Despite Amazon.co.za's slow start in the South African market, the US e-commerce giant is expected to become a “game-changer” locally, in five to 10 years.
This was the word from Daniel Malan, commerce lead at digital marketing agency Dentsu South Africa, speaking at E-commerce Live, held in Johannesburg, earlier this month.
Delivering a presentation on SA’s e-commerce landscape, Malan noted that in the last two years, the online shopping market has experienced exponential growth –presenting substantial untapped opportunities in the online shopping sphere.
The surge is mainly attributed to the widespread ownership of mobile devices and the increased accessibility of the internet across the country, he explained.
According to Malan, the entry of Amazon.co.za is expected to turbo-charge the e-commerce sector in the long-term, despite a slow start.
Thee-commerce giant officially wentlive in SA with its much-anticipated online marketplace in May, promising a seamless shopping experience and access to 3 000 pickup points, 24/7 customer support and easy returns.
It takes on rival online marketplaces Bob Shop, Massmart-owned Makro Marketplace, Takealot and Zando, among others.
While much has been said about the e-commerce giant’s underwhelming offerings, lack of product variety and minimal advertising since its local launch, its compelling strategy and wealth of experience will see it winning within the next decade, he noted.
“With Amazon entering their 21st market, they know exactly what they are up against. I also overhyped their launch in South Africa, and in my opinion, it is unfair to judge a brand against established brands, such as Takealot or Bob Group, that have been operating for a few years in the local market.
“The long and the short of it is that Amazon is playing the long-term game – they are not here to win in year one. Their winning streak is probably going to take place at year five or year 10. I would not underestimate Amazon; it's clear that it will be a game-changer in SA.”
SA’s e-commerce market is still in its early stages – currently contributing around6% of overall retail sales.
Referencing a study by We Are Social and Meltwater, Malan pointed out that in 2023, SA saw an internet penetration of 72.3%, with a substantial 43.48 million internet users, indicating a significant digital shift.
These positive figures reflect massive untapped opportunities for local marketers and online sellers, he commented.
Amazon is rated as the biggest online shopping platform in the US, in terms of market share, with Walmart a distant second, he stated.
According to research firm Statista, the retail giant hit nearly $575 billion in net sales revenue worldwide in 2023, and is ranked as one of the most valuable brands worldwide.
“Now, these are notable numbers and, of course, Amazon should be a game-changer in SA. From a third-party seller’s perspective, Amazon’s launch in South Africa isa good thing, because around 63% to 65% of sales on the platform are from the third-party sellers and they have adopted the same approach in SA.”
Prior to its local launch, online retail experts forecast Amazon’s local entry would shake-up the online marketplace space, provoking a battle to tempt SMEs.
Ashleigh Beddow, director of brand strategy at marketing agency RT7 Digital, participated in a panel discussion at the E-commerce Live event. During an interview with ITWeb, she pointed out Amazon has historically shown how dominant it can be in other marketplaces, like the US,UK and EU, representing roughly 50% of e-commerce market share in those regions.
Since its local inception, the online retailer has already caused local market placeslike Takealot to up their operational game and is positioning itself as a significant growth channel for brands and private sellers, she commented.
“Amazon SA is in its complete infancy. The platform's current brand or product offering leaves many shoppers’ needs or desires unfulfilled, leading to a fall - back to more familiar and mature online retail marketplaces.
“This will change as Amazon SA’s product offering expands, making it a more attractive marketplace for brands and shoppers. Amazon has the financial backing to grow slowly and take on other marketplaces, without a doubt.”
Unlike competitors, Amazon has been “shy” in advertising its platform to shoppers across SA. This could be attributed to the company waiting for the platform to gain further brand/product momentum before focusing on top-of-mind brand-building and taking other marketplaces straight on, she noted.
“As Amazon gains momentum, attracting more and more brands or private sellers to the platform, shoppers will naturally start to use the platform as part of their shopping journeys.
“The platform has always prioritised fast shipping times and well-priced items. These two factors significantly impact shopper decision-making, and should attract more shoppers as time passes.”
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