Region/Countries: Africa and the Middle East, South Africa Industry: Other Date: January 2017

Why this is important to Wisconsin businesses: Wisconsin firms involved in IT platforms and other sectors of e-commerce or retail should consider opportunities in this fast-growing market.

Wisconsin firms involved in e-commerce should be aware of its fast growth in Africa, which, though still far behind the U.S., is rallying to catch up. Globally, e-commerce reached $2 trillion in 2015. In South Africa, right now it accounts for 1 percent of the country’s retail sector, at approximately $800 million. However, the sector is growing at a rate of between 25 and 35 percent year-over-year. A recent study found that the majority of online shoppers were women ages 18 to 39; the majority of online purchases are between R250 and R1000 ($18 to $70); one-third of those surveyed made 10 or more purchases online per year; and 28 percent of shoppers make online purchases using their mobile phones.

Further analysis with PayFast, one of South Africa’s top payment gateways, found that the busiest time for online stores was after the 25th of each month; the average order size in South Africa was around R725 ($53); and 70 percent of all online transactions were paid for with a credit/check card.

According to Kevin Tucker, founder of PriceCheck and expert in the sector, the following trends will be seen in South Africa as it gets caught up with larger markets:

  • participation international online retail sale days such as Black Friday and Cyber Monday;
  • faster delivery turnaround: this has historically been a hurdle in South Africa due to an unreliable postal service, but delivery through various providers and couriers has improved over the last few years;
  • an increase in the variety of product offerings online;
  • customer behavior evolution: as e-commerce offerings increase to include brick-and-mortar stores and their products, which have not traditionally been sold online, consumers will increasingly trust the safety and convenience of online shopping; and
  • the use of mobile devices (and smartphones in particular) within the e-commerce space, a major consideration for retailers, which must consider mobile-friendly website design, mobile apps and payment options.

Tucker estimates that e-commerce will grow at an annual rate of around 40 percent over the next 10 years, as consumer behavior continues to shift in favor of online platforms.