The E-Commerce Boom and the Cross-Border Challenge
South Africas retail sector has changed dramatically in the past few years, driven by a surge in online shopping and powerful new players from abroad. Chinese e-commerce platforms like Shein and Temu have rapidly expanded their South African customer base, attracting local shoppers with trendy merchandise at astonishingly low prices. These platforms offer a dizzying array of goods from fast fashion to gadgets often at costs that local stores cannot match.
A major reason for their competitive pricing rests in the way they structure cross-border shipments. By splitting orders into smaller packages, each valued below R500, these companies have long exploited a loophole in South Africas tax system. Until now, these low-value imports slipped through customs without attracting Value-Added Tax VAT or substantial customs duties. For buyers, the result was a seamless and affordable online shopping experience.
This approach, however, has deeply unsettled the domestic retail and manufacturing sector. Local businesses, required to pay VAT and customs duties on bulk imports and subject to stricter regulations, found themselves at a significant disadvantage. As Shein and Temus popularity soared, South African retailers lost not only sales but also their grip on pricing and market relevance. The digital marketplace, once a promise of opportunity for all, now appeared tilted in favor of international giants.