Amazon’s imminent entry into SA is expected to shake-up the online marketplace – bringing opportunities and challenges for local e-commerce players.
This is the sentiment shared yesterday by local e-commerce players during the Insaka e-commerce virtual summit roundtable.
The discussion, moderated by Warrick Kernes, founder of the Insaka E-commerce Academy, was centred on SA’s growing online shopping market, and the impact of new players such as Amazon on the smaller, burgeoning businesses.
The panellists – Craig Lubbe, head of business: marketplace at Bob Group; Yaeesh Moosa, head of marketplace at Takealot.com; and Leon Qwabe, founder of Order Kasi – agreed the stage is set for the battle of the marketplaces in SA, after the online retail giant confirmed it is set to open its digital doors in SA this year.
This, they noted, will turbo-charge the e-commerce sector – which currently contributes around 5% of overall retail sales in SA – creating huge potential for individual and business sellers.
Once up and running in SA, Amazon − the US-based online retail giant −will take on Naspers-owned e-commerce platform Takealot, which comprises Takealot.com, Mr D Food and Superbalist.
It is also expected to rival online marketplaces Bob Shop, Massmart-owned Makro Marketplace, Zando and Bidorbuy, among others.
“The entrance of any new competitor in the market doesn’t necessarily detract from your business, so if you have strong roots at the core of your business, which we [Takealot.com] definitely think we do, then it will bring healthy competition,” commented Moosa.
“I think the increased competition can add value to the e-commerce environment and will force everyone to up their game and offer better services and prices – which will ultimately benefit consumers and grow the e-commerce sector – and that’s good for everyone.”
The arrival of the US giant will force local e-commerce players to think hard about where their value proposition lies and how to maintain uniqueness and authenticity around their business, so that whatever they have built continues to resonate with their consumers, he asserted.
“We have a passion for e-commerce, SMEs and small businesses, and that’s what we leverage on. We look forward to the challenges and hopefully it [competition] grows the entire market,” said Moosa.
Takealot started with 124 sellers on its marketplace in 2014 and has now grown to list over 8 000 SMEs.
According to Amazon, more than 60% of sales in its e-commerce store are from independent sellers, saying its launch will provide local independent sellers “an opportunity to rapidly launch, grow and scale their businesses”.
Since the Amazon announcement, independent sellers in SA have been increasingly registering on sell.amazon.com/south-africa, it says.
According to Kernes, Amazon’s strong focus on its marketplace platform is poised to transform local marketplaces, and entrepreneurs should take advantage of the changing status quo.
In SA’s competitive market, entrepreneurs need to take a deep dive into understanding exactly what their consumers want, and what will push them over the finish line of making a purchase, he added.
“When we first heard of Amazon coming to South Africa, many people in our community of 40 000 SME members were fearful, as they thought this meant an end to small businesses. But what I communicated is that this means Amazon sees the potential and growth coming into SA’s e-commerce space.
“With significant changes on the horizon for e-commerce businesses of all sizes, adaption and innovation are going to be key components for success, whether it is picking the best online marketplace for your business, improving last-mile delivery to reach new markets, or learning how to scale successfully through social media,” explainedKernes.
Online retail in SA passed the R50 billion milestone in 2022, accounting for around 4.7% of the total retail market, according to the Online Retail in South Africa 2022 study conducted by World Wide Worx with Mastercard.
According to Statista-operated e-commerce insights firm E-commerceBD, the South African e-commerce market has this year contributed 10.4% to the worldwide growth of the e-commerce sector, with an expected increase of 12.3% by the end of 2024.
Online shopping revenue in SA is expected to show a compound annual growth rate of 9.3% between 2024 and 2028, it says.
Lubbe believes Amazon’s debut in the local market will “definitely legitimise” e-commerce to some degree. This was witnessed when many big local grocery retailers set up an online presence, and in turn democratised online shopping for all South Africans, he pointed out.
“With Amazon coming, I think it’s exciting for us to showcase e-commerce as a general space. Sure, it’s definitely competition to a marketplace such as ours and other local marketplaces, but it’s definitely good for consumers, and merchants would be silly not to try it out and see if it works for them.”
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