Analysts say South Africa is becoming a venue for global e-commerce companies. This is because South Africa’s retail market is growing rapidly. In order to dominate the market, distribution dinosaurs such as Amazon and Wal-Mart are scrambling to expand e-commerce services.Global e-commerce companies have begun to enter the South African market. As South Africa’s online shopping market grew rapidly starting with COVID-19, it started to expand its business area to preempt it.Amazon plans to introduce its direct delivery service in South Africa within this year. Since establishing a branch in South Africa in 2004, it has only provided overseas delivery services. It is interpreted that it will preoccupy the distribution market by establishing a new delivery service from this year. To this end, it is known that the number of local employees has increased significantly in recent months.Its rival Wal-Mart plans to expand its mobile shopping channel through local retailer Masamart. After acquiring half of Masamart’s stake in 2010, Walmart focused on expanding its offline distribution network. Wal-Mart failed to expand its market share due to checks on local competitors.Last year, Wal-Mart bought all of its remaining shares (47 percent) in Masamart and devoted themselves to reorganizing its web page. As a result, Masamart’s online sales increased 90% year-on-year last year.
According to Bloomberg, Walmart is currently focusing on developing mobile shopping apps.Singapore’s fast fashion brand Shane has also been actively marketing using social media (SNS) in the South African market since 2020. As a result, Shane topped the list of downloads among South African shopping apps this year.The rapid economic growth is behind global e-commerce companies’ entry into South Africa. South Africa is considered to have the largest purchasing power per capita among African countries. As of 2021, per capita gross domestic product (GDP) was tallied at $6,994. South Africa’s Internet penetration rate also exceeded 70 percent last year. The number of smartphone subscribers exceeded 100 million in 2019. In other words, the foundation for the growth of the online shopping market is all laid.In South Africa, urbanization is also rapidly taking place around Cape Town, the capital. Analysts say that the online shopping market has grown rapidly as the trend-sensitive young population has begun to concentrate. The online shopping market grew from 14 billion rand (about 1 billion rand) in 2018 to 30 billion rand in 2020. According to market research firm Fitch Solutions, South Africa’s online shopping market is estimated to grow to 63 billion rand ($4.4 billion) by 2025.”Africa’s mobile banking and online shopping market is growing rapidly,” said Alec Abraham, an analyst at Saspin Securities, a South African securities firm. “Global conglomerates are also scrambling to enter the African market.”
TED PARK
US ASIA JOURNAL
