South Africa’s e-commerce industry is struggling to keep pace, as international online retailers like Shein and Temu swiftly expand within the country. This surge is displacing thousands of local jobs in retail, textiles, footwear, and manufacturing, raising urgent calls for digital transformation and adoption of artificial intelligence (AI).
A recent report by the Localisation Support Fund (LSF) revealed that from 2020 to 2024, the presence of Shein and Temu in South Africa led to millions of rand in lost local sales and more than 8,000 direct and indirect jobs being wiped out. If their sales continue growing at an estimated 20.8% annually until 2030, their combined sales could reach R22.6 billion, capturing up to 63% of the e-commerce market share. This would threaten over 34,000 South African retail and manufacturing jobs.
Despite some growth, South Africa’s e-commerce sector still lags behind the global average growth rate of 35.6%, and other emerging markets like Brazil and Vietnam. Factors such as limited last-mile delivery infrastructure and a strong preference for physical retail contribute to this slow pace, according to the report. Digital sales currently account for just 9.9% of the retail market, up from 2.4% in 2015.
Recent data from World Wide Worx shows online retail in South Africa hit R71 billion in 2023, representing a 29% increase from 2022. Industry leaders like Arthur Goldstuck of World Wide Worx note that e-commerce’s rapid growth is driven by innovative strategies, including AI-driven customer engagement.
Local tech giant Naspers, owner of Takealot, is increasing its investment in AI, seeing it as essential for future growth. The company reported 20% revenue growth and a 46% rise in core earnings, crediting innovation and AI adoption. Naspers is actively integrating AI to boost productivity, enhance customer experience, and identify new investment opportunities, investing over $7.8 billion (R140 billion) in AI-focused startups over the past year.
The LSF recommends several digital initiatives to help local businesses combat the threat from Shein and Temu. These include digitising supply chains, using data analytics, and developing AI skills for product design and demand forecasting. Takealot already uses AI for stock management, demand prediction, and fraud prevention, demonstrating the potential benefits of technology adoption.
However, ICT commentator Adrian Schofield warns that South Africa is not moving quickly enough to embrace the fourth industrial revolution. He stresses the importance of rapid worker retraining in AI to stay competitive.
Other government measures include cracking down on offshore retailers through stricter compliance with consumer protection laws, customs reforms, and promoting local manufacturing through localisation policies. In response to these threats, South Africa has increased import duties on clothing from 20% to 45% and removed VAT exemptions on low-value parcels.
Meanwhile, other countries like France, Turkey, India, and Indonesia have implemented restrictions or outright bans on certain global online platforms. Recently, US President Donald Trump suspended duty-free imports of small Chinese goods, citing concerns over illegal drug trafficking through small packages.