What to Expect from Amazon South Africa?

It has been three months since Amazon launched its eCommerce platform in South Africa.

Amazon, the company leading the global eCommerce revolution, that generates more revenue in one year than the entire GDP of South Africa, is continuing its global expansion.

Why did Amazon choose South Africa?

Why is Amazon.co.za not yet as amazing as Amazon.com or Amazon.de, Amazon.co.uk, Amazon.japan, etc.?

What can we expect from Amazon.co.za?

These questions will be answered in this blog which will also consider Amazon’s launch in Egypt – back in 2021 – as a comparison.

The Current State of South Africa’s eCommerce Market

South Africa is a country poised for a renaissance… culturally and economically. The Rainbow Nation is indeed plagued with structural challenges, which are unnecessary to dive into here, however, it is reasonable to remain optimistic for the formerly divided nation’s future.

Africa’s most industrialized economy, South Africa intrigues economists globally due to exhibiting something like ‘two economies in one country’… Indeed, we behold terrifying inequality; millions in poverty contrasted to a vibrant and advanced top 20% or so.

South Africa’s eCommerce market (sales made via online platforms like Takealot or Macro) is growing rapidly; even faster than the international average! In just a few years, eCommerce penetration (eComm sales as a % of traditional retail sales) is set to double. The revenue generated by companies selling on eCommerce in South Africa will double within the next 4-5 years.

Looking at more developed countries like the USA, England, Germany, Brazil, or Japan, we can consider where eCommerce is heading in South Africa. This rather simple exercise offers a glimpse into the future of South Africa’s economy, and it shows that eCommerce is the future…

All around the world, including SA, eCommerce continues to win market share from conventional brick-and-mortar retail sales… The future has spoken. People like to shop online due to the convenience, wide variety of products, and competitive prices on offer. This trend is not going to reverse, indeed, it is rather accelerating.

What does this mean? It means that if you are a business, any business selling a product that can be sold online, then you should be obliged to cater to the clear preference of customers.

And if you think “my business is not a good fit for eCommerce” then I implore you to think again. Check out our article on “What is holding business owners back from eCommerce.” Fluid/sa is a full-service Amazon agency, the very first in South Africa, offering global experience gained from Amazon’s largest marketplaces (USA and Europe) to South Africa. We help businesses sell their products on Amazon. Feel free to connect with us for a free consultation with our founder.

Connect to the future. And the future of eCommerce for South Africa is Amazon.

This is rather obvious if you consider the track record of Amazon all around the world. All of the new countries that Amazon has launched in over the years – from the UK, to India, Japan, Brazil, France, Belgium, etc. – had their own equivalent of takealot. All of these countries had eCommerce platforms doing rather well already before Amazon launched there…

Amazon persisted in launching in all of these countries because they knew that they were better. They know that they can offer a better service to both sellers and buyers, and they know that with eCommerce growing so rapidly, they do not need to ‘destroy’ their local competition, they can just need to win customer’s trust to win future market share.

Amazon can dominate because of a plethora of reasons, which were discussed in this article: Looking back at one month of Amazon South Africa, in a nutshell:

• They are the original innovators of eCommerce
• They have deep, deep, pockets (enables them to offer better deals and discounts. Amazon does not mind being unprofitable in a new country for many years…)
• They are a global business; offering sellers to reach customers around the world
• Their technology is cutting-edge
• Economies of scale

What South Africa Can Learn from Amazon’s Launch in Egypt

I will exemplify this with an example that is sort of close to home; Egypt. First, consider this macro comparison of Egypt and South Africa:

• SA GDP: 405 billion USD
• Egypt GDP: 480 billion USD
• SA population: 60 million
• Egypt population: 111 million
• SA eCommerce market: 4.5 billion USD
• Egypt eCommerce market: 9 billion USD
• SA eCommerce penetration: 4.8%
• Egypt eCommerce penetration: 20%
• SA eCommerce market growth rate: 15% (outpacing traditional brick-and-mortar retail)
• Egypt eCommerce market growth rate: 15%

Now consider Amazon’s growth in Egypt:

–       Launched in 2021

–       Merged (bought out) the previous eComm leader

–       Established logistics network

–       Over 3 million cubic feet of storage space

–       Millions of products on offer

–       Millions of happy customers

–       Formerly national Egyptian businesses selling to a global customer base via Amazon

Please realize that South Africa’s eComm penetration is still only < 5%, and at conservatively projected growth rates it will double in the coming years. This spells out an incredible opportunity for clever business owners.

The Future of Amazon in South Africa: A Unique Opportunity

And lastly, why is Amazon.co.za not as amazing as its other marketplaces? Well, it’s rather simple; they have been here for 3 months! In time, Amazon South Africa will be filled with the international product offering that customers here crave. They will continue to scale their logistical network. Amazon will continue to add new services and functionalities to its platform, and eventually, with a little patience, Amazon.co.za will be flourishing.

The fact that Amazon South Africa is “sort of average” at this stage is EXACTLY what offers clever business owners an extremely unique opportunity. The chance to cement themselves, and their products, as best sellers on Amazon early (while it is still unsaturated) positions these brands as best sellers of the future. Learn more about this ‘first mover advantage’ in our blog post which explains it in more detail.

Connect with fluid/sa to start your future today.

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