A new report warns that South Africa's thriving e-commerce sector could falter without coordinated policies, potentially turning the country into a hub for foreign warehouses rather than local factories. The sector has grown rapidly, but challenges like foreign competition and digital exclusion threaten its benefits. Experts call for urgent action to harness the digital economy for national growth.
South Africa's e-commerce sector has expanded significantly, with its share of retail rising from less than 1% in 2019 to nearly 10% today, according to the report 'Seizing the Moment: Unlocking South Africa’s Ecommerce Promise' by the Ecommerce Forum South Africa, in partnership with the Mapungubwe Institute for Strategic Reflection and Takealot. The sector's value exceeded R96-billion in 2024 and is projected to reach R130-billion this year, positioning the country as more advanced than Brazil or India in e-commerce maturity, as noted by senior researcher Machete Rakabe.
However, the report highlights a troubling paradox: despite this growth, 74% of local online shoppers spend on international platforms, leading to an 'externalisation effect' where benefits leak abroad. Foreign platforms like Shein and Temu have captured over a third of local online clothing sales by exploiting regulatory loopholes and lower compliance costs. This trend is expected to grow to R22.2-billion by 2030, risking over 34,000 local manufacturing and retail jobs. Takealot CEO Frederik Zietsman warned, 'unless the imbalance is fixed, we will become a country of warehouses, and not a country of factories'.
The report identifies five structural challenges: fragmented regulation across agencies like the SA Revenue Service and Competition Commission; lack of localisation policies hollowing out the industrial base; digital exclusion sidelining R900-billion in township and rural economies; and insufficient control over data and algorithms. Oversight is splintered, with regulators using outdated laws for a modern economy, as Deputy Commissioner Hardin Ratshisusu observed: 'The regulators of today are working with laws designed for a very old-age economy'.
To address these, the report proposes a 'CART' framework: 'Connect' for digital inclusion via infrastructure and skills; 'Accelerate' for small business participation through logistics hubs; 'Regulate' with a dedicated e-commerce unit in the Department of Trade, Industry and Competition; and 'Trade' leveraging the African Continental Free Trade Area. Phuthi Mahanyele-Dabengwa, CEO of Naspers South Africa, emphasized collaboration: 'with the right investment and collaboration, we can not only drive South Africa forward, but can drive the African continent forward'. Ecommerce Forum SA CEO Dr Alastair Tempest likened the sector to a watch: 'It looks simple from the outside, but if the cogs and wheels don’t work together, it won’t keep time'.
Without action, growth may cannibalize existing retail rather than create new value, the report cautions, urging innovation-friendly policies like regulatory sandboxes.