Amazon’s entry into South Africa has been notably modest. The initial offering is quite limited, intentionally so. Calling it ‘underwhelming’ might be an understatement. The launch of Amazon.co.za had been eagerly anticipated for years, but its day-one offering was subdued and purposefully restrained.
The company announced same-day and next-day delivery across 20 different product categories. However, only 13 categories are currently active, including niche sections like ‘Load shedding solutions’ and ‘Outdoors and braai’, which are not major categories. The range of products is narrow, but this cautious approach was expected, as it aligns with Amazon’s typical strategy for entering new markets.
What’s particularly surprising is the sparse selection within each category. This limited variety suggests Amazon is proceeding carefully as it establishes its presence in South Africa.
Key Takeaways
- Initial Offering and Strategy: Amazon’s South African launch features a limited range of products and categories, with only 13 out of the 20 promised categories active. This cautious approach is consistent with Amazon’s typical strategy when entering new markets.
- Comparison with Local Competitors: Amazon’s product range is significantly smaller compared to local competitor Takealot. For instance, Amazon offers 120 power banks, whereas Takealot offers 1,600. In the fragrance category, Amazon has fewer than 300 options compared to over 5,000 on Takealot.
- Logistics and Payment Infrastructure: Amazon’s delivery and payment options are currently limited compared to Takealot. While Amazon offers same-day and next-day delivery through local partners and a few payment options, Takealot provides a more extensive delivery network and additional payment methods, including virtual currencies and buy-now-pay-later services.
Amazon vs Takealot: A Comparison of Offerings
In a popular category like power banks, Amazon lists about 120 items. Compare this to Takealot, which boasts nearly 1,600—over 13 times more. For fragrances, Amazon has fewer than 300 listings, whereas Takealot offers over 5,000. This limited range of categories and products on Amazon.co.za is quite noticeable.
Many items across various categories are “temporarily out of stock,” further restricting choices for shoppers. This scarcity leaves potential customers and existing Amazon.com users, who are accustomed to importing items, feeling disappointed after browsing the new site.
According to this year’s World Wide Worx’s Online Retail in South Africa report, around 6% of South Africans already use Amazon. In contrast, Takealot serves 20.9% of the market, with an additional 8.3% for Superbalist, which is likely part of Takealot’s count. This significant difference highlights Amazon’s slow start and limited offering compared to local competitors.
Amazon’s Payment and Delivery Options: A Work in Progress
Like its merchandise range, Amazon’s payment options are limited. You can use debit and credit cards, gift cards, and EFTs through Cape Town-based fintech Stitch. In contrast, Takealot offers seven additional payment methods, including buy-now-pay-later services, cash on delivery, and integrations with virtual currencies like eBucks and Discovery Miles.
Takealot’s Pickup Point infrastructure is a significant advantage, benefiting from a decade-long head start over Amazon. However, this phase of Amazon’s launch is about perfecting its supplier, logistics, and delivery processes. Amazon promises same-day or next-day delivery, depending on the order time, leveraging partners like The Courier Guy and Pargo, which has a network of 4,000 retail pickup points. The focus is on scaling up fulfillment in the coming weeks and months, a task Amazon excels at. During this period, it will continue onboarding sellers and expanding its product range.
Takealot, with more experience in the market, offers mostly seamless and often free same/next-day delivery in major centers. Amazon aims to catch up by refining its operations and gradually enhancing its service offerings.
To understand the kind of competition Amazon is up against, take a look at the most valuable South African startups. These homegrown companies are not only reshaping the market but also setting high standards for any new entrant.
TakealotMORE vs Amazon Prime: Competing Subscription Services
Takealot has launched TakealotMORE, a subscription service available at R39 or R99 per month, in anticipation of Amazon’s potential introduction of Amazon Prime. At the R99 tier, TakealotMORE members benefit from unlimited free same-day and next-day delivery, as well as five free restaurant or shop deliveries on Mr D each month. This service is offered to customers in Cape Town, Johannesburg, and Pretoria, with Durban largely covered depending on fulfillment from Johannesburg.
Takealot is enhancing its infrastructure with a new 43,000m² distribution centre near Riverhorse Valley in Durban. This facility will boost delivery times along the KZN coast. Currently, both Takealot and Amazon have warehouses in Gauteng and Cape Town. Takealot’s Gauteng warehouse is located in Eastport Logistics Park between OR Tambo International Airport and Pretoria, while the Cape warehouse is in Montague Gardens.
Amazon is expected to follow suit with the launch of Amazon Prime, aiming to compete with TakealotMORE’s offerings. As Amazon continues to expand its logistics and delivery network, it will seek to match and possibly surpass the convenience offered by TakealotMORE.
What Shoppers Want from Amazon
Local shoppers are eagerly anticipating Amazon’s introduction of its products, such as Echo and Alexa smart speakers, Fire tablets and sticks, and Amazon Basics private label items in South Africa.
Amazon’s global retail event, Prime Day, is expected to take place in July this year. Amazon is likely to launch more products publicly around this time, offering a broader range. This will allow Amazon to test its processes with a significant volume of orders before the peak November/Black Friday shopping period.
By then, competition between Amazon and Takealot is expected to be intense. For now, shoppers will need to be patient as Amazon gears up for a more comprehensive launch. Anticipation is high for Amazon’s broader entry into the market, signalling exciting times ahead for local e-commerce.
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Conclusion
Amazon’s debut in South Africa has been intentionally cautious, showcasing a restricted product selection and fewer operational categories in contrast to local rivals like Takealot. This strategic approach mirrors Amazon’s customary market entry tactics, prioritizing logistics and operational groundwork initially. Despite Amazon’s current shortfall in product diversity and payment alternatives, it is poised to broaden its offerings and enhance its infrastructure in the foreseeable future. As Amazon amplifies its presence, competition with entrenched contenders such as Takealot is anticipated to escalate, potentially reshaping the local e-commerce terrain.
Frequently Asked Questions
Why does Amazon have a limited product range in South Africa?
Amazon’s restricted product offering is part of its cautious entry strategy, prioritizing the establishment of its logistics and delivery infrastructure before broadening its offerings.
How does Amazon’s delivery service compare to Takealot’s?
Presently, Amazon provides same-day and next-day delivery through local partners, yet its network is less extensive compared to Takealot’s. Takealot boasts a more entrenched infrastructure and often offers complimentary delivery in major centers.
What payment methods does Amazon South Africa support?
Amazon South Africa accepts debit and credit cards, gift cards, and EFTs via Cape Town-based fintech Stitch. On the other hand, Takealot offers additional payment options, including buy-now-pay-later services and virtual currencies.
Will Amazon introduce more products in South Africa soon?
Yes, Amazon is poised to broaden its product assortment in the upcoming months, particularly around significant retail events like Prime Day and Black Friday, aiming to test its procedures and manage increased order volumes.
What subscription services do Amazon and Takealot offer in South Africa?
Takealot presents TakealotMORE, a subscription service offering complimentary delivery and other perks. Amazon is expected to roll out Amazon Prime, likely encompassing similar benefits to rival TakealotMORE.
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