How Takealot can fend off Amazon’s challenge 

The key to success in the eCommerce industry is customer service, and currently, Takealot has the edge as Amazon gradually builds out its local supply chain. 

This is feedback from research conducted by World Wide Worx in collaboration with Peach Payments and Mastercard, looking at the size of the local eCommerce market. 

The research showed that local eCommerce is booming, with revenue generated by the industry crossing R71 billion in 2023 and it making up 6.15% of all retail sales in South Africa. 

World Wide Worx’s Arthur Goldstuck expects this to only accelerate with the launch of Amazon’s marketplace in South Africa. 

The eCommerce giant is giving local shoppers the option of door-to-door delivery or using one of 3,000 pickup points. There is free delivery on their first purchase.

Amazon has partnered with Pargo and The Courier Guy to serve its local delivery and logistics needs.

While it only launched its local marketplace this week, Amazon already has a strong customer base in South Africa.

Discovery Bank’s SpendTrend24 report showed Amazon’s US website is the third most visited eCommerce platform in South Africa.

The report further revealed that Amazon is among the most popular places for wealthy South Africans to spend their money.

However, Takealot has a significant edge, as shown in the graph above, as its customer service and experience are set to be better than Amazon’s for some time. 

Bob Group managing director Andy Higgins said earlier this year that Takealot’s strong local presence, understanding of the South African market, and established infrastructure give it a strong advantage over Amazon. 

Amazon’s first challenge will be adapting to not controlling its own infrastructure on the ground. 

Reliable and efficient infrastructure is vital for eCommerce players. In South Africa, Higgins said Amazon will have to rely on third parties and integrate them into their systems. 

This compounds the obvious infrastructure challenges South Africa has in terms of the deteriorating performance of its ports, railways, and roads, among others. 

Once Amazon adapts to that challenge, it will have to adjust to the local market, which has distinct features and nuances. 

“They will need to find ways to adapt how they do things normally for the local market, which will be a challenge,” Higgins said. 

This gives Takealot a big advantage in that it has a strong local presence and has adapted to the local market over time. 

“Takealot would face the most competition from Amazon, but they are also the best positioned to take them on,” Higgins said. 

The competition between Amazon and Takealot will fundamentally come down to the experience they offer consumers. 

Amazon’s publicly published pricing model is similar to Takealot’s, with negligible price differences for being a third-party seller on each platform. 

“Essentially, they are going to have the same sellers who have the same cost base and will charge essentially the same price,” he said.

This will bring the competition down to a battle over the experience South Africans have engaging with the platforms, the services offered, and delivery times. 

Here, Higgins said, lies Takealot’s massive advantage as the local presence and infrastructure they have built over the last decade will enable it to provide a better consumer experience.