E-commerce sales in SA grow 20-35% annually

It is no secret that e-commerce is giving brick-and-mortar a run for its money, and every year the numbers keep increasing.

According to global market researcher, Statista, an estimated 1.8 billion people worldwide purchased goods online in 2018. During the same year, global e-retail sales amounted to $2.8 trillion, with projected growth of up to $4.8 trillion by 2021.  

In South Africa, the market for online retail reached approximately R10 billion in 2017,  according to an Online Retailing in South Africa: Review by the Industrial Development Think Tank (IDTT). 

However, it says that with the size of general retail trade estimated to be R 1 trillion in 2017, this still only amounts to 1% of the total retail market.

This basically means that even though there has been an increase in online store, South Africa is stilling lagging worldwide, because in countries such as the UK, online sales account for 18% of sales.  

This, however, does not dispute the fact that online retail has been growing at a pace that far surpasses traditional retail.

The data reveals that the growth of online retail in South Africa to be between 20-35%, based on the graph below.

E-commerce value chain

The whole process of purchasing online until the product reaches the consumer’s hands is a value chain of online retailers inputs such as marketing and customer, analytics, provision of the technical platform, supply of sales stock, inventory management, payment systems warehousing and logistics. Every one of these functions can be provided inhouse or outsourced.

One of the stores that have been able to optimise the full potential of e-commerce is Planet54.com.

Planet54.com, a Durban based virtual shopping mall of The Word Focus Group (TWFG) which was launched in 2016 has grown by 300% year-on-year. The online store offers 10 000 product types from clothing, footwear, fashion accessories and technical products.

Opening doors

Now the locally online retailer is offering entrepreneurs the opportunity to sell their products on its site through their Planet54 E-Retailer Entrepreneurship Programme.

“Planet54’s vertical business model, which includes local manufacturing, quality imports, local warehousing and in-house distribution, allows us to keep our pricing on high-quality merchandise competitively low, allowing reseller enterprises the flexibility to add a lucrative mark-up and create sustainable small businesses for themselves,” says MI Jeewa, Planet54 managing director.

The retailer says it has been able to increase its sales because it does not have restrictions on quantities and allow shoppers the liberty to shop according to their budget and style.

It attributes its success to offering its consumers’ affordable pricing coupled with an efficient distribution that has unlocked the door to hundreds of new smaller enterprises.

“The products you see online are all available in our warehouses and we can deliver anywhere in the country within an average of three to five days,” says Jeewa.

Shahil Maharaj  Planet54 Director, says the program mainly targets bulk buyers, offering them incentive discounts and business support.

“Customers who regularly spend R5000 or more in a single purchase may apply to participate in the Planet54 E-Retailer Entrepreneurship Program and following a basic vetting process, may be recognised as an official Planet54 e-retailer”.

He adds it has 300 recognised e-retailers including buyers from South Africa, Namibia and Botswana.

“We remain in constant contact with these small business owners and are extremely encouraged by reports of up to 100 % growth in their turnover, month-on-month,” said Planet54 Director,” Maharaj says.