Amazon has launched its South African market, officially beginning operations in its first African country. With 3,000 pickup points, buyers will also enjoy free delivery on their first order.
News of Amazon’s South Africa marketplace launch broke in early 2022, with February 2023 slated as the launch date. The company ramped up hiring throughout 2023 and announced an official launch date in October 2023.
The American e-commerce giant enters a market dominated by Naspers-owned Takealot which accounts for 48% of all online sales in the country. Takealot has stated that it sees Amazon’s entry into South Africa as a validation of the attractiveness of the country’s e-commerce market.
Amazon’s entry sets up an interesting battle with incumbents like Takealot, whose competitive advantage is a great understanding of the South African market. The retail giant will also have to contend with the country’s rigid competition regulation landscape which has seen incumbents having to significantly restructure their operations.
For example, in July 2023, the country’s competition regulator ordered Takealot to segregate its retail division from its marketplace operations. This was to prevent its retail services from accessing seller data and unilaterally stopping sellers from competing for certain brands.
However, despite the complexities of operating in the South African market, Amazon also possesses competitive advantages to weather the storm. The company already has a significant market in SA, with Amazon.com being one of the most visited websites in the country. Amazon also has the financial muscle to take on Takealot which has over the years seen its growth rate dwindle from 72% annually to 15% over the last two years.
