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Online IT spend booms as ecommerce surges in SA

Covid-19 lockdown regulations, coupled with store closures, have resulted in many consumers turning to online shopping for essential products and services – and a surge in both online spending and number of online retail merchants.  The biggest beneficiaries, according to sales statistics from FNB Mechants, have been the education sector, which saw online sales grow a massive 320%, and Electronic, Electrical and Computer, which more than doubled, at 126%.

Overall average online retail spend recorded on FNB Merchant devices grew 30% during the 1st half of 2020 compared to the same period in 2019. The active ecommerce merchant base increased by 15% in this period.

These growth values exclude travel and accommodation-related spend, which is usually a significant contributor to overall ecommerce spend. 

Thokozani Dlamini, CEO of FNB Merchant Services, says the impact is not only on shopping behaviour, but the manner in which consumers opt to pay for goods and services. For example, when considering franchise food delivery services, very few consumers physically pay via cash or card; most of the payments are carried out digitally. 

“For those consumers that still go into brick and mortar stores for groceries and other essentials, we have seen a significant growth in the use of contactless card payments,” says Dlamini. 

Sector performance in eCommerce between January and June 2020 on FNB Merchant Services, compared to 2019. 

Transportation & Related Services-44%
Lodging/Accommodations/Travel arrangements-51%
Educational Services320%
Electronic, Electrical and Computer126%
Home and Office Furnishing77%
Restaurants, Bars, Fast food & Related32%
Grocery shops, Supermarkets, Butcheries, Bakeries & Related79%

Demand has been largely driven by educational services on the back of home-schooling and distance-learning requirements. This was further supported by an increase in demand for computing equipment and home/office furnishing to facilitate the distance-learning drive and work-from-home initiatives that many individuals and companies adopted. 

An increase in the need for gaming and related entertainment (PlayStation, Xbox etc) had to be satisfied as outdoor hobbies were restricted.

Says Dlamini.: “From a Rand value perspective, when compared to the average Q1 values (Jan to Mar), the lockdown period resulted in eCommerce spend decline of -21% in April 2020, while level 4 saw recovery to 10% compared to the average Q1 values. Level 3 of the lockdown has seen further recovery to 12% compared to the average Q1 values.

“Behaviour will and has certainly changed quite rapidly on the back of Covid-19. Transaction volumes have increased at a much faster rate than value, indicating a lot of smaller purchases are being made. Many customers who had reservations about shopping online are beginning to realise that the ease and efficiency outweighs trekking to shops and malls.”

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