How will Amazon influence Takealot’s future?

Even though Amazon has not yet launched its local (South African) online platform, its US platform is getting more and more visitors from South Africa. The US Amazon e-commerce platform is the third most visited e-commerce platform in South Africa. What does this mean for Takealot’s future?

RISE IN ONLINE SHOPPING

Research by Payments and Commerce Market Intelligence (PCMI) indicates that in the next two years, the digital commerce market is expected to reach $72bn across South Africa, Egypt, Kenya, Morocco, and Nigeria, according to Bizcommunity. Andy Higgins, Bob Group’s managing director, believes 2024 will be the year online retail in South Africa will start to accelerate and catch up with international uptake.

Online shopping has seen a significant rise in South Africa, with its growth surpassing in-store spending. The online shopping growth rate in the country matches those of cities in developed economies such as Sydney in Australia, and San Francisco and Los Angeles in the US, according to Business Tech.

TAKEALOT’S POSITION

Takealot is currently a giant in South Africa when it comes to online shopping. Takealot’s online e-commerce site was officially launched in June 2011. It has warehouses in Johannesburg, Durban and Cape Town and over 2000 employees.

However, many experts believe that Takealot will struggle to stay afloat when Amazon officially enters the local online marketplace. Amazon’s South African website will launch later this year.

HOW DOES AMAZON COMPARE TO TAKEALOT?

Even though Takealot’s pricing and distribution will be roughly on par with Amazon, Amazon has a broader range of products, giving it an edge over local e-commerce platforms.

Damon Buss, an equity analyst at M&G Investments, said that Amazon usually takes a slow and measured approach to launch in new markets, gradually dominating in the local e-commerce space by offering a more comprehensive range of products than its competitors and providing personalised services to individual consumers, according to MyBroadband.

According to Buss, Amazon has the best customer analytics – unmatched by other e-commerce businesses. It also has highly efficient logistics and supply chain setups which are key to its success. Buss predicts that Amazon will dominate the e-commerce space in SA within five years. The approach that Amazon takes is offering new products that attract more customers. This enables Amazon to learn more about the customers, i.e. their wants and needs. Following this, Amazon can adapt their services accordingly, leading to customer satisfaction.

WHAT ARE SOUTH AFRICANS BUYING ONLINE?

Statista published statistics at the end of last year showing the most popular categories for online purchases in South Africa. Clothing was the most popular category with 47% of online purchases falling in this category. The nine other categories that made up the top 10 are:

• Shoes – 36%
• Food and beverages (excluding restaurant deliveries) – 31%
• Bags and related accessories – 30%
• Cosmetics and body care products – 25%
• Accessories – 24%
• Health products – 22%
• Electronics (e.g. smartphones, TVs) – 21%
• Books, movies, music, and games (excluding downloads) – 16%
• Household appliances – 16%

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