Online retail in South Africa surpassed the R50-billion milestone in 2022, a new study by World Wide Worx and Mastercard shows.

Amid an ongoing boom in demand for home deliveries, online retail increased 35% to R55-billion during 2022.

This followed 40% growth to R42.3-billion in 2021, according to the Online Retail in South Africa 2022 study.

“One can call this the pandemic dividend. The 2020 boom in home deliveries has continued for the past two years, as retailers compete aggressively in every area of online shopping,” says World Wide Worx MD and principal analyst on the research project Arthur Goldstuck.

The study further revealed a boost in online sales during Black Friday, which has become one of the biggest shopping days of the year, with all banks reporting significant increases in card and online spending.

During 2022, stellar performers emerged, including Checkers Sixty60, Mr Price and Pick n Pay.

Checkers Sixty60 reported 150% turnover growth from July 2021 to July 2022, while Mr Price reported that online retail sales increased 48.2% for the year to April 2022.

Pick n Pay, meanwhile, reported in its financial results for the year ended February 2022 that online sales had seen yearly compound growth of 72.5% over the previous two years.

“The relentless rise of ecommerce is occurring at the same time as total retail stagnates,” says Goldstuck, citing Statistic South Africa’s Statistical Release for Retail Trade Sales for January 2022, which reported that total retail for 2021 had reached R1 166-trillion, up from R1 063-trillion in 2020.

This represented a healthy 9.7% growth, but after a 4.4% fall in 2020, he adds.

“For 2022, the data is less promising, with the most recent quarterly report, for the three months to the end of September 2022, showing retail trade sales had declined by 0.6% in the year to September.

“The last quarter saw a 1.9% fall for the three months to the end of September, representing a second quarter of retail decline.”

Goldstuck notes that the food, beverages and tobacco category, with an 8.1% fall in sales, was one of the biggest drops.

The World Wide Worx findings, compiled from accumulated figures and projections from listed companies, interviews with unlisted online retailers and data on card transactions, also reveal what percentage online retail makes up of total retail in South Africa.

For 2021, online retail accounted for 4% of total retail in South Africa, marking healthy growth from the 2.8% recorded in 2020, while in 2022 online retail accounted for 4.7%.

While it fell just below the 5% mark, a milestone that had previously been anticipated for the end of 2022, it is believed that this will be reached in 2023.

Online retail sales are also benefiting from a fundamental shift in shopping behaviour.

“Since physical shopping was limited during the hard lockdown, it was during this time that we first saw a rise in consumers resorting to online shopping,” explains Mastercard South Africa country manager Gabriel Swanepoel.

On the back of this, he says consumers got comfortable.

“The result is that growth in online retail comes not from increasing demand, but from consumers shifting existing purchase behaviour from physical shops to online stores and apps.”

However, with comfort of use, there are emerging consumer needs and expectations that go beyond being able to shop online.

“Based on our observation, consumers are expecting online retailers to offer fast delivery with apps such as Uber Eats and Superbalist, that offer same-day delivery,” says Swanepoel, adding that there also seems to be an expectation of the highest levels of security before shopping at a particular online retailer.

Further, consumers are increasingly seeking an omnichannel shopping experience that allows customers to pick up where they left off on one channel and continue the experience on another.

“Consequently, consumer attitudes seem to have changed, and we anticipate that with those changes, we will see the evolution of online shopping and some interesting innovations from the retailers, thus responding to these changes,” he concludes.