What you might not know about Amazon in South Africa

While Amazon Marketplace may have just launched in South Africa, the broader group has been operating in the country through Amazon Web Services (AWS) for well over a decade.
After years of speculation, Amazon.co.za launched in South Africa on May 7th 2024.
Thus, South African customers can now shop from a wide array of local and international brands and enjoy same-day and next-day delivery.
Despite the fanfare, many locals may not have known that the company has been operating in South Africa for many years via its cloud service, AWS, whose origin story also leads back to South Africa.
In the mid-2000s, South African engineer Chris Pinkman returned to Cape Town from Seattle, where Amazon is based, to start work on the group’s Elastic Compute Cloud (EC2) system.
Pinkman and lead developer Christopher Brown successfully created the EC2 service, which now forms a core part of AWS.
AWS has also heavily expanded its presence in South Africa over the last decade.
In 2015, AWS opened an office in Johannesburg. Amid growing customer demand, the group opened a larger Johannesburg office in 2022.
Amazon’s global network also expanded into Africa through AWS Direct Connect in 2017.
A year later, the group established its first cloud infrastructure on the African continent, launching Amazon CloudFront locations in Johannesburg and Cape Town to help organizations securely deliver content with low latency at high transfer speeds.
In 2020, the AWS Africa (Cape Town) Region was launched with three Availability Zones—isolated clusters that provide data centre infrastructure.
The group also opened its first international AWS Skills Centre in Cape Town last year. The centre will provide free foundational cloud training for those interested in cloud computing.
AWS has a planned investment in the AWS Africa region of R46 billion between 2019 and 2029.
AWS is a profit machine
Although Amazon is still primarily a retail business, AWS is a major source of profits for the group due to its high software margins.
In its results for Q1 2024, Amazon’s net sales increased by 13% to $143.3 billion (R2.6 trillion), compared with $127.4 billion (R2.3 trillion) in Q1 2023.
North America segment sales were the largest contributor, at $86.3 billion (R1.5 trillion).
The AWS segment’s sales increased 17% year-over-year to $25.0 billion (R454 billion) but were still less than a third of North American sales.
Amazon’s operating income—profit after deducting operating expenses—increased to $15.3 billion (R278 billion), compared with $4.8 billion (R87 billion) in Q1 2024.
The AWS segment’s operating income was $9.4 billion (R170.86 billion), making it the largest contributor to the overall group’s profit.
Despite making over three times the amount in sales as AWS, the North American segment’s operating income was $5.0 billion (R90.88 billion)—just over half of AWS’s.