Cities from South Africa advised to host emerging ecommerce companies to benefit online retail

In this regard, Cape Town is considered a tech and ecommerce hub within South Africa. This is not because the city boasts the largest number of online buyers, but more because of Cape Town’s well-established tech landscape, which makes it an appealing destination from which to run an ecommerce business.

While Gauteng contributes a much larger proportion of the country’s online buyers, Cape Town accounts for the lion’s share of the headquarters of the most well-known ecommerce companies in South Africa. The city is also the birthplace for the majority of new tech startups operating in the ecommerce ecosystem.

Factors that have underpinned Cape Town’s attractiveness to ecommerce companies include an appealing lifestyle; an extensive network of supporting companies and institutions, including payment gateways, software developers and tech incubators; a strong supply of ICT skills among the workforce; and better availability of venture capital than in other areas of the country. In terms of the latter, 75% of all venture capital deals in 2015 were located in the Western Cape according to the Southern African Venture Capital and Private Equity Association.

Currently, only 14% of South Africans with access to the internet have shopped online (according to UNCTAD 2016). This industry provides a huge opportunity for strong future growth as internet penetration increases and consumers increasingly choose digital options over traditional shopping patterns.

Worldwide Worx (2016) recently predicted a doubling of online purchasing between 2016 and 2020. Deloitte (2015) estimated that the industry would more than double its share of retail sales by 2020. This is further backed up by a PWC study that polled emerging companies – 55% indicated that they are expecting to sell more than half of their goods online in the next five years. The majority believe that this upward trend will continue and in the longer-term, they will sell between 75% and 100% of their products online.