans: Mainly descendants of European settlers (British, Dutch, German) from the 17th century, divided into Afrikaans and English-speaking groups.
• Languages in South Africa:
  • Black South Africans are divided into four linguistic groups: Nguni (including Zulu, Xhosa, Swati, Ndebele), Sotho-Tswana, Tsonga, and Venda.
  • White South Africans primarily speak Afrikaans or English.
  • The Colored population speaks Afrikaans or English.
  • Twelve official languages include Afrikaans, English, Zulu, Xhosa, and others. English is increasingly dominant in formal sectors, reflecting a shift from Afrikaans.

So, how does this information impact the localization of your online store?

It’s absolutely crucial to localize your online business, and it’s easy to do so by incorporating imagery, local idiomatic expressions, and even models to reflect this population. A quick look at Amazon South Africa will show that models are mostly black, and banners showcase African-inspired imagery, with the vibrant colors typical of the region. You can speak to the customers in English, given that so many of them speak it, but to really appeal to the South Africa e-Commerce customer, show true respect, understanding, and awareness of their history, culture, and what inspires them.

Consider offering online promotions and coupons, and localized online payment methods, to encourage buying online from your store. By offering a localized store, and honoring the South African consumer’s preferred means of payment and unique cultural nuances, you can expect to appeal to this market, and establish yourself as a key player and a pioneer at this nascent stage.

While we’re on the topic, we can’t possibly underscore enough the importance of cultural sensitivity in eCommerce. It goes beyond the language barrier!

5. Expansion Considerations in South Africa e-Commerce: Amazon or Local Platforms?

So, given all of this information, and with the understanding that eCommerce is getting particularly attractive in South Africa, let’s compare and contrast selling on Amazon vs. local platforms.

	Pros	Cons
Amazon	Global reach and streamlined operations	Higher competition and fees compared to local platforms
Local Marketplaces	Lower costs, stronger connection with South African consumers	Limited reach and scalability compared to global platforms like Amazon

So, there are pros and cons to both.

Keep in mind – in practice, anyone can sell on local marketplaces like Takealot, but you’ll need a South African ID and a bank account.

Now, amazon.co.za offers many a product category in South Africa, including consumer electronics, sporting equipment, toys, home, and small kitchen appliances, in addition to international brands like Sony, Apple, HP, Chicco, Maybelline, Neutrogena, and Johnson’s. The platform also offers local brands from South African sellers like Amanda-Jayne, King Kong Leather, Tiger Lily, and Masodi – so if you choose to expand to amazon.co.za, you might very well be competing with these home-grown names – in addition to a few big brands with massive expansion budgets.

Although statistics show that amazon.com is the third largest online shopping portal, amazon.co.za is projected to grow. With Amazon’s entry to South Africa e-Commerce, local platforms are facing pressure. Accenture suggests that Amazon’s entry will force local players to sharpen their value propositions and improve customer experiences to stay competitive.

In fact, Amazon’s arrival might trigger a pricing war, which benefits South Africa’s price-conscious consumers.

Nevertheless, many a consumer survey shows that South Africans are happy to buy from the U.S arm of Amazon, and that the South African version of amazon.com still has a ways to go before it catches up to Takealot and other local players.

Conclusion: Approach e-Commerce in South Africa Strategically

So, there you have it. The rapid increase in the number of online shoppers in South Africa has driven significant growth in the country’s e-Commerce sector, with exponential growth predicted year-on-year. In particular, the youth are online in South Africa, with older Gen Z and millennial females leading the charge, in categories such as personal care, gadgets, fashion, home, and toys.

In spite of projections of a positive annual growth rate, the question remains, will South African consumers actually patronize the South African arm of Amazon? Or will they continue to shop on UK and US sites?

However the future looks, one thing is clear – Africa’s definitely worth a good study for your global expansion efforts. Approach South Africa e-Commerce strategically and perhaps even a bit cautiously, given the diverse cultural  and ethnic landscape, price consciousness, preferred payment methods, and preference for local products.

Let us know – are you interested in expanding to South Africa? We’d love to hear from you!

While we’re on the topic of the continent, read about the Significance of e-Commerce Support in Egypt and Saudi Arabia.