Amazon to take fight to SA online retailers

Amazon has officially launched its SA unit, Amazon.co.za, marking a pivotal moment in the country’s e-commerce sector and launching an onslaught against major retailers in the R1.3-trillion market.

The launch of the online store on Tuesday is widely seen as a direct challenge to the reigning champion, Takealot, which has the backing and deep pockets of its parent, Naspers — a top-10 tech investor in the world alongside Facebook, Google and even Jeff Bezos’ Amazon.

With a strategy that combines local offerings, swift delivery, a plethora of pickup points and convenience, the incursion into the market has the potential to redraw the retail map with implications for everyone from Massmart and Shoprite to Pick n Pay and Woolworths.

“We are excited to launch Amazon.co.za, with thousands of independent sellers in SA,” said Robert Koen, MD of Sub-Saharan Africa, Amazon.

Amazon’s entry could also be seen as a sign that the market is ripe for the taking. The stakes are high. The retail market, valued at more than R1.3-trillion, is witnessing a shift as consumers turn to online shopping for their shopping needs.

Amazon will pose the biggest threat to the dominance of SA’s largest e-commerce player, Takealot, and will challenge traditional retailers as more South Africans shop online. The e-commerce giant had previously been expected to start operating in SA in 2023, but those plans were pushed out.

Explosive growth

Data from World Wide Worx shows e-commerce in SA topped R55bn in 2022. After the pandemic, e-commerce has grown explosively in online grocery and clothing shopping, a big change from a time when products such as consumer electronics dominated the space.

In its first salvo to competitors, and to quickly gain a share of the market, Amazon is enticing more locals to its platform with a free delivery on the first purchase, followed by free delivery for subsequent orders above R500.

Amazon says more than 60% of its sales are from independent sellers, including small- and medium-sized enterprises (SMEs). Such sellers already take a large chunk of Takealot’s SA business. The US company will provide another channel through which SMEs can drive sales.

The SA store will include popular local brands, including Amanda-Jayne, King Kong Leather, Masodi and Tiger Lily.

Minister of small business development Stella Ndabeni-Abrahams said: “The heartbeat of our small business enterprises measures the health of our country’s economy. If they are pumping, the nation is growing. We welcome companies that provide opportunities for local sellers and entrepreneurs to grow their businesses.

“We are counting on Amazon to provide such opportunities to our small enterprises, and look forward to working together to unlock these opportunities. This will create jobs and contribute to government’s objective of repairing the legacy of poverty and inequality. This is the heartbeat we want to hear.”

While much of the attention about Amazon in SA has focused on its competition with Takealot, Chinese online retailers Shein and Temu have already cemented their place in the market.

Update: May 7 2024
This story has been updated with new information and comments.

gavazam@businesslive.co.za