Amazon vs e-tailers
MARKETPLACES: LOYALTY DISCOUNTS SET E-COMMERCE GIANT APART
‘If you’re a prime customer, you’ll be dealt with differently.’
Amazon’s entry into South Africa on Tuesday coincides with a period of rapid growth in the local e-commerce space, which means there is room for several e-tailers to carve out a unique offering.
This is the view of panellists who participated in a webinar hosted by World Wide Worx to present SA’s latest e-commerce figures for last year.
According to the latest survey numbers, e-commerce made up R71 billion of total SA retail sales last year, up from R50 billion in 2022. This means online shopping forms 6.15% of total retail in the country.
“Given the current growth trends, we expect online shopping to form 10% of total retail by the end of 2025,” said Arthur Goldstuck, CEO of World Wide Worx.
The question dominating the discussion after the numbers presentation was whether e-commerce giant Amazon’s launch in South Africa would crowd out current market leader Naspersowned Takealot, especially since Amazon’s prices are not necessarily lower than those of South African e-tailers.
Andrea Rademeyer, founder and executive chair of Ask Africa and one of the panellists, said Amazon would most likely try to monopolise the South African market by focusing on customer loyalty.
“What makes Amazon wickedly successful is that they individualise the shopping experience, not
because they go in for the cheap.”
“If you’re a ‘Prime customer’, it means you’ll be dealt with differently. You get discounts based on your unique profile and you will most likely get loyalty discounts for staying with them. That is what makes them dangerous to Takealot and other platforms,” added Rademeyer.
Amazon.co.za officially launched in the country on Tuesday with the offer of free delivery on customers’ first orders. South African shoppers have access to a selection of local and international brands across 20 different product categories, which will be available for both same-day and next-day delivery, along with more than 3 000 pickup points and an easy return system.
The trust advantage
One of the findings emanating from the World Wide Worx report is that trust is an important consideration for South Africans who
want to shop online. Amazon will also be able to capitalise on this, which will lure more conservative shoppers to e-commerce, according to Rademeyer.
“Amazon has an incredible brand around security, and I think it will therefore open and grow the market, and overall the economy will grow.”
Goldstuck says when SA reaches the “magic number” of 10% (of online shopping as a percentage of total retail sales) it will most likely spark even bigger investments in the e-commerce space.
“When these levels were reached in the UK and the US, it caused tremendous excitement. It was a massive boost, which fed further growth in the years that followed.”
Other significant figures from the World Wide Worx report:
25% of people in the over-65 category are now shopping online, a significant jump from 16.5% in 2022; and
More than 50% of South Africans now use their mobile phones to do online shopping – largely due to the Checkers Sixty60 app for online grocery shopping, with Pick n Pay and Woolworths on its heels.
Goldstuck said an issue that needs further investigation is that 28% of respondents said they still prefer an in-store shopping experience, compared to 14.5% who said they find online shopping more pleasant.
“The contrast is dramatic and needs closer scrutiny. This also means online retailers must do more to make it pleasant for shoppers and not frustrate them.”
Another important consideration is that e-tailers must be willing to deliver in townships. “Delivery to townships is a strong indicator [of] whether people will choose online shopping. The availability of physical collection and return points are also an important factor for customers.”