SARS tax crackdown puts brakes on SA's e-commerce boom

South Africa's cross-border e-commerce sector is entering a slower, more competitive growth cycle, largely as a result of import duties imposed by South African Revenue. Service (SARS) in 2024.

This is one of the key findings of the newly released South Africa Cross-Border E-Commerce Market OutlookCompiled by Mustang Pay and developed in partnership with the South African International E-Commerce Association (SAIEA).

The report is based on customs clearance and payments from 2024 to 2025 dataCross border payments via Mustang Pay and collected through merchant network operations.

Combining this with local and global market trend analysis, the study examines the structural changes that will reshape the country's domestic and cross-border e-commerce markets in 2025.

According to the report, tax and duty adjustments introduced by SARS in 2024 have significantly contributed to the slowdown in cross-border e-commerce growth, reducing SA's total e-commerce transactions by about 7%. This signals the end of “indiscriminate low-price competition” in the sector.

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As a result, SA has now entered an era of “repositioning”, where growth is no longer driven primarily by aggressive pricing and rapid scale expansion – factors associated with global e-tailers – but increasingly by customer confidence, operational efficiency and delivery reliability.

“In 2025, total cross-border online orders will reach 19 million, accounting for 18.6% of SA's total e-commerce transactions,” the report shows.

“Compared with the 30% to 50% annual growth rate seen before 2025, cross-border e-commerce growth slowed sharply to about 7% after tax and duty adjustments implemented in November 2024.”

According to the study, merchants are now being forced to compete on fulfillment efficiency, quality of customer service and trust rather than just the affordability of merchandise.

Over the past few years, new online players – including Amazon, AliExpress, Shein and Teemu – have entered the local market, and have shaken up the local landscape by offering budget-friendly goods and free international delivery.

While these global players have captured a large share of South Africa's cross-border market while attracting large numbers of local consumers before 2024, the situation is now changing.

The report said local e-commerce platforms including Takealot, Makro, Bob Shop and Superbalist are now weakening their dominance by improving fulfillment networks, increasing their product categories, introducing same-day delivery and offering competitive pricing without tax-related headaches.

Other factors contributing to the slowdown in sales at global e-tailers include taxes and customs duties paid by local buyers, a combination of macroeconomic pressures, the localization of online retail and increased import barriers, which have raised the cost of shopping from international sites. The weakness of the South African rand against the US dollar has made global imports significantly more expensive, especially for goods such as fashion and electronics – categories that once underpinned cross-border growth, it says.

The report said consumers are placing more emphasis on certainty about delivery, product quality and after-sales support rather than simply choosing the lowest priced option.

“With cross-border deliveries averaging six to eight days and high return costs, local platforms are gaining a competitive edge by offering faster, more predictable deliveries and clearer returns policies,” the report said.

“The market is moving away from a model built primarily around ultra-low pricing and imported volume sales.”

In September 2024, SARS introduced a 45% tariff on all imported e-commerce goods with a standard 15% VAT. Previously, small consignments under R500 were at a disadvantage as they attracted 20% customs duty with zero VAT.

The new rules were aimed at providing a level playing field for local retailers and manufacturers, which were hit by the growing popularity of offshore e-tailers.

Consumers accustomed to low-cost, fast delivery from platforms like Shein, Teemu and AliExpress now faced higher fees, processing delays and unpredictable final prices.

Shein and Teemu, in an effort to gain popularity, hampered by new VAT and duty regulations and currency volatility, are now introducing local storage models, and partnering with local suppliers to complement their core business model.

This localization strategy involves storing its inventory within South African borders or in regional centers to reduce friction and ensure faster delivery times. This trend has seen the local e-commerce market shift from aggressive price wars to a focus on operational efficiency.

However, Amazon does things differently and, since its inception in SA in 2024, has been leveraging local warehouse networks such as its South African fulfillment centers to offer one- to two-day expedited shipping.

According to the report, operational discipline, customer retention and consumer trust are increasingly becoming more important than user acquisition.

“As the market matures, success depends on more than transactions – it depends on enabling merchants to operate efficiently and build customer trust,” says Dillion Chen, CEO of Mustang Pay.

“This report is part of our commitment to providing actionable insights that support long-term growth.”

“Consumers are increasingly prioritizing certainty over whether products will be delivered, match their description and be supported by reliable customer service,” the report said.

The findings show that this shift is creating opportunities for local retailers and platforms that can provide robust fulfillment and transparent returns processes.

The report also highlights growing regional differences in e-commerce behavior.

Tier one markets such as Johannesburg and Cape Town lead in transaction volume and high value purchases. According to the report, these cities are characterized by increasing “brand-led, premium consumption”.

Meanwhile, tier two markets including Durban, Pretoria and Port Elizabeth are more focused on value and operational efficiency.

Tier three markets, which include townships and smaller cities, remain highly confidence-driven and price-sensitive.

These regional dynamics are increasingly shaping platform expansion strategies and logistics investments, the report said.

The report also highlights the growing operational and logistical gap between urban and township markets. “In urban areas, next day and two to three day delivery has become the expected service baseline.

“In township and small-town markets, delivery times range between five to seven days, making pick-up, drop-off collection networks critical to overcoming accessibility and security challenges.”