Retail e-commerce sales alone increased by a staggering $3 billion between 2019 and 2023, indicating a tremendous surge in global expansion for e-commerce. These astounding figures are expected to rise even further, prompting us to consider the accessibility of e-commerce in South Africa; and what challenges South Africans face in fully embracing the vast realm of e-commerce on a larger scale.
In this article, we will address the challenges faced by South Africans in effectively using international e-commerce platforms. We will exclude local online shopping for basic goods and focus on global e-commerce.
Identifying the problems
1. Lower-than-average online buying rates
Let’s start by addressing the initial misconception often associated with online e-commerce. Contrary to popular belief the vast majority of South Africans do have internet access. In fact, many South Africans are avid social media users which is exciting news. The problem in the online aspect of e-commerce is that we have lower than average buy rates or conversions from visitors to buyers.
There are two possible explanations for this, one is that South Africans have less and less money to spend on online shopping with the rising cost of living and the high unemployment rate in South Africa, making life difficult for many. The other possibility is that South Africans are not as enthusiastic about e-commerce, which seems like the more unlikely of these two possibilities.
2. Examples of the logistics challenge to e-commerce in South Africa
Amazon
Let’s assume you want to purchase items from an e-commerce site such as Amazon. First, you must contend with the fact that some items are simply not going to be available to buy in South Africa. Secondly, should you wish to buy something smaller such as this battery pack you will quickly learn that the tax and shipping costs will outweigh the cost of the item.
This does two things, firstly it makes smaller items impractical to buy from any buyer’s perspective. Secondly it prevents smaller consumers from buying items that may fit their price range, serving as a barrier to e-commerce entry.
The primary reason for this is the high customs taxes on imported goods. In essence, this isn’t caused by Amazon or any other e-commerce platform, but rather by another issue that the South African government has imposed, further complicating matters.
eBay
Should you wish to use a site like eBay, popular for finding niche items, you will face another challenge from a different source. Once you buy items from eBay, you’d need your own courier service ready as a middleman. These items will then be sent to the South African post office or SAPO. The main issue with your items passing through the South African post office is that often your items will simply disappear.
The main obstacles to future e-commerce growth in South Africa
1. High Tax on imported items.
Let’s look at an issue that affects everyone, regardless of wealth or social class: import taxes. Picture this scenario: you want to buy a shirt that is not available in South Africa. You make the purchase and now look forward to receiving your new shirt. However, you will quickly discover that a whopping 45% tax is levied on clothing items, calculated on the total value of your purchase.
Yes, that’s right the tax man wants almost half of what you paid for your item. This creates a situation where some items such as clothes are impractical to purchase. This is unfortunate to see because yet again, this unfortunately this is also imposed by the South African government.
2. A non-functional post office
With the high amounts of tax that South Africans pay, you would expect that entities such as the post office would have all the funding they need to operate effectively and provide a quality service to its citizens. You would unfortunately be mistaken, according to a report on BusinessTech the SAPO is currently under provisional liquidation.
This creates another cost of entry situation for international e-commerce participation from South African citizens and businesses. What I mean by this, is that under the current situation if you want your items to arrive with peace of mind, hiring a courier service to avoid the post office is a must.
3. Restrictive import regulations
Since the year 2013, a new customs law was implemented, whereby individuals are permitted to bring in no more than three imported consignments per calendar year. What this means is that if you wish to buy more than three items per year from international sources, you will have to register as an importer.
If this seems wildly out of touch regarding the number of items you wish to bring in for personal use, you’re not alone. This effectively places a hard-numbered limit on how much South Africans can participate in international e-commerce.
4. The existing strain on pockets
Given the barriers to entry above and considering the already difficult state of both the South African economy and the high unemployment rate. It’s no wonder that very few South Africans participate in the e-commerce world.
Conclusion
The challenges faced by South Africans in participating in e-commerce are multifaceted and have a significant impact on the growth and accessibility of online shopping in the country. Several key obstacles hinder the seamless adoption of e-commerce, limiting the potential benefits it can offer to both consumers and businesses. Most of these obstacles however stand firmly within the government’s ability to solve and are sadly self-inflicted issues.