By Jonathan Ntege Lubwama
- Amazon’s forthcoming South Africa launch marks a major stride into Africa’s e-commerce, the second country after Egypt
- Entering South Africa is strategic, given its 9.6% contribution to global e-commerce growth
Amazon (AMZN +0.86%), the global e-commerce giant, has announced its plans to launch its online shopping service in South Africa in 2024. This move marks a significant expansion for Amazon, making South Africa only the second African country, after Egypt, to have a locally dedicated website from the U.S. company. South Africa will also become the 21st country to host Amazon’s locally dedicated website, posing a significant challenge to the plethora of online retailers, primarily led by Naspers’ Takealot.com.
Why This Matters: The move underscores Amazon’s strategic focus on tapping into South Africa’s growing online shopping demand, offering consumers enhanced access to diverse products and providing sellers opportunities through its third-party marketplace. While Amazon has previously offered international shipping to South Africa through its Amazon Global service, establishing a local presence signifies a strategic move to capitalize on the growing demand for online shopping in the region. The launch of Amazon.co.za will also allow individual sellers to grow their e-commerce prospects through Amazon’s hugely successful third-party marketplace program. Consumers also get a piece of the cake. This launch promises greater access to a wider range of products, competitive pricing, and enhanced shopping convenience.
Moreover, Amazon’s growing presence in Africa underscores the continent’s s growing significance as a key player in e-commerce. The African e-commerce market contributes to 61% of the total dominated by the big four of Nigeria, South Africa, Kenya and Egypt. E-commerce revenue is projected to grow to $72 billion by 2025, up from $38B in 2021, a CAGR of 10% within that period. It validates South Africa’s position as a strategic market ripe for investment and expansion, while also highlighting the untapped potential of the African continent.
What Next: Analysts caution against expecting Amazon’s entry to be a game-changer or a major disruptor in South Africa’s retail landscape. Challenges such as economic stagnation, high unemployment, infrastructure deficiencies, and regulatory hurdles pose formidable obstacles. Furthermore, the South African consumer market is expanding slowly, which may limit the potential for rapid growth in e-commerce sales. Nonetheless, Amazon’s arrival is expected to intensify competition within the sector, challenging established players like Takealot.com, owned by Naspers. Mamongae Mahlare, CEO of Takealot Group, has expressed confidence in the company’s competitive edge, citing its extensive delivery network and strong local appeal.
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