Online sales accelerate in South Africa

In news certain to buoy South African online retailers, a new research report released this week by independent technology research and strategy organisation, World Wide Worx has found that retail in South Africa has entered a phase of sustained acceleration.

‘The Online Retail in SA 2011’ study shows that the total spent on online retail goods in South Africa passed the R2 billion mark in 2010 for the first time. It reached R2,028 billion, a growth of over 30% with regard to the previous year.

With the industry consensus pointing to 40% growth this year, online retailers are even more bullish about 2011. This 40% growth would represent the highest rate of growth for online retail in South Africa in almost a decade.

“This dramatic rise in online retail comes in the wake of an ongoing increase in the number of experienced Internet users in South Africa”, says Arthur Goldstuck, managing director of World Wide Worx and principal analyst for the survey. “Last year there were 3.6-mlilion people who had been online for five years or more. By 2015, that figure will be 6.8-million — almost double the potential e-commerce market of today”.

According to Stats SA, 2010 saw traditional physical retail in South Africa reaching R561 billion. This means at a mere 0.36%, online retail still only makes up less than half a percent of total retail in South Africa. But at the same time, with the growth rate of online retail in South Africa in 2010 being four times that of physical retail — 30% vs 7% – this is rapidly changing.

Internationally, according to global online retail data analysed in the report, growth slowed in most regions during the global financial crisis, but did not turn negative. Industry estimates for the total value of global online retail in 2010 come to an average of about US$545 billion. The figure for 2009 was US$469 billion.

This indicates that whilst it still makes up a small proportion of total retail worldwide, globally, just as in South Africa, for now online retail is recession-proof.

“This shows us that online retail growth represents not a rise in shopping activity, but rather a shift in shopping activity, from the physical space to the online space”, says Goldstuck.