While local merchants view online marketplaces − such as Amazon and Takealot − as an opportunity to reach more customers, they face several challenges, such as high marketplace fees and navigating market competition.
This is one of the key findings of Network International’s 2024 Payfast State of Pay report, which features insight from industry innovators and delves into SA’s payment landscape.
It highlights the rise of marketplaces and the convergence of commerce – an industry-defining trend set to drive consumer convenience and merchant efficiency.
The report details insights sourced from Payfast by Network platforms and a survey conducted among its merchant network over the past year.
It notes mobile wallets and open banking solutions – such as Apple Pay, Samsung Pay and Capitec Pay − have grown significantly over the past year, indicating increasing familiarity, comfort and trust with the adoption of digital payment solutions among local consumers and merchants.
The top three marketplaces for local merchants are Takealot, Amazon (SA) and Makro Marketplace – with Takealot emerging as the most popular option for merchants to sell their products.
David Adams, Southern Africa regional MD of Network International, says: “The overwhelming sentiment is positive, with 71% of merchants considering marketplaces an opportunity to reach more customers, drive innovation and promote growth in the e-commerce sector.
“Recognising that this comes with its own set of challenges, the overall impression is that South African businesses are built on grit and determination – a quality that stands these businesses in good stead.”
According to the study, challenges faced by merchants include cash flow concerns (23%) navigating competition from marketplaces (18%), and marketplace fees and requirements (17%).
Some marketplaces allow merchants to list products on their sites free of charge, but take a commission on all products sold. Others charge both a commission fee and storage fee for products kept in their warehouses.
According to the study, 50% of merchants with an online presence saw an increase in online sales during 2024 compared to 2023, when only 38% of merchants saw an uptick in online sales.
Amazon’s entry into SA is shaking-up the online marketplace. Since Amazon.co.za launched, independent sellers in SA have been increasingly registering on the site, it says. According to Amazon, more than 60% of sales in its e-commerce store are from independent sellers.
Takealot started with 124 sellers on its marketplace in 2014 and has now grown to list over 8 000 small and medium enterprises.
An unnamed tech industry merchant quoted in the report comments: “Competing with marketplaces in SA requires focusing on offering unique products, or personalised services that stand out.
“While marketplaces provide convenience and reach, businesses can compete by building strong customer relationships, offering faster delivery and providing exceptional customer service. It's also important to differentiate through quality, local expertise and targeting niche markets that big platforms may overlook.”
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