Analysts Say Takealot Has Much To Worry About As Amazon SA Nears Launch

By  |  April 12, 2024

Analysts are convinced South Africa’s top e-tailer Takealot has a lot to worry about as Amazon’s launch in South Africa draws near.

Online shopping in the country has witnessed a remarkable surge, outstripping in-store spending, according to the recent SpendTrend24 report by Discovery Bank. This growth trend parallels that of leading cities in developed economies.

The rise of global e-commerce platforms delivering to South Africa, aided by improved logistics and faster delivery times, has fueled this boom. Even before its official launch, Amazon’s US website ranks as the third most visited e-commerce site in South Africa, according to data from the International Trade Administration.

Amazon’s impending arrival spells tough times for local giant Takealot, analysts reckon as reported by BusinessTech. Offering a broader range of products, Amazon holds a competitive edge. Speaking on the Classic Business podcast, Damon Buss, an equity analyst at M&G Investments, foresees Amazon gradually dominating the local market with its extensive product catalogue and personalised services.

Drawing on its global footprint and efficient supply chain, Amazon’s strategy mirrors its success in other regions. For instance, within five years of launching in Australia, Amazon expanded its product range from 7.5 million to over 200 million, solidifying its dominance.

Buss emphasizes Amazon’s prowess in customer analytics and logistics as crucial to its success, predicting a similar trajectory in South Africa.

According to Buss, the group’s “unrivalled customer analytics” and logistics setup are key to its success. It’s very likely that Amazon will dominate the e-commerce space in South Africa within five years as well, he said. This virtuous cycle, he explains, would attract more customers, enabling Amazon to refine its services further.

Despite concerns, Phuthi Mahanyele-Dabengwa, CEO of Naspers’ South African unit, expresses confidence in Takealot’s preparedness. Naspers is ramping up investments in its online retailer, positioning itself to tackle the competition head-on. “We are well positioned to deal with whatever Amazon might bring,” Mahanyele-Dabengwa asserts.

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