The Competition Commission has for the first time put hard numbers on how far South Africa’s township and rural businesses are shut out of online retail, and it points to informality, missing capabilities and weak infrastructure as the main reasons.

The findings appear in the commission’s inaugural Rural and Township Economy Report, launched on Thursday on the first day of the 20th Annual Competition Law, Economics and Policy Conference in Melrose Arch, Johannesburg. It draws on two national surveys – a business survey and a consumer survey – conducted for the commission by research firm RedFlank.

Just 11% of township businesses and 9% of those in rural towns sell through online marketplaces. Only 11% of township firms and 6% of rural ones run their own e-commerce sites. By contrast, roughly half – 51% in townships and 48% in rural towns – still depend on walk-in trade at their own physical stores.

The gap is as stark on the demand side. Online customers account for 7% of township businesses’ reach and 5% in rural towns, with the overwhelming majority reporting that local residents are their main, and often only, market.

When the commission asked business owners why they were not selling online, registration came top:

Nearly a quarter said their business did not meet the requirements or was not registered (24% in townships, 23% in rural towns).
Seventeen percent of township firms said online sales were not an appropriate route to market for them, as did about 20% of independent firms in rural towns.
Limited knowledge of how to sell online was cited by 15% in townships and 19% in rural towns.
A lack of the infrastructure needed to support online sales was cited by 15% and 20%, respectively.

The commission says it regards these answers as evidence that the barriers to online selling are “closely linked to informality, capabilities and infrastructure”. Notably, the second-largest reported constraint in townships is not exclusion at all but a judgement that online is the wrong channel – a finding that sits awkwardly alongside the report’s wider argument about latent demand.

Structural constraints

The report ties the structural constraints back to the commission’s Online Intermediation Platforms Market Inquiry, which ordered Takealot to separate its retail and marketplace arms. It argues that platform rules, search rankings, commissions and fees ultimately decide whether small sellers can compete online at all, warning that online intermediation can open up access “only if platform conditions enable fair participation by smaller sellers”. That argument is drawn from the earlier inquiry rather than from the new survey data.

Crucially for the sector, the commission says it will not stop at research. It concludes that the appropriate response is not a single intervention but a combination of competition advocacy, stakeholder coordination, potential focused further research and, where warranted, screening.

Commissioner Doris Tshepe put the stakes in terms of who gets to participate in the mainstream economy: inequalities will only narrow, she said, if township and rural residents take an active part in what she called the Kasi economy and are able to “expand beyond its borders to participate in the formal malls and online purchases of middle-class South Africa”.

Private players are already chasing the same opportunity, from Shop2Shop’s cash-to-digital push in the spaza sector to Shoprite’s move into B2B e-commerce.

The report notes that low uptake reflects latent demand rather than disinterest: many surveyed firms said they would sell online or move into formal retail if the barriers were lowered.

It is a research report rather than a formal market inquiry, and the two surveys underpinning it were commissioned from RedFlank and are not published – the report cites them as internal project documents and gives no sample size. – © 2026 NewsCentral Media