Young people aged between 25 and 34, catergorised as Millennials by Pew Research Centre, were a large driver of the surge in online shopping to a value of R71 billion in 2023 a 29% increase from last year.
The 2023 rise comes after 35% growth the previous year, which took total sales to R55bn.
The Online Retail in South Africa 2023 report released yesterday by World Wide Worx - in partnership with Mastercard, Peach Payments, and Ask Afrika - showed the sector will go past the R100bn mark by 2026 and will also make up 10% of all retail sales in South Africa.
World Wide Worx MD Arthur Goldstuck yesterday said that at this point, online shopping will generate real excitement among retailers.
Online retail has now reached 6.15% of total retail in South Africa.
Statistics South Africa, in its Statistical Release for Retail Trade Sales for January, reported that total retail for 2023 had reached R1.153 trillion, down 1% from R1.164trln in 2022; only the second time this century that total retail had declined.
The report indicated that, while the boom in sales two years ago could be attributable to what was termed the pandemic dividend due to the massive demand for home deliveries as a result of lockdown, the ongoing gains have been driven by competitive e-commerce strategies from most major physical retailers, existing e-shoppers moving more of their traditional shopping to the online space, and credit card payment processing becoming more streamlined.
Peach Payments CEO Rahul Jain said this online shopping behaviour is here to stay and is permanent.
The Online Retail in South Africa 2023 study also pointed out the success of Shoprite Checkers Sixty60 service, which saw a 63.1% increase in the latter half of 2023, while Pick n Pay grew online sales by 76% and Woolworths reported a 47% online sales increase.
By contrast, the countrys current largest online retailer, Takealot, grew sales by only 6%.
The arrival of Amazon.co.za in South Africa is probably the most momentous event in the local e-commerce industry since the launch of Checkers Sixty60 in 2020, the report states.
At the same time, the highest penetration of online shoppers was among those aged 25 to 34, who are settling into their careers and tend to be more comfortable with technology.
However, spending power among the youth below the age of 25 is crimped because of various socio-economic factors.
Fewer youngsters are shopping online, a figure that is linked to both a lack of education and the current employment situation.
In 2023, 4.7 million young people between the ages of 15 and 34 were unemployed according to Statistics South Africa.
In terms of devices, the use of mobile phones came in at 50.4% last year, surpassing the halfway mark, indicating a growing preference over desktops and laptops.
Clothing and groceries were the items purchased most online, with increased diversity in shopping choices reflecting growing consumer trust in online platforms.
Yet, more than half of shoppers abandoned their carts at checkout because their credit cards declined, while others also bailed out at the payment stage due to concerns over the security of credit card information, and complicated checkout processes.
Goldstuck said the overall findings provided a powerful indication of continued future growth.
This comprehensive report not only reflects the current state of online retail but also forecasts continued robust growth in the sector, partially driven by the arrival of Amazon.com in the local market, he said.
