Takealot takes the fight to Amazon

Naspers CFO Basil Sgourdos said they would pump money into Takealot to ensure it is fighting fit for its looming battle against global eCommerce giant Amazon.

Sgourdos was referring to Amazon’s announcement that it will launch its Amazon.co.za marketplace in South Africa in 2024.

Through its marketplace, Amazon will provide South African-based sellers with the ability to reach customers nationwide.

Robert Koen, general manager of Amazon’s Sub-Saharan Africa region, said they will work with local sellers to grow their businesses in South Africa.

Amazon offers a range of valuable tools, programs, and services to empower sellers and foster their business growth.

It includes free educational content to support sellers at every stage of their journey, including articles, videos, webinars, and case studies.

The launch of Amazon.co.za in 2024 will provide independent sellers nationwide an opportunity to launch, grow, and scale their businesses rapidly.

More than 60% of sales in Amazon’s stores are from independent sellers, most of which are small and medium-sized businesses.

Amazon will compete directly against prominent South African eCommerce players like Takealot, Makro, and Bash.

Takealot CEO Mamongae Mahlare said Amazon’s launch in South Africa shows the market is poised for growth.

She added that it demonstrates that Takealot has built an investment case big enough for global companies like Amazon to take note.

Mahlare did not seem overly concerned about Amazon.com’s launch, saying their shareholder, Naspers, has invested in Takealot for the long term.

Sgourdos substantiated Mahlare’s view, saying they would make a substantial cash injection into Takealot to take the fight to Amazon.

The Sunday Times quoted Sgourdos as saying Takealot is a fantastic business and that they will continue to invest in it to improve its value proposition.

Naspers interim CEO Ervin Tu added that they will be ready for competition from Amazon and are not troubled by it.

Although Amazon is a formidable opponent, Takealot has many advantages in South Africa because of its longevity in the market.

It has its own logistics network through Mr D, unrivalled knowledge of the local eCommerce market, and strong relationships with local sellers and suppliers.

Naspers South Africa CEO Phuthi Mahanyele-Dabengwa told the Sunday Times Amazon has failed in some territories because of the lack of local knowledge of businesses there.

“One of the things we forget is the importance of having local knowledge, and Takealot has got that,” Mahanyele-Dabengwa said.

Bob Group managing director Andy Higgins agrees, saying Amazon will initially struggle to gain traction in the local market.

Higgins, one of South Africa’s foremost eCommerce experts, said it may take Amazon longer than many expect to succeed in South Africa.

He added 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.