South Africa's online retail turnover is expected to top 130 billion rand ($7.42 billion) this year and account for 10% of total retail sales, driven by on-demand grocery and fashion, as well as the entry of global competitors such as Amazon, a study shows.

Online retail sales grew by around 35% in 2024 to an estimated 96 billion rand and accounted for roughly 8% of all retail trade in South Africa, according to the study released on Thursday by World Wide Worx in collaboration with Mastercard, Peach Payments and Ask Afrika.

The fastest and most visible growth remains in grocery retail, where the shift to digital has been accelerated by the adoption of on-demand shopping apps of market leader Shoprite and its peers Pick n Pay and Woolworths.

Meanwhile, growth in online fashion sales is being driven by retailers investing in digital platforms, with better user experiences, improved size and fit guidance, said Arthur Goldstuck, CEO of World Wide Worx, a research firm.

"Online retail has moved from being an experiment on the margins to a structural force in the economy. Nearly one in every 10 rand spent at retail will now be online," he added.

The arrival of Amazon last year has also fuelled growth.

The U.S. retailer is now used by 12.3% of online shoppers after Shein and Temu, with a collective 15.3% in second place. Market leader Takealot is used by 31.9% of shoppers, according to the report.

Shein and Temu made rapid inroads in 2023 to 2024, reaching an estimated 7.3 billion rand in turnover and an almost 40% share of online clothing sales in 2024.

However, the closure of tax loopholes, stricter customs enforcement and the resilience of local retailers have moderated their impact, Goldstuck said.

"Their growth is now expected to slow, suggesting coexistence with, rather than displacement of, established players," he said.