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Amazon’s less than Prime time for SA launch will be significant challenge for e-commerce king

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Shapshak is editor-in-chief of Stuff.co.za and executive director of Scrolla.Africa

Having confirmed the worst-kept secret, the e-commerce giant will begin local operations, but only next year.

South Africans will have to wait a little longer for the holy grail of e-commerce to arrive. Amazon’s much-rumoured local launch was finally confirmed — but its launch has been delayed until next year.

“We look forward to launching amazon.co.za in South Africa, providing local sellers, brand owners and entrepreneurs — small and large — the opportunity to grow their business with Amazon, and delivering great value and a convenient shopping experience for customers across South Africa,” says Amazon GM for sub-Saharan Africa Robert Koen.

“The launch of amazon.co.za in 2024 will provide independent sellers throughout the country an opportunity to rapidly launch, grow and scale their businesses while leveraging the innovative capabilities provided by Amazon,” it says.

Amazon’s marketplace, where it lets other sellers use its site and delivery infrastructure, is important to its business model. Amazon says 60% of what it sells through its store is from other sellers “providing a vast selection of products, competitive prices and great convenience for consumers”.

Obviously, Amazon will sell all of its own brands, and private labels, when it eventually launches. But how it enables — and frankly requires — these independent sellers for its strategy is telling. 

Takealot, the Naspers-owned e-commerce player, is the dominant service in the country — but it’s still not profitable. It lost R300-million last year, despite its decade-long operation. 

Like Amazon, it also provides a marketplace for other sellers — but the Competition Commission found this was a “conflict of interest” and it has ordered Takealot to create two separate companies.

“Takealot faces a conflict of interest on its site as its retail division competes with marketplace sellers leading to behaviour that has disadvantaged sellers,” the commission’s Online Intermediation Platforms Market Inquiry (OIPMI) report found. It was released in August after two years of investigation. The US government recently sued Amazon for the same issue.

Amazon will ultimately face a similar problem in South Africa, but not immediately. It has other pressing problems to contend with — not least the depressed South African economy. The post-Covid recovery has been as weak as the poor state it was in pre-Covid. Runaway inflation, the Russian invasion of Ukraine, price increases for petrol and diesel as a result, as well as shortages of grain and fertiliser have already hammered our stuttering economy.

Economic storm

The ANC’s colossal mismanagement of the country’s infrastructure means the water system is now as decrepit as Eskom’s power — while Transnet has also gone off the rails

Economists have said the last year has been brutal on SA retailers — who must also fork out tens of millions of rands for diesel to keep food from going off in fridges.

Apart from Takealot, South Africa’s e-commerce successes have come from sweating physical assets in a new way, as it were.

Shoprite’s Sixty60 is able to do its 60-minute deliveries because it has enough stores to do that, Shoprite’s chief strategy officer Neil Schreuder told me.

Those delivery bikes in that lurid blue have spawned countless internet memes over the Springboks’ weird “hyper-jade” coloured alternative outfits, certainly helped by Sixty60’s sponsorship of the Rugby World Cup broadcasts on SuperSport.

After buying delivery app Bottles during Covid and rebranding it Asap, Pick n Pay has instead opted to use Takealot-owned Mr D for its deliveries — giving the delivery service an interesting pivot. 

Meanwhile, Sixty60 has launched its own Amazon Prime-like subscription service: For R100 a month you get free deliveries if you ordered over R350. I subscribed to it this month.

Prime time

Prime is another of Amazon’s great ideas. Originally it just offered next-day delivery in countries where Amazon operated. But it evolved to include an alternative to Netflix, a similar music streaming option and now does same-day deliveries, amongst others.

Amazon clearly knows how to compete in other markets and has a superb supply chain. It’s got its operating model honed but has it ever dealt with #loadshitting and its knock-on effects? DM

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Comments - Please in order to comment.

  • Johan Buys says:

    everybody should temper expectations, not least Amazon shareholders.

    TakeALot is a 25y year old startup that still loses hundreds of millions a year. I figure R40,000,000,000 sunk capital to date. Hole + Shovel. Will NEVER find enough soil to get above ground in my lifetime.

    Amazon has not rolled out well to new countries. Japan, Germany, China, India, Australia, etc

  • Not sure why mr Buys indicates that amazon is not successful in Germany, it is by far the largest online retailer in Germany with 20 billion usd. I welcome any retailer that understands customer relationship, something Take a Lot will never learn.
    Ordering 4 make up mirrors from this company, two not working when they arrive and simply replying that you can’t return them. While I ordered for our small lodge TV’s, bathroom accessories, fridges etc etc. And now within the year the other 2 mirrors also stop working. That… will not happen with Amazon. Also delivery time from Amazon will be a lot better. I order from Amazon US, Netherlands, Germany and it is always fast and competitive. Welcome to South Africa Amazon!

  • Mike Schroeder says:

    “I subscribed to it this month”
    Endorsement much? … seems the author has a vested interest!

  • Jay Vyas says:

    The Million Dollar Question :
    Did Amazon AGREE to a 30% BBBEE Deal with the Corrupt ANC Government?
    I Rest My Case!

  • Barry Tyson says:

    As a seller on both Takealot in SA and Amazon in the UK, I can assure you the Takealot is a lot more efficient and user-friendly than Amazon.. Dealing with Amazon UK is a nightmare – you can’t phone them, and emails and online queries are always replied to with meaningless AI answers. As a seller there is no way I will sign up with Amazon when they come to South Africa. I have wasted too many hours trying to comply with their overly complicated systems – without any assistance from them.

    • terna gyuse says:

      i’m curious to hear from Takealot sellers — and, in due course, Amazon sellers when it launches here — how fair and profitable the terms are.

      studying its behaviour in its birthplace, the excellent Cory Doctorow has precisely no good things to say about Amazon: “Having locked in buyers and sellers, Amazon is now in the ‘burn down the forest’ phase of Eucalyptus Capitalism. The company now extracts the majority of its third-party sellers’ income in junk fees – fulfillment, service charges, payment fees, and more.”

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