Erica Bester, Managing Director
A few years ago, Nike quietly scaled back its local operations in South Africa. Stores closed, the local e-commerce site disappeared, and buying your favourite sneakers suddenly meant importing them yourself.
But shoppers did not stop buying. Instead, they began navigating the complexity that Nike stepped away from.
Every time a South African shopper enters their ID number at checkout on Nike’s global site, they are not just buying shoes. They are taking on the role of importer, dealing with duties, shipping delays and using their Single Discretionary Allowance. This moment tells a much bigger story about what happens when global demand collides with local complexity.
And this story is about more than just one brand. It is about the structural barriers that make operating in high-friction markets difficult, even for the biggest global names. Payments, compliance, logistics and regulation all play a part. When these pieces do not align, even strong demand cannot hold a local operation together.
What happened to Nike is a window into the experience of many international businesses trying to establish a footprint in South Africa. The opportunity is real, but without the right infrastructure, the friction wins.
A market full of demand, with limited access
South Africa is often seen as a gateway to Africa. It boasts a sophisticated payments landscape, a large consumer base and one of the fastest growing e-commerce markets on the continent.
According to the Global Voices Report 2025, South Africa is one of just five markets worldwide where consumers planned to increase their online spending this year, alongside India, China, Brazil and the UAE. This underscores the scale of the opportunity the market continues to offer global brands.
For many, though, that opportunity is harder to seize than it looks on paper. What starts as a promising growth market often turns into a wall of operational and regulatory friction. Nike is not alone in stepping back from the complexity of running fully local operations. Plenty of international businesses face the same decision: physically scale into a market with rising consumer demand or retreat because the infrastructure is not built to make entry easy.
This tension is not unique to South Africa either. It is part of a broader pattern seen across other BRICS economies like India, China and Brazil. These are markets with massive consumer demand and strategic global importance, but they also come with complex regulatory and operational landscapes. For global brands, they are not niche markets, but growth engines that require a different playbook to unlock at scale.
Cross-border buying fills the gap, but at a cost
When brands pull back from local operations, consumers do not stop buying; they simply change how they buy.
Global shoppers have become increasingly comfortable purchasing directly from international websites. According to the Global Voices Report, more than four in ten respondents placed up to ten cross-border orders last year, and another 37% placed between 11 and 50. The main driver is simple: products are often cheaper, easier to find or released earlier abroad than they are locally.
But while cross-border shopping fills the gap, it also creates new layers of friction. Shoppers face longer delivery times, higher costs at the border and uncertainty around duties and returns. In Nike’s case, demand for its products has not disappeared; it has simply shifted.
Instead of the brand managing fulfilment, South African shoppers have become the importers.
That shift weakens any brand’s control over pricing, delivery timelines and the overall customer experience, highlighting exactly why many global brands hesitate to operate in high-friction markets. While demand remains, the responsibility moves upstream. What once sat with the brand now sits with the customer.
When strong intent meets weak infrastructure
Strong consumer demand means very little if shoppers do not feel confident enough to complete their purchase. In South Africa, this gap is especially visible at two critical points: checkout and delivery.
According to the report, 57% of South African shoppers have abandoned an online cart because of payment security concerns, a figure higher than the global average.
When brands rely solely on international payment methods, they introduce friction exactly where it should be disappearing. Shoppers face foreign currency fees, unfamiliar checkout flows and a lack of local trust signals. Even highly motivated buyers can lose confidence at this stage.
The challenge does not end there. Shipping has become just as decisive. Modern shoppers expect delivery within a week, and anything longer quickly turns excitement into frustration.
Brands that fulfil exclusively from overseas struggle to meet these expectations. Customs clearance, duties and shipping delays stretch timelines beyond what many customers are willing to tolerate. A global giant like Nike may be able to absorb some of that frustration, but most brands simply cannot.
In high-demand, high-friction markets, payments and shipping are no longer back-office details. They are competitive factors that shape conversion, trust and growth. When infrastructure is weak, even strong intent is not enough to carry the sale over the line.
Why many global brands do not stay
South Africa presents all the characteristics of a high-potential growth market. Yet for many global businesses, initial enthusiasm gives way to the realities of operating in a complex and highly regulated environment. What appears straightforward often proves challenging in execution.
The most common barriers include:
- Restrictive capital flows. Exchange control regulations make cross-border fund movement cumbersome. Settlement processes are slower, liquidity is less flexible, and repatriating revenue can become a persistent operational constraint.
- High import costs and logistical uncertainty. Customs duties, administrative requirements and variable clearance times introduce both cost and unpredictability into supply chains. These factors undermine pricing strategies and complicate the delivery experience for end customers.
- Complex regulatory and compliance obligations. South Africa’s B-BBEE framework, tax structures and transformation requirements demand deep local expertise. Compliance is not easily standardised across markets and requires dedicated resources to manage effectively.
- Misalignment between global and local payment systems. The dominance of local payment methods such as instant EFT stands in contrast to the card-first approach many global brands rely on. This mismatch increases friction at checkout and erodes conversion rates.
- Challenging market economics. Despite strong consumer demand, South Africa remains a mid-sized market. The cost of establishing and maintaining a fully local entity can outweigh expected returns, particularly for brands pursuing efficient global scaling.
Individually, these factors are manageable. Combined, they create a level of operational friction that often discourages global brands from sustaining a local presence. It is rarely a lack of demand that drives exits from the market. More often, it is the weight of structural complexity.
A smarter path to market
Global expansion does not need to be a binary choice between committing to full local infrastructure or avoiding the market altogether. The Merchant of Record (MoR) model offers a third path: enabling brands to operate locally without the cost, complexity or compliance burden of establishing a legal entity.
Simply put, an MoR functions as the local seller and importer of record, managing operational and regulatory components that typically slow market entry, such as payments, foreign exchange, tax, compliance and import processes. This enables brands to maintain full control of their customer experiences, while the MoR absorbs and manages the structural complexity behind the scenes.
The result is a faster, more seamless route to market. Customers benefit from a familiar, localised checkout, shorter delivery timelines and a more predictable experience. Brands, in turn, can access new revenue opportunities without tying up capital or resources in building and maintaining local operational infrastructure.
Turning signals into strategy
Nike’s story is not a failure; it is a signal. It demonstrates how even the world’s most recognisable brands can be locked out of high-growth markets when infrastructure stands in the way. The opportunity exists, but without the right operating model, the friction wins.
Winning in a high-friction market like South Africa is not about louder marketing or bigger budgets. It is about addressing the operational barriers under the hood that stop customers from completing their journey. That is where the MoR model becomes a strategic lever rather than an administrative function.
Partnering with an MoR like Novo42 empowers global brands to access the South African market with confidence by removing the heavy lifting of compliance, payments and logistics, while preserving brand control and customer trust. The result is faster entry, smoother scaling and stronger margins.
Exploring expansion into South Africa or looking for a better way to operate in the country?
