Amazon's Slow Start in South Africa, But Potential Remains

Amazon South Africa potential: Recently, the e-commerce giant, Amazon, set its sights on the South African market.

This development has sparked curiosity in the hearts of many and has generated a buzz.

However, the retail giant has decided to take the slow and steady approach in establishing itself in the South African market.

Amazon South Africa Potential

This slow and steady approach contrasts with the anticipated rapid expansion.

Instead, the tech titan appears to be adopting a slow and steady tactic, leading many to ponder whether this is a strategic decision or a lost opportunity.

South Africa’s booming e-commerce scene provides the context for Amazon’s strategic approach.

Discovery Bank’s SpendTrend24 report highlighted that South African shoppers are already familiar with Amazon, frequently visiting the US site – Amazon ranks as the third most visited e-commerce platform in the country, per the report.

With the online shopping scene thriving, boasting an estimated 9.3% annual growth rate, outpacing the global average, and a projected value exceeding USD 6.4 B by 2028, this flourishing market with its existing customer base piqued Amazon’s interest.

Robert Koen, Amazon’s managing director for sub-Saharan Africa, highlighted the strong relationship the company has with South African bands during last month’s official launch.

He said, “Building a strong relationship with South African brands and businesses — small or large — is important to us. We want Amazon.co.za to be the place where they can reach millions of customers.”

Analysts Criticize Amazon’s Slow Approach

Industry analysts suggested that Amazon’s approach, while sound, might not be effective in taking over the market.

Also Read: Amazon Launches a Flagship Marketplace in South Africa

Partnerships with local logistics companies, on-boarding local and international sellers across an initial 20 product categories, and free introductory delivery were decent first steps.

However, these hardly offer a compelling reason to choose Amazon over their established US store, and some products were even cheaper there, early reports show.

Moreover, Amazon’s choice to not roll out its Prime membership with its South African launch may hinder its ability to differentiate itself and maintain customer loyalty.

The lack of Prime membership withholds media benefits and exclusive Prime-only services. Services such as free shipping on a wide range of products.

Amazon South Africa Potential Growth Faces Competitors

The lack of this necessity has opened a spot for competitors to shine through. Takealot, seizing the spot, has launched TakealotMORE.

The new initiative is a subscription service offering tiered memberships with free and express delivery options.

Takealot Group CEO Frederik Zietsman declared, this strategic move aimed to “revolutionize the online shopping experience and redefine convenience and value.”

Takealot has maintained a strong search lead in the country, however, underestimating Amazon would be unwise.

Their execution prowess, financial weight, and global might have seen them muscle into new markets and go on to dominate.

Is Amazon Slow Approach A Wise Move?

The slow burn path Amazon has taken, could be a strategic move on the part of the company to overhaul the local market competition.

Industry experts note that the slow approach allows them to gather market intelligence, refine their offerings, and potentially build a more robust local presence.

However, the jury’s still out on whether this cautious strategy will pay off against Takealot’s established dominance and the unique preferences of South African online shoppers.