The highly anticipated online shopping battle between Takealot and Amazon is here soon, with consumers setting to benefit from the battle for market share.
Amazon announced that it will launch Amazon.co.za in 2024. Apart from offering its own products in the country, it will also give local sellers access to the platform.
More than 60% of sales in Amazon’s stores are from independent sellers, and it wants to replicate its international marketplace success in South Africa.
Robert Koen, general manager of Sub-Saharan Africa for Amazon, said they will give local sellers the opportunity to grow their businesses.
Amazon is the global eCommerce leader with a range of tools, programs, and services to empower sellers and foster their business growth.
Amazon will compete directly against other South African eCommerce players like Takealot, Makro, and BoB Shop.
Takealot CEO Mamongae Mahlare downplayed Amazon’s launch in South Africa and the potential impact on their business.
She said it demonstrates that Takealot has built an investment case big enough for global companies like Amazon to take note.
She added that they are not overly concerned about Amazon.com’s launch, saying their shareholder, Naspers, has invested in Takealot for the long term.
However, behind the scenes, everyone is scared when a large global company like Amazon enters a country.
When Google Search launched in South Africa, for example, it was not long before local search engines like Ananzi and Aardvark closed shop.
Although eCommerce, unlike search, can accommodate many players, Amazon is likely to win market share from local shops.
It will also put margin pressure on Takealot on its regular product prices and its marketplace seller fees.
Amazon is currently encouraging sellers throughout South Africa to register their businesses to form part of its launch.
It has slashed its Professional Seller fees to R1 per month, down from the regular R400 per month. It sets the one for what is to come.
Another factor in the looming battle between Takealot and Amazon is the strict conditions the Competition Commission imposed on Takealot.
It may seem that it disadvantages Takealot, but the Competition Commission is likely to impose similar requirements on Amazon.
“Whilst Amazon has not entered South Africa, were it or any other large eCommerce player to do so, they will similarly be expected to comply with similar provisions set out for Takealot,” it said.
The Competition Commission said it had engagements with Amazon on both its likely entry and potential compliance were entry to occur.
While Amazon poses a significant threat to South African eCommerce players, especially Takealot, it will still have to prove its worth.
Takealot has a dominant position in South Africa with exceptional logistics capabilities. It knows and serves the local market well.
Unless Amazon can match Takealot’s service levels, which is unlikely initially, it will have to rely on pricing to attract new customers. This is a difficult strategy to maintain.
This looming eCommerce battle is great news for South African consumers and sellers who will benefit from increased competition and lower prices.