Inclusive growth for ecommerce in SA
by Mamongae Mahlare. The arrival of more competitors in the SA ecommerce market is a good thing. It speaks to scope for growth. As it stands, online retail accounts for a mere 4% of the total retail market in South Africa.
by Mamongae Mahlare. The creation of a native ecommerce industry in South Africa is attracting established global competitors. This is an indicator that the local market has capacity for extensive growth worthy of investment by global players, as well as established local players.
Even loadshedding hasn’t dimmed South Africa’s light with global players entering the local retail market. It is set to be an interesting time for South African consumers and other retailers which have ambitions for winning in the omnichannel play. Beyond the arrival of a big global player, there are important considerations around what the growth path looks like for ecommerce; and questions around what will change and whether all changes will be for the better for all.
The arrival of more competitors is a good thing. It speaks to scope for growth. As it stands, online retail accounts for a mere 4% of the total retail market. The opportunity is there to double and triple that, reaching over 12% within the next decade, or sooner. To scale the number of people that use this channel more regularly and the businesses which can grow as part of this adoption, will take investment; access to data; reduction of known friction factors; and constructive competition.
One of the side effects of familiarity is missing what is right in front of you. It is important to be awake to the local retailers, their investment, and the momentum that is being gained in growing their online footprints. They have the insight to tailor their executions to cater for the nuances of the South African consumer. We have already seen an increase in local activity, and it is expected that this will continue to rise. It is very likely that global players entering the SA market will find there is more than one strong contender to compete with within this market (Ed’s note: Amazon is entering the SA market in 2023).
One of the powerful aspects of ecommerce is that the game isn’t about the online platforms alone. There will be ripple effects that impact local retailers, as well as the marketplace businesses that are created and enabled through the growth of ecommerce. For example, through the Takealot.com marketplace, we have enabled around 8,000 small to medium businesses to date with a cost-effective and instant route to market. That’s 8,000 businesses that create jobs and serve consumers who would otherwise not have been able to successfully enter the formal economy.
We know that small business are a critical driver of economic growth and future job creation, so we want to see this number double and triple, powered by local homegrown SMEs. When you consider that our ecosystem has spawned 33,000 jobs in a decade, the power of these enablement platforms for transforming young South Africans lives is unparalleled.
There is also the question as to whether international competitors will build a local seller base or bring in international sellers? This will have real implications for small business development and, as a country, we need to preferentially support those that grow local economic participation. This is particularly relevant for South Africans struggling to get jobs and with the ambition of building their own businesses — they want to be active participants in the economy, and this must be protected and supported. Local Is lekker, local is power, local is the future.
This explosion of ecommerce competition will have a very real impact on the circular economy. It’s important to protect local companies because they pull on multiple threads throughout the country. A small business will source its supplies from another business and that business will source its goods from another local business and all three will source employees from local communities.
This circular economy is critical to the growth and transformation of our economy. The value of consumer spend must be retained In the country, and the economy, the communities, and the local businesses. This must remain a priority – putting inclusiveness at the heart of growth and expansion. This doesn’t just ensure that communities thrive and success but is an investment into the economy and broader society that will benefit everyone in the long-term.
The arrival of global players in South Africa is a nod to what we have built here and to the presence of a compelling opportunity. South Africans are ready for growth and ecommerce creativity, and now it is up to us to bring that to life. It’s going to be challenging – that’s the point of competition – but it’s also going to be agile, exciting and deliver immense value to the South African market and those courageous enough to be part of the building. We see a bright future in ecommerce and we are glad that global peers do too.
Main image credit: Pexels.com.
Mamongae Mahlare is Group CEO, Takealot. The Takealot Group is a home-grown South African business, helping to champion the local digital economy and increasing access to quality retail products and services countrywide. It has helped thousands of small businesses and business partners to find an audience and grow in the formal economy.
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