By Dudley Filippa
E-commerce is a key part of global shopping, offering huge opportunities for traders and consumers everywhere.
In 2020, a Deloitte study found that more than 70% of South Africans were shopping online compared to the previous year, probably due to Covid-19 lockdowns. By 2022, online spending reached R59 billion. This year, the e-commerce sector expanded to R71bn, accounting for 6% of total retail. Projections suggest the figure could rise to R225bn by 2025, reflecting significant growth in online retail.
The e-commerce boom in South Africa, driven by the digital revolution, is causing diverse reactions: euphoria among consumers, excitement among small and medium-sized enterprises (SMEs) and panic among established retailers and manufacturers.
In the current economy, price sensitivity greatly influences consumer shopping. Brands offering convenience, competitive pricing and variety will be best positioned to lead in this evolving market.
Global giants such as Shein, Temu and Amazon are fast gaining market share and increasing pricing pressure on traditional local retailers. The upsurge of the relatively new players has been met with much resistance from local retailers and the textile industry.
E-commerce significantly contributes to the country’s gross domestic product by creating new jobs, empowering independent couriers and stimulating new markets for SMEs. This enables smaller businesses to compete with larger ones, boosting economic growth and improving South Africans’ standard of living.
By breaking down geographical barriers, e-commerce further enables SMEs to access a global customer base. The boom also presents a lucrative opportunity for innovative and enterprising, growth-focused South African SMEs to break into the profitable Chinese online, e-commerce market.
One of the major reasons why e-commerce is an attractive option for SMEs is its affordability. It allows aspiring entrepreneurs to establish businesses at low entry-level cost.
By eliminating the need for physical infrastructure expenses such as rental, storage and shop front, it offers a model that optimises various aspects of a business, including supply chain management inventory control and customer service. SMEs can also reduce operational costs and improve efficiency, allowing them to allocate resources more strategically through process automation.
In South Africa, where retail markets have limitations, online platforms provide SMEs an affordable alternative to market their products and services globally. Furthermore, they can export goods and expand their reach, reach new markets and diversify revenue streams. This can be a game-changer for small businesses, opening opportunities that were once limited to big businesses.
With smart business strategies, innovation and creative marketing, South African SMEs can join the global e-commerce market, expand their reach and diversify their revenue streams while growing the economy. They connect directly with consumers, delivering parcels and bringing smiles.
Despite the positive role e-commerce plays in the country’s economy, there exists a misguided view that low-cost e-commerce sites are destroying the retail business.
Assertions from some industry professionals that duties and taxes are not being paid by Freight Forwarding and courier companies are libellous and defamatory.
Professional service providers responsible for freighting are South African Revenue Service- accredited Authorised Economic Operators who are closely monitored by customs officials to ensure full compliance with import requirements. There is nothing, therefore, to substantiate the claims since all goods are cleared through authorised Customs channels.
Apart from being a signatory of the Southern African Customs Union and European Free Trade Association Free Trade Agreement, South Africa is also a member of the World Customs Organisation and one of 186 member countries that apply de minimis – a particular allowance in e-commerce designed to benefit small consumers and entrepreneurs.
South Africa charges 20% de minimis for goods up to R500 while, other member countries enjoy a higher threshold such as the US – $800 (R14 596), EU – €150 (R2 990) and Australia – A$1000 (R12 022).
The “Small Parcel” exemption is a lifeline for cash-strapped masses allowing them to purchase clothing at factory cost.
Our entry into BRICS was a landmark for our democracy, strengthening our political, social and economic global position. This provided South Africa with an enviable opportunity to access new emerging markets, with potential growth, economic diversification and synergies across several sectors of our economy.
BRICS trade agreements, including those with China, offer significantly reduced or zero tariffs on various goods among member countries. The agreements, especially with China, help low-income households afford essential clothing and apparel. Additionally, China’s Belt and Road Initiative aims to enhance trade and investment with Africa, increasing demand for South African goods.
Increasing tariffs and removing the “Small Parcel” exemption, which allows people to buy clothing at factory cost, will harm SMEs. SMEs play a vital role in the nation’s economy and are key players in reducing unemployment.
South Africa’s threshold is one of the lowest among member countries, and rescinding the exemption could have severe consequences for struggling consumers, the industry and the thousands of jobs created by SMEs who plug into e-commerce.
Dudley Filippa is the chairperson of South African International eCommerce