Amazon’s fast approach into the South African market is expected to reshape the country’s eCommerce landscape, with the potential to outshine local competitors like Takealot.
Equity analyst Damon Bush from M&G Investments has emphasized Amazon’s historical strategy of a gradual and measured approach when entering new markets. Starting with a soft launch, Amazon progressively expands its services and product offerings, leveraging its global scale to outcompete local rivals.
As much as Takealot’s pricing and distribution are expected to be comparable to Amazon, the latter’s ability to provide an extensive range of products is looked at as a key factor in securing dominance. In October 2023, Amazon announced its plan to launch Amazon.co.za in 2024, facilitating South African sellers in reaching customers nationwide. Robert Koen, general manager of Amazon’s Sub-Saharan Africa region, expressed enthusiasm for the launch, highlighting the platform’s potential to boost local businesses.
However, the excitement surrounding Amazon’s arrival is weakened by the acknowledgment that the company typically adopts a cautious and gradual approach when entering new markets. Damon Bush cautioned against expecting an immediate replication of the extensive services offered in the US. Additionally, the competition between Amazon and Takealot is foreseen to hinge on the consumer experience, services provided, and delivery times.
There is an agreement that pricing models between Amazon and Takealot are similar, with negligible differences for third-party sellers. This parity prompts a competition centered on consumer engagement and overall experience. Andy Higgins, managing director of the Bob Group, believes that Takealot holds an advantage due to its established local presence and infrastructure built over the past decade.
In contrast, Damon Bush argues that Amazon’s global reach and efficient supply chain enable it to offer a significantly broader product range. Drawing parallels with Amazon’s expansion into Australia in 2017, Bush highlighted how Amazon’s platform initially featured 7.5 million products, eventually expanding to over 200 million within five years, solidifying its position as the dominant eCommerce player.
The crux of the differing opinions lies in whether Takealot’s local presence or Amazon’s global capabilities will prevail in shaping the South African eCommerce landscape. While Higgins contends that Takealot’s localized infrastructure will secure its victory, Bush believes that Amazon’s ability to offer an unparalleled array of products, coupled with efficient logistics and customer analytics, will position it as the eCommerce leader in South Africa within five years.
