Retail continues to undergo a digital revolution that is redefining industry standards and reshaping how businesses compete and thrive. As Euromonitor highlighted in 2023, this transformation isn’t just about where and how people shop - “it’s about how the entire industry operates”. More channels, tougher competition, and higher customer expectations are raising the stakes for success. Ecommerce, while settling into more stable growth post-pandemic, remains the key growth driver in retail. Globally, it’s expected to account for 47% of retail growth through 2027. In South Africa, ecommerce is set to grow at 13%+ CAGR through 2027.
The ecommerce market is material, with penetrations varying by country and category (Euromonitor):
- Global market as at 2023: $5 trillion with 22% penetration
- USA: 21%
- UK: 25%
- China: 27%
- Brazil: 14%
- South Africa: R60 billion, or ±5.6% of total retail
- Apparel & Footwear: Globally, 26% penetration, with the US leading at 38%.
Why does it keep growing?
1. More choice
Selling online has never been easier, exploding product variety. SKU counts are soaring across industries, with supermarkets averaging 7,000 in the 70’s to 40,000 today, and a 30-fold increase in the auto sector. In two decades, retailers experienced a 50% SKU jump, per McKinsey. Customers have never had this much choice, and online excels in handling vast choice through limitless shelf space, advanced search and filter capabilities, and personalised recommendations. Ecommerce also increases price transparency. Customers easily compare prices from multiple sellers in seconds.
2. Digital natives
With each passing year, more and more of the consumer population is made up of digital natives (individuals who grew up in the era of the internet). These consumers have different habits and are comfortable with technology and prefer digital channels for convenience, personalisation, transparency and choice. The rise in mobile has further fueled this trend.
3. Better, faster delivery
Advancements in logistics have made ecommerce faster and more reliable. From automated warehouses to advances in last-mile delivery, these improvements optimise the customer experience and improve conversion and retention.
4. It’s attractive to omni-channel retailers once it reaches scale
Ecommerce is scalable and allows meaningful operating leverage.
To thrive in ecommerce, retailers must prioritise robust digital infrastructure, seamlessly integrating cloud-based systems for scalability, accurate and real-time inventory management, and cutting-edge technology stacks. Success hinges on fast, accessible data flows and a tech-forward approach to operations.
Ecommerce is not just another channel; it is the backbone of modern retail - powering growth, driving innovation, and shaping customer loyalty. In South Africa, where ecommerce is still emerging, it offers an unparalleled opportunity to lead and define the future of the industry. Success in this space is the ultimate barometer of a retailer’s digital maturity and adaptability, reflecting technical excellence that drives transformation across the business. Retailers that invest boldly in digital transformation and anticipate consumer needs have the chance to build enduring success in an increasingly competitive market.