On Tuesday, Amazon announced its plans to inaugurate an online shopping platform in South Africa in the coming year. This move will establish South Africa as the second African country, following Egypt, to have a dedicated Amazon website tailored to its local market.
South Africa will mark the 21st country where Amazon operates with a domain-specific website, thus entering a market that is predominantly occupied by online retailers, notably Takealot.com, under the Naspers umbrella.
Amazon issued a statement saying that the introduction of Amazon.co.za in 2024 will offer local independent sellers a chance to swiftly initiate, expand, and advance their businesses.
Historically, South Africa, known as Africa’s most advanced economy, has often been regarded as a strategic entry point for companies aiming to expand their presence across the continent. Analysts have previously made this observation regarding Amazon’s potential strategy.
The launch of Amazon’s service coincides with a notable surge in online shopping in South Africa, which was catalyzed by the pandemic and created an opportunity for e-commerce to firmly establish itself. As a result, retailers have significantly increased their investments in response to this trend.
However, the recent increase in online sales seems to have reached its peak as South Africans are returning to traditional shopping malls.
Additionally, due to South Africa’s sluggish economic growth, high unemployment rates, issues with power supply, and transportation challenges, analysts do not consider the launch as a transformative move for Amazon or a significant disruptor for the local retail sector.
Sasfin Wealth’s senior equity analyst, Alec Abraham, expressed, “I don’t believe that Amazon’s dominance in the South African retail market is a guaranteed success.”
While Amazon is expected to heighten competition with both local online and traditional retailers, the fact remains that the overall consumer market in South Africa isn’t expanding, as noted by the analyst.
Mamongae Mahlare, the Chief Executive Officer of Takealot Group, stated last year that the company’s extensive delivery network and its appeal to local consumers would enable it to compete effectively with Amazon.
The specific configuration of Amazon’s platform in South Africa is yet to be disclosed, as it will need to adhere to the local competition authority’s regulations, which require online retailers to keep their retail division separate from their marketplace operations.
Reported by Nqobile Dludla, Edited by Promit Mukherjee and Mark Potter Our Standards: The Thomson Reuters Trust Principles