Shein and Temu shift to local fulfilment as SA’s tighter customs regime reduces the appeal of direct imports. (Image created via Gemini)
South Africa’s crackdown on low-value imports has significantly slowed the growth of cross-border e-commerce, forcing international platforms such as Shein and Temu to shift their focus from tax arbitrage, towards local fulfilment and supply chains.
This is one of the key findings in the Online Retail in South Africa 2026 report, conducted by World Wide Worx, in partnership with Mastercard, Peach Payments and Ask Africa.
The study draws on retailer financial disclosures through FY2026, Statistics South Africa retail data through mid-2026 and consumer research from Ask Africa’s Target Group Index, based on 23 910 interviews conducted from January to December 2025.
It reveals the regulatory intervention by the South African Revenue Service (SARS) has had a more pronounced impact on SA’s e-commerce sector than previously anticipated.
According to the study, cross-border e-commerce growth slowed significantly in 2025, with the slowdown being particularly pronounced for the two international platforms at the centre of concerns about the ramifications of offshore e-commerce on local retailers.
Shein’s growth slowed by 30% to 50% annually, to 11% in 2025, while Temu recorded an average monthly decline of 42%.
Arthur Goldstuck, MD of World Wide Worx and principal analyst on the research, commenting on the cross-border growth with Shein and Temu, and the extent to which it collapsed after policy changes, says: “Shein and Temu are not as big in the consumer mind as the media tends to think they are.
“The closure of tax loopholes, stricter customs enforcement and the resilience of local retailers have moderated their impact. Their growth is now expected to slow, suggesting coexistence with, rather than displacement of, established players. However, 18% of all e-commerce transactions were still cross-border last year, so they’re still quite massive.”
Referencing industry data conducted by MustangPay with the South African International E-Commerce Association, the World Wide Worx study says SA’s cross-border e-commerce growth rate declined to 7% in 2025, from annual growth of between 30% and 50% before 2024.
Approximately 19 million cross-border platform orders were placed during 2025, accounting for 18.6% of all South African e-commerce transactions, it says.
Over the last few years, new online players have entered the market, shaking up the local landscape, which is increasingly being dominated by multinational shopping sites, such as Temu, Shein, AliExpress and Wish.
Shein, which launched in South Africa in 2020, and US-based Temu, which entered the local market in January 2024, have been ruffling the feathers of South African retailers, which allege anti-competitive practices.
The Ecommerce Forum South Africa (EFSA) previously told ITWeb that it received a range of complaints from local online retailers, with accusations of misleading advertisements, anti-competitive prices and exploiting import tax loopholes.
The e-tailers complained they saw their sales drop by at least 15% to 20%, in 2024, as a result of locals turning to Temu and Shein, attracted by their low-cost ‘fast fashion’.
“The main issues raised by members are the extremely low prices the South African businesses can’t compete with and using large advertising budgets to prevent anyone else from promoting their products,” explained Alastair Tempest, EFSA CEO, at the time.
“There is also the perceived failure to adhere to South African laws, which allegedly gives them unfair advantages – and reduces their overheads. Many are also asking what government is doing to protect South African business and the manufacturing sector.”
Arthur Goldstuck, MD of World Wide Worx and principal analyst.
The Online Retail in South Africa 2026 report traces the recent decline in cross-border sales to a series of regulatory interventions aimed at closing the gap between how low-value imported parcels are treated and how goods sold by local retailers are treated.
In November 2024, SARS removed the de minimis concession that allowed parcels worth less than R500 to clear at a flat 20% duty without VAT.
The arrangement dated back to 2007, before the emergence of today’s high-volume e-commerce platforms, when local retailers could face duties of up to 45% plus 15% VAT on comparable goods.
A tiered tariff structure was introduced in February 2025, while SARS tightened declaration requirements in April, requiring more comprehensive invoice information on cross-border products bought by locals.
Later in 2025, National Treasury’s draft tax Bills proposed removing low customs-value consignment relief altogether, alongside the withdrawal of more than 140 customs concessions aligned with World Customs Organisation guidelines, the study points out.
The effect has been to reduce the advantage enjoyed by global platforms whose business models relied heavily on shipping individual low-value parcels directly to consumers.
SARS data shows goods entering SA under the three customs tariff sections covering textiles, clothing, footwear and leather goods totalled approximately R92 billion in 2024, up 11.4% from 2023.
The figure comprised R65.5 billion in textiles and clothing, R21 billion in footwear and R5.5 billion in leather goods.
“An estimated combined turnover of R7.3 billion for both Shein and Temu therefore represents less than a tenth of imported goods in these categories, although the measures are not directly comparable because SARS records customs value, while retail turnover includes elements such as shipping and margins,” notes the report.
These changes mean Shein and Temu “no longer slip as easily beneath the regulatory radar”, and their pricing advantage is likely to narrow further, Goldstuck states.
From cross-border to local
The report argues that the next phase of competition will be determined less by parcel-by-parcel import economics and more by how effectively international platforms establish local operations.
Both Shein and Temu have responded by moving towards locally-compliant supply chains and merchant programmes.
“Temu, for example, has introduced local-dispatch warehouse services, allowing some products to be stocked domestically through logistics partners and delivered more quickly to South African consumers. This changes the nature of the competitive threat.
“A platform that relies on individual cross-border shipments can potentially be constrained through customs and tax enforcement. A platform operating through local fulfilment, inventory and South African sellers is considerably harder to regulate away,” the study points out.
It is also a more expensive and slower model, increasing the importance of operational efficiency, rather than simply offering aggressive prices.
The report describes this as a transition from tax arbitrage to local execution.
“For domestic retailers, this means the threat posed by international platforms has not disappeared. Instead, it is evolving,” the reports asserts.
However, during an ITWeb interview in July, Tempest explained that the SARS customs system is still failing to create a level playing field between local retailers and global e-commerce giants, despite changes to import rules.
Tempest said many parcels continue entering the country with declared values well below their actual worth, allowing importers to pay substantially less duty than local businesses that import goods through conventional channels.
“According to SARS, one of our biggest problems is that these imports are chronically undervalued. If you’re paying customs duty on a product declared at R100, when it’s actually worth R500, obviously that’s going to cause problems. The concern is that they recognise the issue but simply don’t have the staff to deal with the sheer volume of parcels.”
Tempest said the situation continues to disadvantage South African manufacturers, particularly the textile industry, which has struggled to compete against ultra-low-priced imported clothing.
Alastair Tempest, Ecommerce Forum South Africa CEO. (Photograph by Lesley Moyo)
