“Amazon and Shein are going to accelerate online shopping in South Africa beyond recognition,” said Anthony Thunström, chief executive officer of The Foschini Group Ltd., a local retailer that owns Jet, a discount clothing chain. “South Africa has been very slow adopting digital or online shopping, so I think the competition’s good.”

South Africa has a growing middle class, nearly three quarters of the country has internet access and more people live in concentrated urban areas than in most other nations in the region. E-commerce makes up about 4 per cent of retail in the country meaning there are potential riches to be won.

Early mover advantage hasn’t really helped Walmart though. When the US retailer first bought into Massmart, which sells clothes, fridges and washing machines alongside tinned foods, it had ambitions to expand with stores across Africa. But subpar infrastructure and difficulties finding good real estate has dimmed that dream.

Instead, in the last three years, it has focused on building its South African online sales and sent Sylvester John, one of its e-commerce experts, to Johannesburg with the goal to make Massmart South Africa’s top general merchandise website with same-day fulfilment. Massmart is already revamping its websites and the redesigns are focused on ensuring they’re formatted for mobile devices first, instead of desktop. That’s because of the strong preference of South African consumers to browse and shop online on their mobile devices, according to John.

Last year the value of goods sold online by Massmart rose more than 90 per cent to 2.3 billion rand (US$120 million), helping justify Walmart’s decision to buy out the unit in preparation to go head-to-head with arch rival Amazon. Though it has yet to set a firm date for its retail launch in the country, Amazon has been advertising for local recruits in recent months. The Seattle-based company won permission in June to continue building a local headquarters near Cape Town after a halt due to a dispute with an indigenous group over the land’s traditional use.

Online Inroads

Global retailers’ inroads into South Africa come even as the country’s antitrust regulator examines how e-commerce prices are formulated and as the country battles with erratic electricity supply which is severely hampering economic growth.

“Africa has shown its ability to leapfrog when it comes to technology – we’ve seen this in online banking and mobile money and I think we are seeing it in purchases made with apps,” said Alec Abraham, an analyst at Sasfin Securities in Johannesburg. “While the South African economy is currently floundering, getting big players like this putting a foot in the door demonstrates the potential that sits within this market.”

“We realised that the future battle was going to be against the Sheins and Amazons of the world,” he said. “Normally this takes two years, but we knew we had to push to do it quicker than that and do it well.”

There are some growing concerns, however, about whether all retailers will operate on a level playing field. South Africa’s local industry association as well as the textile union have already complained to the government that they suspect Shein is possibly exploiting customs tax loopholes.

Growing Competition

“We don’t mind competition as long as it’s by the rules,” said Pieter Erasmus, CEO of Pepkor Holdings Ltd., Africa’s largest clothing retailer.

Shein complies with all local laws and regulations and remains open to engage and cooperate with the South African government, a spokesperson said, adding that the retailer finds the local market interesting.

Paying far more than expected for her Shein order to pass through South African customs was Agnes Rammutla’s recent experience. The 25-year-old dentist has been buying from Shein for about a year. There was no glitch with her other six orders, but this time local authorities made her stump up more in custom duties before releasing the parcel.

“Like me, all my friends buy online, but I guess there can be a risk,” Rammutla said