Takealot, South Africa’s largest online retailer, believes that Amazon’s plans to launch its e-commerce business in the country demonstrate the potential for growth in the market. Despite facing challenges such as power cuts, antitrust issues, and inflationary pressures, Takealot CEO Mamongae Mahlare said that South Africa’s growing, tech-savvy, and youthful population, together with its large upper-middle-income economy, make it an attractive base for tech giants such as Amazon and Microsoft seeking to expand on the continent.
Takealot, which was launched in 2011 and is owned by Cape Town-headquartered internet group Naspers, reported $827 million in revenue in 2022. However, e-commerce only makes up about 4% of South African retail, presenting a market growth opportunity three to five times the size of peer countries, according to Mahlare. Online market players, including Takealot and Google, have also faced government scrutiny over competition concerns in the sector.
Mahlare said that South Africa’s digital sector needs an enabling regulatory environment to ensure continued growth “as it impacts on job creation and inclusivity by providing equal access to products and services.” As Amazon prepares to launch its e-commerce business in South Africa and Nigeria later this year, Takealot will focus on its local advantage and boosting profitable growth of its three business units.
Takealot.com, the group’s largest business unit, became profitable in 2021, according to Mahlare. The company is targeting profitability for online fashion platform Superbalist and food delivery service Mr D Food in the next two financial years. To deal with power cuts, the business is running generators and investing in solar power options, while remaining optimistic that national solutions for the electricity problem will come into play, said Mahlare.
In conclusion, the entry of Amazon into the South African market highlights the potential for growth in the e-commerce sector, and Takealot is well-positioned to benefit from this trend with its local advantage and focus on profitable growth. While there are challenges to overcome, such as power cuts and competition concerns, South Africa’s digital sector has the potential to drive job creation and inclusivity if an enabling regulatory environment is put in place.
