After shaking up SA, Chinese e-com brands chase Africa at large

Chinese e-commerce giants Shein and Temu are extending their reach in Africa, their influence already deeply felt in South Africa, the continent’s largest economy. 

Per recent data, Shein has increased its SA users by 300% over the past year. Then, Temu, which touched turf in January 2024, has become the country’s most downloaded app. 

This surge in popularity reflects a broader trend in DHL’s Online Shopper Trends Report 2024. The study shows that these app-based marketplaces are transforming the e-commerce landscape in South Africa, and globally.

Consumers are drawn to these platforms for their low costs and variety. "It is very affordable, and the quality is very great. When I buy clothes in local stores, I get less for more. But in Temu and Shein, I get more for less," says a shopper interviewed in the report. 

This sentiment is shared by many South Africans. They find high-brand fashion items on these platforms that are not readily available in local stores. Convenience and cost-effectiveness have made them formidable competitors against traditional retailers.

The COVID-19 pandemic bumped up the adoption of e-commerce. Case in point, Initially, South African consumers hesitated to embrace online shopping. Pandemic-induced lockdowns and social distancing measures forced a tendency towards digital commerce. 

Now, this shift has affected consumer behavior. Many now favor the convenience of online shopping. The DHL report recognizes this, noting that smartphones have become the preferred device for online shopping. 57% of consumers use them for browsing and purchasing items.

The rise of Shein and Temu has however not been without challenges for local retailers. The influx of low-cost products from these platforms has put significant pressure on local businesses, prompting industry groups to lobby for higher import duties. 

The South African Revenue Services have imposed a flat 45% import duty on these purchases coming out of China. Previously, these low-cost packages did not incur the duties that regular retailers must pay on their imports. Additionally, a 15% VAT on imported clothing worth under R500 (~$27) has further jacked up costs.

While Temu currently operates only in South Africa within the African continent, Shein’s reach extends to several other countries, including Algeria, Morocco, the Democratic Republic of Congo, and Mali. 

The DHL report indicates that these platforms are gaining traction in various regions, driven by their ability to offer a wide range of affordable products. This trend is part of a global phenomenon, with Shein and Temu also seeing significant popularity in markets such as the UAE, the US, and Brazil.

The rise of social commerce—buying stuff directly through social media platforms like Instagram, WhatsApp, and Facebook—is also a factor. This niche is expected to grow sporadically. Sales are forecast for $8.5 trillion by 2030, compared to an estimated $700 billion in 2024. Asia, China, and Thailand especially, are at the forefront, with a chunk of shoppers making purchases via social media.

Chinese influence on e-commerce is not isolated to Africa. In the U.S., Shein and Temu have challenged established players like Amazon, Meta, and eBay. In Africa, where Amazon recently officially launched to much fanfare, a head-to-head is in the works.

Shein, valued at $66 billion, has nabbed a large share of the global fast-fashion market. On the other hand, Temu’s aggressive pricing and marketing have made it a popular choice. It is one of the largest online-only fashion retailers, its estimated annual revenue at $22.7 billion and GMV at $15.1 billion.

Competition from these platforms has prompted concerns from industry leaders about trade loopholes that allow these products to enter markets duty-free.

Despite new taxes and import duties, the appeal of these platforms remains strong. As they continue to innovate and adapt, Shein and Temu are poised to reshape retail in Africa, challenging traditional retailers and setting new trends in online shopping.