More local companies are expected to double down on boosting their online retail platforms in anticipation of the entry of US e-commerce giant Amazon to the country in 2024.
Begun as an online bookstore, Amazon has grown into one of the biggest e-commerce companies in the world, offering a wide range of products with a fast delivery time. The company has also expanded into cloud computing for businesses and video streaming.
The arrival of Amazon in South Africa was announced in October 2023, and industry experts have said the company will be especially strong on logistics. They have warned competitors to get their house in order, as the US company’s arrival is expected to be a game-changer.
One of the companies seen to be under threat is Takealot, South Africa’s biggest online retailer. The company has said it will invest heavily in its products and services to fight competition from Amazon.
In recent years, the number of e-commerce platforms aimed at providing online shopping to customers has increased. These retail sites are also giving small to medium-sized businesses better access to customers.
Digital mall
The platforms include Makro’s OneCart, which aggregates various shopping apps and is sometimes referred to as a “digital mall”, and Nedbank Avo, which features groceries, gadgets and fashion, home appliances and cars. Vodacom’s VodaPay super app also allows customers to buy a range of products — such as clothing, groceries, holidays and home appliances — online.
Competition is a wonderful accelerator for customer-oriented solutions and will contribute to the overall growth of e-commerce in SA
— Divisional executive at Nedbank’s Beyond Banking platform, Vishal Maharaj
This year, Nedbank will expand Avo’s range of products and improve customer experience and logistics issues.
Vishal Maharaj, divisional executive at Nedbank’s Beyond Banking platform, said the bank would improve Avo'’s selection of categories at the “best pricing available”. The platform has “exciting plans to expand the selection of products and categories this year”.
On customer and rewards, he said: “We are doubling down on great offerings for our customer base through expanding tailored deals and rewards programmes, such as Greenbacks by Nedbank. We are also excited about the imminent launch of travel on Avo,” he said.
Maharaj said well-established global players entering the market would will help accelerate e-commerce adoption and grow the market, which is “exceptionally nascent by global standards”.
“Avo welcomes Amazon’s entry [to the market]. Competition is a wonderful accelerator for customer-oriented solutions and will contribute to the overall growth of e-commerce in SA. Core to our differentiation is that we have the backing of Nedbank, which is a trusted brand and operator in South Africa,” he said.
This will enable Avo to engage with a wide range of partners and “allow us to develop a broader set of categories and offerings that can be tailored to customer needs”. He said: “We are not a single point of interaction, but rather we can fulfil multiple needs for a customer, who can engage in a range of transactions, from buying airtime, groceries, the latest iPhone or a Samsung TV to applying for a personal loan or booking travel.”
Maharaj said Avo’s SuperShop will focus on core areas of the business that have brought success in the last three years, but also keep working on improving user experience. Avo Solar, its one-stop shop for solar solutions, will be “an area we will focus on growing in 2024”. He added: “We want to continue providing accessible solar packages for any budget, installation by industry experts, and easy, secure financing through Nedbank.”
Anthony Thunström, CEO of TFG (The Foschini Group), said in November he thought Amazon’s presence in South Africa would accelerate digital adoption and e-commerce in the country. “The more people use digital, [the more] it will boost Bash [TFG’s e-commerce platform].”
Vodacom’s spokesperson said the company will add more e-commerce partners to VodaPay, giving customers even greater choice.
VodaPay is popular for bill payments, airtime purchases and money transfers. However, more consumers are using the app for e-commerce. “We will continue to invest in and enhance our VodaPay platform for the customers we serve. We will be investing in customer acquisition, customer retention, new services, and an enhanced customer experience,” the spokesperson said.
Vodacom’s spokesperson said VodaPay's strength comes “from the powerful mobile base we have and the attractive telco services we continue to offer”. The spokesperson added: “We believe our strength will be the portfolio of services and the convenience of payments we offer on a single app.”
In October last year, Amazon said it would provide local sellers, brand owners, and entrepreneurs — both large and small — with the opportunity to grow their businesses on its platform. More than 60% of sales in Amazon’s store are from independent sellers, most of which are small and medium-sized businesses, It said.
OneCart’s CEO Aidan Johnson did not comment specifically on competition in the sector and the company’s plans.
He said: “Using a single shopping app to get the best prices from multiple retailers in one transaction is both more efficient and more affordable than the multiple app, multiple transaction alternative shoppers are having to use today.”
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