Amazon will face significant challenges when it launches in South Africa as it will have to adapt to a new market and compete against established local online marketplaces such as Takealot, Bash, and Bob Shop.
Amazon announced that it will launch Amazon.co.za in 2024, providing South African-based sellers the ability to reach customers nationwide.
Codenamed “Project Fela”, the project includes its own marketplace in the country and plans to launch its “Fulfilment by Amazon” service for third-party sellers.
Robert Koen, general manager of the Sub-Saharan Africa region for Amazon, confirmed their plans in a press statement.
Koen said they look forward to launching Amazon.co.za, providing local sellers, brand owners, and entrepreneurs the opportunity to grow their businesses in South Africa.
The launch of Amazon.co.za in 2024 will provide independent sellers nationwide an opportunity to rapidly launch, grow, and scale their businesses.
More than 60% of sales in Amazon’s stores are from independent sellers, most of which are small and medium-sized businesses.
Amazon will now compete directly against large South African eCommerce players like Takealot, Makro, Bash, and Bob Shop.
Many think that Amazon’s arrival will spell doom for local online marketplaces.
However, Bob Group managing director Andy Higgins said that Amazon would initially struggle to gain traction in the local market and that it may take longer than many expect for it to succeed in South Africa.
Higgins said in response to questions from Daily Investor that Amazon’s launch is unlikely to be a big bang, with it gradually gaining momentum over time.
Their main challenge will be whether they can take tech that works for other markets and make that work in South Africa, which has its own nuances.
Higgins said that Amazon has not always been successful when moving into new markets. For example, in Poland, the local incumbent Allegro still dominates.
In India, on the other hand, it ended up being a battle between Amazon India and Walmart through its subsidiary Flipkart, where Amazon is currently considered to have the lead after making big investments.
Local online marketplaces have the advantage of experience in the South African market, which Higgins believes makes them more agile in adapting and providing services specific to the country.
Higgins thinks Amazon’s launch will positively impact all online marketplaces by encouraging potential buyers to shop online, which will lead to growth for all online marketplaces, including Takealot and Bob Shop.