Trouble for Takealot in South Africa

 ·12 Apr 2024

Amazon’s US website is already the third most visited e-commerce platform in South Africa, and some experts believe local online retailer Takealot will struggle when Amazon officially launches its local online marketplace.

According to the SpendTrend24 report by Discovery Bank, online shopping has seen a significant rise in South Africa, with its growth surpassing in-store spending.

This growth rate has even exceeded that of other emerging market cities and matched that of cities in developed economies such as Sydney, San Francisco and Los Angeles.

The report attributes this increase to the rise in global e-commerce platforms that now deliver to South Africa, aided by enhanced logistics and faster delivery times.

Although Amazon’s South African website is still to launch later this year, it is already quite popular among consumers.

According to data from the International Trade Administration, Amazon’s US website is the third most visited e-commerce site in South Africa.

Other global e-commerce sites South Africans enjoy include AliExpress, Shein, Wish, and eBay.

Tough times ahead for Takealot

Amazon has a broader range of products than its competitors, giving it an edge over local e-commerce platforms like Takealot.

Speaking to Classic Business, Damon Buss, an equity analyst at M&G Investments, said Amazon is likely to gradually dominate in the local e-commerce space by offering a more comprehensive range of products than Takealot and providing personalised services to individual consumers.

This broader catalogue can be chalked up to the retail giant’s global presence and highly efficient supply chain.

For instance, when Amazon launched in Australia in 2017, it gradually expanded its operations until it reached a point where it became unbeatable.

Amazon launched in Australia with 7.5 million products on its platform. Within five years, the number increased to over 200 million, making it the dominant e-commerce player in the country.

According to Buss, the group’s “unrivalled customer analytics” and logistics setup are key to its success. It’s very likely that Amazon will dominate the e-commerce space in South Africa within five years as well, he said.

Buss explained that this would create a ‘flywheel effect’, where new products would attract more customers, enabling Amazon to learn more about their wants and needs and tailor their services accordingly.

Despite this sentiment, the CEO of Naspers’ South African unit, Phuthi Mahanyele-Dabengwa, said the parent company is boosting investment into its South African online retailer ahead of Amazon’s expected launch in 2024.

“We are well positioned to deal with whatever Amazon might bring,” she said.

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