Amazon appears to be unperturbed by the competition in SA’s e-commerce market as the US giant began operating in the country this week.
The launch of the SA online store — Amazon.co.za — is widely seen as a direct challenge to the reigning champion, Takealot, which has the backing and deep pockets of its parent, Naspers — a top-10 tech investor in the world alongside Facebook, Google and even Jeff Bezos’ Amazon.
Consumers can now shop for locally sourced goods at local prices. Until this week, consumers were able to shop on Amazon’s international website, which came with pricing in foreign currency, making goods more expensive due to the weak rand — and with the possibility of import duties for out-of-country purchases.
On the merchant side, Amazon says more than 60% of its sales are from independent sellers, including small and medium-sized enterprises (SMEs). Such sellers already take a large chunk of Takealot’s SA business. The US company will provide another channel through which SMEs can drive sales.
Robert Koen, MD of Sub-Saharan Africa at Amazon, told Business Day that the company had already been able to convert a number of merchants to register with its platform, but he wouldn’t reveal exact figures.
While much of the attention about Amazon in SA has focused on its competition with Takealot, Chinese online retailers Shein and Temu have already cemented their place in the market.
Koen says the US online retailer is more concerned with winning over customers than beating out competitors.
“We’ve faced very heavy competition in all the countries where we operate. But what I think makes us a bit unusual is we definitely don’t focus on what our competitors are doing. We’ve found what that successful formula is if we really obsess over our customers. We know they want great products, great prices, real convenience and being able to shop online,” he said.
“By just focusing on that and really listening very carefully to what’s working, maybe what’s not working, we can tweak the experience. It’s really important for us to listen to the customer and be earning their trust every day, with everything we do. And that’s where our focus will be, on the customer, not on the competitor.”
So big is the threat from the proliferation of Chinese online players that trade, industry & competition minister Ebrahim Patel is reported to be working on a plan to close import tariff loopholes that have fuelled the local dominance of Temu and Shein.
Naspers has warned that new competition regulations in SA could give Amazon an edge over local e-commerce firms.
Online retail is seen as a small piece of the overall retail pie, estimated to be worth more than R1.3-trillion. Yet the stakes are still high, with much opportunity to grab market share and large pools of capital being poured into the space.
In April Standard Bank reported that online fashion sales through its channels had surged almost 80% over the past three years, with 2024 on track to outpace the activity of previous years.
Consumers have been making the most transactions with their Standard Bank Mastercard credit cards at local fashion e-tailers, which accounted for the largest share of spend in 2023. The bank also noted that purchases from Shein were “growing aggressively”.
Shein is consistently among the top smartphone apps downloaded in SA, alongside social media apps such as TikTok. The company, which is preparing for a US listing, is valued at just under $50bn.
There are an estimated 250,000 Shein shoppers in SA, according to data from the Marketing All Product Survey (MAPS), figures which have been referenced by Mr Price.
In recent months Temu, which is operated by Chinese e-commerce company PDD Holdings, has been expanding aggressively in SA. PDD is backed by Tencent, whose largest shareholder is Naspers, through its Amsterdam unit Prosus, making it an indirect investor in the business.
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