Takealot will remain eCommerce king – but Amazon will fight for the crown

Takealot will continue to dominate the eCommerce industry in South Africa for the next few years. However, over the longer term, Amazon’s range of products and customer service will pressure local players. 

Amazon launched its marketplace in South Africa earlier this week, offering local shoppers a range of products with the option of door-to-door delivery or using one of 3,000 pickup points.

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

However, in response to questions from Daily Investor, managing director of Bob Group Andy Higgins said that it would take much longer than expected for Amazon to become truly dominant in South Africa. 

He added that Takealot will remain the dominant player in the industry for the next few years as Amazon slowly expands their product range and improves its service. 

“It will take Amazon longer to establish themselves than most people think. We will need to wait years rather than months to see Amazon’s true impact on the local market,” Higgins said. 

He explained that the view of “local is lekker” will also help Takealot in the short to medium term. 

“What happens down the line will depend on Amazon’s ability to execute locally. Maybe Amazon will end up buying a local logistics company. If that were to happen, it would have the potential to change the game.”

These comments echo those that Higgins made earlier this year, where he urged South Africans to curb their enthusiasm for Amazon’s launch as it will start off smaller and more slowly than people expect. 

He explained that Amazon tends to conduct a small launch with little fanfare and slowly ramp up its product range and services. 

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.

Thus, it is unlikely that for the first few years, either Amazon or Takealot will have a massive competitive advantage, which would allow one to establish dominance.