SA’s e-commerce market ‘far from saturated’

Online shopping for groceries andfast-moving consumer goods (FMCG) presents a major growth opportunity for South African retailers, at a time when consumers are more aware than ever of the cumulative effect of inflation on their cost of living.

However, capitalising on this market will require retailers to provide a mix of value and convenience for consumers who feel they are paying more and getting less.

This is according to Gareth Paterson, director of client strategy at Nielsen IQ (NIQ) South Africa, speaking during a panel discussion at Converge 2025, a digital commerce event held in Cape Town this week.

According to Paterson,SA’s e-commerce market, particularly for groceries and FMCG, is experiencing steady growth, with projections for a substantial increase in value in the coming years.

International experience shows that the opportunity for FMCG retailers and brands grows rapidly as the e-commerce market matures, he noted.

In the more mature e-commerce markets that NIQ tracks, the e-commerce share of value for FMCG is comparable to the e-commerce share of value of tech and durable (T&D) goods.

In SA, however, the FMCG share of value of e-commerce is only around 2%, compared to 17% for T&D.

This gap shows the e-commerce market in SA is far from saturated, presenting exciting opportunities for FMCG manufacturers and broad-based retailers, he pointed out.

“Our data shows that online T&D sales grew by 11% in 2024 as consumers sought better deals online. We expect to see a similar appetite among grocery shoppers for finding value and convenience on digital platforms this year.

“However, growth will likely vary significantly by category − items like personal care, diapers and fragrances are poised to grow faster, while fresh produce may continue to lag due to higher barriers to entry.”

Despite the growth of ‘quick commerce’ grocery deliveries in SA since the pandemic, the market remains in the early phases of maturity, said Paterson.

NIQ research shows the cost of living, reflected in food and energy prices, is putting consumers under pressure and reducing their confidence.

In response to ongoing economic anxieties, South African consumers are exhibiting more value-conscious behaviours. Despite this, online grocery shopping is gaining ground even as consumers tighten their belts.

Paterson pointed out that amid these shifting behaviours, e-commerce in SA is demonstrating resilient growth.

“The South African e-commerce market will be shaped in the months to come by a shift towards greater intentionality in consumers’ shopping habits. Echoing the global trend, many consumers are gravitating towards digital channels to compare prices and save money.

“Our research indicates that 27% of global consumers shop online as a saving strategy, considering the channel a good option to get better deals and save money.”

E-commerce is rapidly evolving and today encompasses a multitude of channels and touch points under the banner of ‘omni-channel commerce’, he continued.

This evolution is driven by factors such as the increasing pace of technological change, the pervasive influence of social media and growing demand for convenience.

“We’re expecting to see social commerce and other emerging e-commerce models gain traction in the months ahead,” Paterson added.

“Consumers who are active on social media platforms may find it natural to shop as part of their online experience. Similarly, as logistical infrastructure develops, demand for quick commerce solutions may increase in urban centres. Retailers will need to be nimble to keep up with changes in tech and consumer behaviour.”