South Africans have shown a deep love for online shopping, with data revealing that the digital market grew by a staggering 35% in 2022 alone, reaching R55 billion.
According to consumer research and analytics company, Eighty20, nearly 13 million South Africans shopped online in 2022.
This excludes data, airtime and electricity, and accounts for 37% of the population aged 15 years and older, which indicates a 6% increase from 2021.
The “Online Retail in South Africa 2022” study conducted by World Wide Worx and Mastercard, also showed that online shopping in South Africa is growing rapidly.
The study showed that the South African online retail market grew 35% in 2022 reaching R55bn, while overall retail sales increased by only 7.3% year-on-year between January to November, 2022 according to Stats SA.
Growth for 2023 is expected to be about 25%, which could see online retail exceed 5% of total retail in South Africa for the first time.
After Black Friday and Christmas comes Valentine’s Day, an imminent hallmark calendar day set to build the 2023 e-commerce trajectory.
Leading South African e-commerce retailer, Takealot has seen searches for Valentine’s Day up 25% compared to 2022.
The growth of online retail supports the view that the rapid change in retail behaviour brought on during the pandemic is here to stay.
Customers are changing the way they shop and to remain competitive, retailers have been scrambling to meet the speed, convenience and efficiency that customers expect from online shopping.
The Eighty20 National Segmentation (ENS) which summarises and tracks key South African consumer segments shows how both digital adoption and e-commerce has not only been driven by the wealthier heavy hitter segment (typically earning R40 000+ per month), but can also be seen across most demographics.
Mobile commerce (or m-commerce), referring to the move of e-commerce to primarily mobile devices, has been a significant contributor to making online shopping more accessible to all consumer segments.
“This Valentine’s Day, online retailers will be looking at ways to encourage existing and attracting new customers to go online to show their love. Data from BrandMapp shows that preferred online shopping categories vary by ENS segment. Heavy hitters and middle-class workers favour shoes and bags, while the mass credit market opt for clothing and apparel,” says Steve Burnstone, CEO at Eighty20.
According to MAPS (a nationally representative survey conducted by the Marketing Research Foundation), when it comes to buying gifts online, heavy hitters and middle-class workers who earn on average R15 000 per month are the most likely to treat someone special with an online gift. Across all segments, online contributes only 11% of the total gifting market, leaving lots of room for growth.
Top performing gifting categories online
Traditionally Takealot’s top performing categories on Valentine’s Day are fragrances, skincare, liquor (especially wine), chocolates, lingerie, watches and jewellery, with fragrances, chocolates and lingerie showing the strongest growth over the past few years.
Dining in?
Mr D Food completed 27% more orders on Valentine’s Day in 2022 compared to a any comparable Monday. The “extra orders” started ramping up at 2.30pm, with 7.30pm seeing nearly double the number of orders than normal. While most partner restaurants benefited from the increased orders, the true stars were the smaller groups and independents, who saw 35% more orders. While chicken, burgers and pizza still retained at the top spots, Mr D Food sold more than 2.5 times the amount of sushi and desserts than on a typical Monday.
The gift of choice
Vouchers are purchased frequently throughout the year, yet Takealot has seen a significant increase in the uptake of R1 000 vouchers around Valentine’s Day over the past four years. When zooming into Mr D Food’s gifting option, in 2022 about 500 SnackMe gifts were purchased on the day, and hundreds of orders were delivered with messages (entered in the delivery instructions to the driver) to loved ones referencing “Valentine’s Day” or “Love”.
For retailers, one advantage of e-commerce is its ability to allow businesses to gather data revealing insights into who their customers are, how they behave, and how to best engage with them. Traditionally retailers needed loyalty programmes to gauge these insights. Brands that will succeed in the future are those that take the time to understand their customers and target market and developing compelling, customer-centric engagement strategies. “In some cases, we have seen customers 10 times more likely to make a purchase if presented with a relevant, timeous offer,” said Burnstone.
Business Report