U.S retail giants Amazon and Walmart, on the back of recent developments, appear to be making strides to capture more of the consumer market in South Africa with efforts targeted at tapping into the expanding e-commerce industry.
Between the recent announcement that Walmart is making a move to take ownership of South African retailer Massmart with a strategic push for online shopping and earlier revelations that Amazon is planning to launch its e-commerce platform in South Africa by next year, the famous big-retail rivalry could be reignited in South Africa in the coming years.
Both giants appear to be channelling resources toward new growth frontiers with Amazon also keen on the Nigerian market, per earlier reporting which cited sources informed on the matter.
In South Africa, wherein lies one of the most viable markets for e-commerce on the continent with both legacy brick-and-mortar retailers and established e-tailers like Takelot and Superbalist making significant in-roads, rising interest from global behemoths like Amazon and Walmart is expected to catalyse speedy growth in the industry.
Both U.S. retail giants have been competing doggedly since Amazon blurred the online-offline retail lines, notably with the acquisition of Whole Foods in 2017 which has seen Amazon increasingly eat into Walmart’s market share.
In response, Walmart has expanded its online shopping capabilities across several markets as the two-front retail battle between familiar foes intensifies.
Outside the U.S., both companies have also faced off in less familiar, untamed territories, most notably in India where Amazon’s entry in 2013 and subsequent acquisition of brick-and-mortar assets have been matched by Walmart taking a controlling stake in Flipkart for USD 16 B in 2018.
Currently, Amazon.in and Flipkart are technically shoulder-to-shoulder as the two biggest e-commerce platforms in India after years of engaging in something of a slugfest, which contributed to the jump in the country’s e-commerce market size from USD 16 B in 2013 to USD 46 B as of 2020, with lofty projections of USD 188 B by 2025.
Industry observers reckon a similar scenario could play out in South Africa with both players making moves that suggest an onslaught on one of the continent’s most vibrant e-commerce markets is on the cards.
Walmart initially acquired a 51 percent stake in Massmart in 2011. While it was seen as a long-term investment in the region to capitalise on a significant growth opportunity, the deal hasn’t lived up to expectations. Economic conditions and strong competition have hampered growth, but Walmart appears to be currently pursuing a more strategic and robust turnaround plan.
This has seen it divest non-core assets, including Game stores in East and West Africa and non-core stores in South Africa, and place a stronger focus on South Africa’s e-commerce scene which is projected to hit USD 25 B in revenue by 2028, as well as non-food formats, including its home improvement banners.
On its part, Amazon has doubled down on African markets recently with significant investments noticeable in its Prime Video push, a talent acquisition drive, and infrastructure plays centred around Amazon Web Services. However, Amazon’s would-be flagship project on the continent – a bold USD 300 M facility that would house its Africa headquarters in Cape Town South Africa – remains tied up in an ongoing legal dispute.
Feature Image Credits: BoldStrategies