Takealot’s strong local presence, understanding of the South African market, and established infrastructure give it a strong advantage over Amazon, which will struggle with the intricacies of the South African eCommerce market.
This is feedback from Bob Group managing director Andy Higgins, who told Biznews that Amazon will not enter South Africa and dominate from day one.
In October 2023, Amazon announced that it would launch Amazon.co.za in 2024, providing South African-based sellers the ability to reach customers nationwide.
Robert Koen, general manager of Amazon’s Sub-Saharan Africa region, said they look forward to launching Amazon.co.za.
The platform will allow local sellers, brand owners, and entrepreneurs to grow their businesses in South Africa.
There has been great excitement around Amazon’s South African launch, with many expecting the world-class service levels that make it the world’s largest eCommerce company.
However, Higgins advised South Africans to curb their enthusiasm as Amazon will likely start off smaller than people expect.
“Many people expect Amazon to come in and, from day one, have a massive impact on the market. I believe it will take them longer than most people expect for them to have an impact,” Higgins said.
Amazon’s first challenge will be adapting to not controlling its own infrastructure on the ground.
Reliable and efficient infrastructure is vital ror 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.
Amazon will take time to develop its presence and infrastructure, potentially resulting in a less pleasing initial experience.