Boosting Your E-Commerce in South Africa: The Power of Local Payments
Discover how to unlock South Africa’s e-commerce potential by tailoring payments to local preferences. Explore digital commerce dynamics, online retail dominance, and access relevant numbers and insights.
João Paulo NotiniNovember 30, 2023
Embark on a digital journey to unlock the vast potential of South Africa’s e-commerce landscape by tailoring your payment strategies to local preferences. In this exploration of the thriving market, we’ll delve into the dynamics of digital commerce, the role of online retail, and the pivotal aspect of offering local payment solutions.
An overview of E-commerce in South Africa
E-commerce in South Africa stands tall as a leading economy, spearheading the digital frontier. While gaming and Software as a Service (SaaS) flourish, the heart of the matter lies in the exponential growth of digital commerce. The ready-to-go market beckons global brands, propelled by robust internet connectivity, consumer spending potential, and diverse payment options.
- Digital purchases reached almost USD 11 billion in 2022, making South Africa the third-largest digital market in Africa.
- With around 78% internet penetration, a pillar of e-commerce, South Africa aligns itself with high-income nations.
- Digital payment adoption is significantly ahead of the African average at a remarkable 70%, surpassing the continent-wide adoption by 24%.
- Despite recent challenges, South Africa’s economic resilience places it among the largest upper-middle-income markets on the continent. A GDP per capita of around USD 6,500 showcases the nation’s financial strength.
South Africa’s Online Retail Dominance
The South African e-commerce market is well developed compared to other African countries, with international brand presence and local giants such as Takealot. Global behemoths like Amazon and fashion retailer SHEIN have recognized the country’s potential.
Shein is already the most downloaded shopping app in South Africa, while Amazon is set to expand into Africa, starting with South Africa and Nigeria, by the end of 2023.
Regarding online retail, the market is driven by various online purchases, with clothing and shoes leading the charge. The ever-growing user rate of the internet, projected to grow by ten percentage points by 2027, is a significant driver of this exponential growth.
Here are some insightful consumer data according to Statista:
- Clothing and shoes lead online purchases, with 46% and 36% of consumers favouring these categories.
- Approximately 27 million e-commerce users were registered in 2022, which is forecasted to increase to 37.9 million users by 2027.
- Home delivery remains a significant driver of online shopping, with over 70% of respondents mentioning “direct delivery to my home” as a primary driver in 2022.
Online Payments are the future of South Africa’s e-Commerce
As mentioned previously, payments are among the most significant responsible for e-commerce growth in South Africa. According to EBANX’s Beyond Borders Study about Africa, the country stands as an African outlier when it comes to payments, with electronic transfers being the most common payment method:
- Over 80% of retail transactions rely on electronic transfers.
- Banking penetration is at 85%, with almost 60% of the population owning a debit card.
- Finding alternative payment methods to cash and credit cards is vital to propelling e-commerce growth in South Africa.
Alternative Payment Methods to Fulfill Local Needs
Finding alternative payments to cash and credit cards is vital to propelling e-commerce growth in South Africa. According to Statista, cards are South African digital commerce’s most used payment method. This highlights a pent-up demand for digital business that will only be brought to light once merchants offer alternative payments.
- Cards dominate digital commerce payments, emphasising the potential growth with alternative options.
- Bank transfers through mobile money services, like EFTs and Instant EFTs, are currently the most used alternative payment in South African digital commerce. OZOW is a famous payment method example that fits into this category.
Accessing South Africa’s Digital Commerce Potential
As you have seen, South Africa stands at the forefront of the digital revolution in Africa. With a burgeoning digital landscape, a growing e-commerce market, and a dynamic payment ecosystem, the country presents a unique opportunity for global brands.
South Africa beckons as international companies contemplate expansion as a digital frontier waiting to be explored. Decision-makers and top executives from global brands should consider South Africa a top contender for development and move over saturated markets like Europe and North America. It is known that expanding into new markets has its challenges. For a smooth journey, global e-commerce players need a savvy payment partner. So, here’s where EBANX comes in.
With over a decade of experience in emerging markets, EBANX is your ticket to unlocking South Africa’s digital potential. Offering Visa, Mastercard (as local credit and debit cards), and the local favourite, OZOW, EBANX makes it hassle-free—all without setting up local entities to start selling.
Your gateway to thriving in South Africa’s digital realm starts with the right payment partner with the proper payment methods. Are you ready?