Amazon is almost in South Africa!

Apr 11, 2024 12:45:34 PM

"Once operational in South Africa, the US-based online retail giant, will compete with Naspers-owned e-commerce platform Takealot, comprising Takealot.com, Mr D Food, and Superbalist. It is also expected to rival online marketplaces such as Bob Shop, Massmart-owned Makro Marketplace, Zando, and Bidorbuy, among others."

By Raine St.Claire

Amazon’s plans to set up operations on South African shores have been an open secret for several years now. While the official date is yet to be announced, 2024 will see the US retail giant set the stage for a marketplace battle in SA.

The company’s ability to offer a vastly superior range of products to its competitors has made it the dominant player in many of the markets it operates, and South Africa will be no different and Amazon’s arrival in South Africa is anticipated to bring about significant changes for e-commerce businesses of all sizes.

This sentiment is shared by local e-commerce players in SA, who are observing the growth of the online shopping market and anticipating the impact on smaller, burgeoning businesses, estimates the entry of Amazon is expected to turbo-charge the e-commerce sector, currently contributing around 5% of overall retail sales in SA, creating significant potential for individual and business sellers.

Once operational in South Africa, the US-based online retail giant, will compete with Naspers-owned e-commerce platform Takealot, comprising Takealot.com, Mr D Food, and Superbalist. It is also expected to rival online marketplaces such as Bob Shop, Massmart-owned Makro Marketplace, Zando, and Bidorbuy, among others.

Growing the ‘local is lekker’ market

According to Amazon, local small businesses are already “looking forward” to an opportunity to grow their businesses in the Amazon store.

“African Mamas is very excited at the prospect of working with Amazon locally, to leverage their tools and expertise to grow our e-commerce business. We cannot wait to embark on this journey of growth,” says Nomaswazi Tinus, founder and director of African Mamas Crafts.

Another business, according to Amazon, is Reader’s Warehouse, created by two brothers who grew up with a passion for books and reading.

Sean Bulpin, director of Reader’s Warehouse, states: “I am absolutely thrilled about the opportunity to partner with Amazon and sell in their store. This presents an incredible chance to expand our e-commerce business and tap into a broader customer base in South Africa.”

How big is the Courier Industry in South Africa?

Research, indicating that the South Africa Courier, Express and Parcel Services (CEP) market revenue in South Africa was estimated at R44-billion in 2022. With over 24 courier companies currently operating in the country, this growing economy is set to accelerate to R60-billion by 2027, at a CAGR of 7.0%.

South Africa is the 48th largest market for e-commerce with a predicted revenue of approximately R83.40-billion by 2024. Revenue is expected to show a compound annual growth rate (CAGR 2024-2028) of 9.3%, resulting in a projected market volume of R119-billion by 2028.

E-commerce Boom: Fierce Competition Benefits All!

South Africa's passion for e-commerce, SMEs, and small businesses, is clear.

Online retail in South Africa passed the R50-billion milestone in 2022, accounting for around 4.7% of the total retail market, according to the Online Retail in South Africa 2022 study conducted by World Wide Worx with Mastercard. According to Statista-operated e-commerce insights firm E-commerceBD, the South African e-commerce market in 2023 contributed 10.4% to the worldwide growth of the e-commerce sector, with an expected increase of 12.3% by the end of 2024.

Takealot, for example, started with 124 sellers on its marketplace in 2014 and has now grown to list over 8 000 SMEs. According to Amazon, more than 60% of sales in its e-commerce store are from independent sellers, and its launch will provide local independent sellers "an opportunity to rapidly launch, grow, and scale their businesses."

Since the Amazon announcement, independent sellers in SA have been increasingly registering on sell.amazon.com/south-africa, it revealed.

Entrepreneurs must understand consumer desires for successful sales."Amazon's focus on marketplace transformation impacts South Africa's competitive market”, says Warrick Kernes, founder of Insaka E-commerce Academy, who urges adaptation and innovation in e-commerce amidst upcoming changes.

Amazon HQ South Africa

The Western Cape’s trade and investment company Wesgro reported a record start to its 2020 financial year, securing R5-billion in investment through a major real estate deal with Amazon.

In April 2021, the City of Cape Town announced that it had greenlit the multi-billion-rand River Club 150 000 square metre mixed-use space as the new home of Amazon in Africa.

Divided into commercial and housing uses across two precincts, the city said that the development will include both market-driven and affordable housing opportunities; a significant boost to the economy.

About 5 239 jobs were created in the construction phase alone. The project will also create up to 19 000 indirect and induced jobs.

While Amazon will be the anchor tenant, 31 900 square metres (20%) of the residential floor space will be allocated for affordable housing opportunities.

Other parts of the development include:

59 600 sqm office space
20 700 sqm retail space
8 200 sqm hotel
4 100 sqm gym
restaurants, conferencing, school, and events space

Amazon Easy Ship

Unique to South Africa, the Amazon Easy Ship programme offers sellers on Amazon a convenient service. Sellers pack the order and can have their packaged orders collected and shipped through an associate from Amazon's designated courier, ensuring a quick and predictable delivery experience for customers. This service also includes up-to-date shipment tracking information.

Amazon sellers can also choose to use the self-ship option, which means that as a seller, you store, package, and ship all your products. The cost for shipping your order through a third-party carrier of your choice will differ from carrier to carrier.

Source: amazon.com｜bizcommunity.com｜itWeb｜YahooFinance ｜businesstech

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