The evolution of South African e-commerce

The Household Affordability Index shows that the average South African family is spending 13.1% more on groceries in February 2023 compared to the same time a year ago – reflecting the increasing living costs impacting everything from fuel to food and electricity.

During a period where interest rates and scarcity mean that almost all budgets are stretched thin, it is important for businesses in the retail sector to understand the relevance of spending habits, preferences and trends to adapt their offering and price points accordingly.

Spending survey results published by South African online loan provider Wonga examine how trends are evolving, comparing data from the past seven years, and explore how people spend, save and choose to interact with retail brands. Among the key takeaways from the report are:

• Consumers are spending less on discounts and sale events such as Black Friday and festive periods, including Christmas.
• Fewer people are using short-term lending to finance ad hoc purchases, with 40% relying on savings and 36% depending on a workplace bonus.
• Luxury expenses such as restaurant dining, entertainment and clothing are becoming less desirable, where discretionary spending dips in favour of the essentials.

The primary mood is caution, where consumers choose to reduce credit borrowing and are less likely to be enticed by short-term deals, instead prioritising value, longevity and quality, where a purchase is necessary, justifiable and likely to last.

The report shows that, between 2017 and 2023, consumers shopping via mobile rose from 60% to above 80%, bringing demand for digital apps and mobile-compatible websites in line with global norms.

Statista indicates that, in the UK, almost 100% of people owned a smartphone in 2022, and mobile commerce in 2019 accounted for £50.36 billion of spending – predicted to more than double in 2024.

However, the specific mood in the South African climate is somewhat different, where more consumers are purchasing online to reduce their outgoings, with 32% citing online shopping as a strategic way to achieve lower prices while avoiding unnecessary spending on petrol.

Motorists have borne the brunt of considerable increases in transport costs, making e-commerce a viable alternative, where pricing is competitive, consumers can order goods directly to their homes and feel they are supporting their financial health by buying digitally.

Another insight is that many consumers are choosing not just what to spend but how to buy, based on economic volatility, with a 25% growth in health and wellness products predicted for 2023, as people look for ways to support their well-being without spending over and above their household budgets.