Online retail rises to 38% of adults in South Africa

Online shopping in South Africa skyrocketed from 27% of adults in 2020 to 38% in 2022 as massive growth continued during the pandemic lockdowns.

This was a key finding of the Online Retail in South Africa 2023 study published this week by World Wide Worx with Mastercard. The study found that online spending patterns and online behaviors of South Africans have continued to evolve rapidly in 2022. This is despite the country’s ongoing recovery from lockdown restrictions and social distancing.

The study included analysis of the annual Target Audience Index (TGI) survey conducted by Ask Afrika, which surveys 16,000 South Africans every six months to collect data on their consumption (products, brands and media), purchasing behavior, attitudes, Collect motivations and beliefs. This survey provides the most detailed demographic breakdown of online shopping available in the country.

The increase in the share of shopping behavior of the population indicates a 40% increase in the total number of shoppers. The first results of the study, published in late 2022, coincidentally showed an annual growth in total online retail spending of almost 40% over the last two years.

“The most telling aspects of the new data lie in the demographic differences between South Africans,” says Arthur Goldstuck, CEO of World Wide Worx, lead analyst on the research project. “The breakdown by gender in particular shows that the traditional gender gap in online shopping, which was male-dominated in the early years, still persists, with 41% men and 36% women shopping online.”

According to the report, one factor contributing to men dominating online shopping is the increased purchase of electronic goods, which have traditionally been a male shopping domain. However, the fact that the biggest areas of growth in online shopping in recent years have been in the grocery and clothing categories, traditionally dominated by female shoppers, suggests that other factors are at work.

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“This may include elements such as male control over the household budget and the likelihood that men are more likely to have a credit card in a household,” says Goldstuck. “It shows that outdated societal norms die hard.”

The age distribution of online shoppers in South Africa has changed significantly compared to 2020 figures. During the pandemic, online shopping had “normalized” across all age groups, and by that time an average penetration of 27% to 30% was seen across all age groups up to the age of 64. Only in the age group 65+ did we see a clear decrease (down to 19%).

In 2022 there were two significant shifts. The first was that the shopping pattern by age reverted to a previously observed pattern, namely that online shopping peaked in the 25-34 age group and then steadily declined with each successive age group. The second major change observed over the past year has been the significant decline in online shopping penetration among the over 65 age group. This is the only age group showing lower penetration than during the peak of the pandemic.

“One conclusion we can draw from the study is that online shopping is highly correlated with age, however, the youngest age group is constrained by incapacity to work,” said Gabriel Swanepoel, Country Manager, Mastercard Southern Africa. “A second conclusion is that the oldest age group has a strong reluctance to shop online, which is supported by another finding that this group is most likely to still prefer in-store shopping experiences.

“Today, more than ever, it is crucial for retailers to understand their consumers. Understand who they are, where they are and how our country’s economy affects them. This will help understand how and where to reach target customers, creating a seamless consumer experience from online to in-store.”

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While most age groups show relatively high agreement with the statement that shopping in-store is preferable to online shopping (24% to 30%), this figure rises dramatically to 41% in the over 64 category. No other demographic metric shows such strong divergence in a segment in terms of preference for shopping experiences.

The metrics that showed the highest positive correlation with online shopping were:
• Education, up from 20% for those with less than a tertiary degree to 54% for those with tertiary education.
• Income rising steadily from 22% for those earning less than R2,500 a month to 62% for those earning more than R50,000.
Goldstuck: “The results are practically a blueprint for online retailers, showing on the one hand where they can reach their most lucrative customers and on the other hand which segments they need to target in order to further expand online trade in South Africa.”