Looking Back at One Month of Amazon South Africa

June 12, 2024

Rumours of Amazon South Africa’s launch plans started circulating nearly three years ago, and fluid/sa, a South African Amazon agency, was founded back in July of 2022! We believed that Amazon would expand into Africa’s most industrialized country, and we wanted a head-start in establishing ourselves in SA – bringing our expertise honed in Amazon’s biggest marketplaces to the Rainbow Nation!

Now, just over a month since Amazon South Africa’s eCommerce marketplace launched and we are looking back at developments and considering insights for seller success.

Amazon South Africa’s Soft Launch

When Amazon opens in a new country (which they have done many many times) they follow the playbook which they wrote themselves and helped them grow into one of the world’s largest businesses. South African sellers and consumers who are unfamiliar with Amazon were partially disappointed by the behemoth’s South African launch since Amazon.co.za is still a far cry from Amazon.com. Consider the following:

Limited categories: Amazon South Africa has not yet launched several key categories such as apparel, ingestibles, jewellery, and furniture. These are some key categories, and we have met with many sellers who were saddened to learn they cannot yet sell their products on Amazon… However, to succeed on Amazon, preparation is key, so fluid/sa offers free consulting and preparation services to sellers within restricted categories.
No Ads: Amazon Advertising is an essential marketing service for sellers to bid for keywords to increase visibility. Interestingly, Amazon does not immediately launch this service, despite it bringing them great revenue… This shows that Amazon is not in a rush to make profit from South Africa, and is content to grow thoroughly from a strong foundation – a luxury that one of the richest companies in the world can afford.
No Prime: Similar to Ads, this will come as the platform grows.

While South Africans are understandably frustrated by these limitations, they should take comfort in the fact that this is standard procedure for Amazon. The global eComm leader has prepared for its South African launch for many years, and now that they have reached the implementation stage, they will not rush the process.

Amazon.com has consistently ranked as one of the most used eComm sites for South Africans, and as Amazon South Africa launched consumers were certainly hoping to access such international products. These products will eventually reach Amazon South Africa as it continues to grow.

First Mover Advantage

We’ve already written about the (rather obvious) advantage offered to South African sellers by Amazon’s opening in their country. Simply, Amazon South Africa is the least saturated it ever will be, and by listing your products ASAP you can start to rank in its algorithms and cement your spot as a category leader!

One of the greatest advantages of eCommerce is that the barrier to entry (compared to selling in your own physical store or on a retailer shelf) is rather low. The other side of this coin is that your product will not stand out from the millions of goods sold on Amazon. This makes the first mover advantage an especially important opportunity.

Considering the soft launch, this opportunity is extended but still requires proactive dedication by business owners. Contact us for a free consultation to consider how your business can grow via this new distribution channel.

Local Competition (Takealot) for Amazon South Africa

For us it is a near guarantee that Amazon will overtake Takealot… we see this from international experience as Amazon eventually dominated the previous eComm local leaders in France, Poland, and many other countries… Global expansion is Amazon’s bread & butter, and when you consider the facts that Amazon generates more revenue than South Africa’s GDP per year and reaches more customers in the USA alone that the entire population of South Africa, it is just a question of when they will dominate in South Africa.

Amazon has had a presence with their web services in South Africa for over a decade, so they are familiar with our Rainbow Nation. South Africa is the most industrialized country in Africa, and Amazon is deeply committed to success here. Consider our post illustrating the economic environment of South Africa, which shows eComm growing faster than the international average as online sales continue to take share from traditional retail. eComm still has a long way to go in SA compared to more advanced nations, which indicates that there is much growth ahead in our eComm space!

For now, and for months and probably years to come, Takealot will remain the local eComm leader. Amazon does not mind – indeed they expect it – to remain unprofitable for several years after they launch in a new country. The deep pockets of Amazon will allow them to out-compete Takealot and eventually gain market dominance as they have all around the world.

Any eComm marketplace relies on 3 pillars of; price, variety, and delivery. Amazon created the eComm playbook that Takealot and others have since duplicated. Consider how they will compete on these points:

Price: Amazon generates over two-thirds of its revenue in the USA, and most of the rest from the UK, Germany, and Japan. When they launch in a new country, they can gain market share by offering discounts on delivery and product pricing. As stated, Amazon is happy to be unprofitable for several years, as part of their plan to out-compete the local players. They have done this in far more advanced economies than SA… so the obvious bet is that they will do the same here.
Variety: Amazon South Africa has attracted the sellers already selling on Takealot, and it also attracts new sellers from SA who were not interested in Takealot. In addition, international merchants who succeed on Amazon in Europe, the US, and Asia, will continue to expand to Amazon’s newest market. Before long, Amazon will have a far greater product variety than Takealot.
Delivery: Amazon is a global logistic leader, with its international delivery reaching over 130 countries… In South Africa, they have taken a wide approach to partner with a variety of logistic providers, to ensure speedy and safe delivery to satisfy customers. In the long-term, they may consolidate and focus on the partners which yield the greatest customer satisfaction.

Added the fact that Amazon is a global business, offering South African businesses reach across the world, they should be a clear favourite for business owners. fluid/sa learned the Amazon trade by operating in its leading marketplaces (USA and Europe), so globalisation is our core competency. We love helping brands expand into new countries, with unprecedented ease, so let us help you!

Amazon’s deep pockets, technological leadership, global presence, brand recognition, and eComm leadership suggest that it is just a matter of time until they lead the South African marketplace!

While fluid/sa is a part of Amazon’s exclusive Service Provider Network (offering our expert services to sellers), we are not employed by Amazon nor are we privy to their internal deliberations. Therefore the views expressed in this post, and in other posts, are the views of fluid/sa alone.

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