E-commerce giant Amazon is set to expand its global footprint with the launch of an online shopping service in South Africa in 2024. South Africa will be the second African country to have a locally-dedicated Amazon website, following Egypt.
With this move, Amazon is entering its 21st country with a local domain-based website, posing a challenge to online retailers in the region, primarily led by Naspers’ Takealot.com. Amazon’s expansion aims to provide independent sellers in South Africa with the opportunity to establish and grow their businesses.
South Africa, known as Africa’s most advanced economy, often serves as a strategic entry point for global companies looking to extend their reach across the continent. The timing of Amazon’s launch aligns with the growing trend of online shopping in the country, accelerated by the COVID-19 pandemic. Retailers are making substantial investments in their e-commerce capabilities to meet the rising demand.
However, recent trends suggest that the surge in online sales may have peaked as South Africans return to physical shopping venues. Additionally, South Africa faces challenges like slow economic growth, high unemployment, and infrastructure issues, which may affect the immediate impact of Amazon’s entry into the local market.
Sasfin Wealth’s Senior Equity Analyst, Alec Abraham, cautioned against viewing Amazon’s presence as an automatic game-changer. “I don’t think their takeover of South Africa retail is a slam dunk,” he commented. While Amazon will certainly intensify competition among local online and traditional retailers, the limited growth of the consumer market in South Africa presents challenges.
Mamongae Mahlare, CEO of Takealot Group, expressed confidence that the company’s extensive delivery network and local appeal would enable it to compete effectively with Amazon. It remains to be seen how Amazon’s platform will be configured, as it must adhere to the local competition authority’s rules, which require online retailers to separate their retail divisions from their marketplace operations.
Amazon’s entry into the South African market is a significant development in the ever-evolving landscape of global e-commerce, offering consumers more options while stimulating competition among retailers.