Last year saw an unprecedented rise in online retail and services, thanks to the COVID-19 pandemic and various phases of lockdown. According to a study by World Wide Worx, in conjunction with Mastercard, Standard Bank and Platinum Seed, online retail in South Africa jumped to R30.2 billion in 2020. Consumers were shopping up a storm online and making the most of home entertainment subscription services. And, as shopping habits adjust to the 'new world', 2021 is set to see even more growth in the e-commerce sector. We're taking a look at the industries coming out on top during this online boom, and finding ways for you to get in on the action...
How the e-commerce boom is affecting industry in SA
Let's take a look at a few encouraging stats...
Total growth for online retail in South Africa came to 66% in 2020. In just two years, retail sales went from R14.1 billion in 2018 to R30.2 billion in 2020.
The online percentage of total retail doubled between 2018 and 2020, going from 1.4% to 2.8%.
In 2021, online retail sales are expected to reach R42 billion by the end of the year, accounting for about 4% of total retail sales.
Unfortunately, with the rise of e-commerce and online shopping, traditional retail numbers took a bit of a dip. This was expected as many consumers avoided malls and shopping centres during COVID-19. With this change in shopping habits, and a general slump in economics, total retail fell by 4.2% in the last year. But, as things pick up, 2021 is looking to be a healthier year for retail in general, and e-commerce in particular.
Which industries are driving the e-commerce boom?
In November 2020, Mastercard released a series of findings from a survey they conducted with 1 000 South African consumers. Among the results was the insight that 68% of participants claimed to be shopping online more since the onset of COVID-19. It also indicated that 71% of respondents would continue to shop online after the pandemic. It seems the e-commerce boom is here to stay. Here are the industries that came out on top last year...
Aside from the ever-popular airtime and data top-up e-commerce services, the clothing industry was the one that showed the most growth in 2020. Online shopping in the fashion industry saw growth of 56% in a time when most people weren't shopping much at all. That's impressive.
Unsurprisingly, the demand for online grocery services grew during the pandemic. And, we saw apps like Checkers Sixty60 make the most of this trend. Online shopping for groceries saw growth of 54% last year.
3). Online entertainment
According to Mastercard, the demand for online entertainment surged during the pandemic. Their survey found that 52% of respondents spent more money on virtual experiences in 2020 than they did before the pandemic. And a whopping 75% used an online subscription service to watch TV or films.
4). Virtual classes
While people were stuck at home, may of them decided to use the time constructively. Apparently, 68% of participants took the time to learn a new skill, with 47% taking part in a virtual cooking class. Consumers had the time, and wanted to turn it into a positive learning experience.
How can you get in on the e-commerce action?
It's definitely not too late to get involved in e-commerce. Or simply tweak your current business model to make e-commerce part of your digital transformation. The first step is to do loads of research into successful e-commerce business models and learn from existing companies. You also need to make sure there's an e-commerce market for what you're selling. Then, it's a case of building an efficient website and going mad with ads, promotions and e-mail marketing to attract customers to your store. And it's worth including m-commerce in your business plan. Trends forecasters are predicting mobile online shopping to be the next big thing, so make it part of your app development strategy.
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