If the market speculation is accurate, Amazon.com is on the verge of announcing the launch of its own e-commerce marketplace in South Africa.
The arrival of Amazon online shopping on our shores was originally slated for the beginning of the year. Its establishment may be imminent; the US e-retail giant is on a hiring spree as it gears up to take on successful home-grown players like Naspers-owned Takealot.
The investment by Amazon is undoubtedly a significant development for South Africa’s retail industry — and could even shake the foundations of the e-commerce market, simply because of the Nasdaq-listed company’s enormous scale. But Amazon shouldn’t expect its entry into the local market to be a walk in the park.
When Covid emerged in early 2020, accompanied by the hard lockdowns — when people were encouraged not to leave home unless they absolutely had to — the way many South Africans shopped changed fundamentally. As a direct result of shifting consumer behaviour in recent years, local retailers have upped their game considerably.
That’s particularly true of traditional bricks-and-mortar retailers like Walmart-owned Massmart, Shoprite Holdings — with its hugely successful Checkers Sixty60 offering — and fashion retailer TFG (The Foschini Group). TFG recently launched Bash to compete with Takealot-owned Superbalist and Shein, the low-cost Chinese online fashion brand.
These companies, and others like them, have invested big money since the pandemic, developing their online sales channels and logistics networks. A lot of planning and hard work are involved in forging a slick e-commerce operation that keeps fickle consumers, who are increasingly spoilt for choice online, supporting a particular retail brand.
[Other local retailers] will get there — frankly, they have no choice if they want to avoid Checkers eating their lunch
Today it’s a rare retailer that doesn’t have an online store capable of delivering goods to consumers within a day or two of ordering. And the next big shift is to on-demand shopping — deliveries being made on the same day, sometimes within an hour.
Here Checkers is leading the pack with Sixty60, thanks to the enormous work that has clearly gone into building a slick back-end system and extensive logistics network; others, like Spar Group and Pick n Pay, are behind. But they’ll get there — frankly, they have no choice if they want to avoid Checkers eating their lunch.
Fast deliveries will soon be coming to nongrocery items, too. In August, Takealot announced it had launched a trial of one-hour on-demand deliveries in Cape Town. Called TakealotNow, and leveraging Mr D — the logistics firm it owns that’s well known for fast food delivery — the e-retailer is testing the service in Durbanville, Bellville, Brackenfell, Kraaifontein, Kuils River and Parow ahead of a wider rollout. In theory, a Takealot customer could buy a laptop at 7pm and have it delivered by 8pm. Will Amazon be able to match this?
Of course, Amazon should not be underestimated. It is expected to launch its popular Prime subscription service in South Africa. With more than 200-million subscribers worldwide, Prime offers “members” a range of benefits, including faster (and free) deliveries and access to Prime Video (a Netflix competitor), Amazon Music (a competitor to Spotify and YouTube Music) and Twitch (a streaming platform aimed mainly at gamers).
Interestingly, Checkers has become the first South African retailer (that this writer is aware of) to introduce a similar subscription model: Xtra Savings Plus. It was launched in September, costs R99 a month and provides free and unlimited deliveries through Sixty60 (it imposes a R350 minimum spend per order). Subscribers also get up to R200 in additional in-store discounts (10% off for baskets valued at up to R2,000, once a month) along with further discounts and personalised offers.
It’s a smart move by Shoprite that will help it appeal to higher income consumers, helping the business compete more effectively with the likes of Woolworths. As with Amazon Prime, once consumers sign up for the Checkers subscription plan they are more likely to direct their spending to Checkers and Sixty60 than to its competitors. (Aside: Sixty60 could really do with an app for Windows and Mac — native or web based. It would help drive up spending by businesses on the platform.)
Of course, all these developments are happening against the backdrop of an economy in serious trouble. Gryphon Asset Management research analyst Casparus Treurnicht told TechCentral recently that the past year has been the toughest South African retailers have had to endure since the dawn of democracy.
Conditions are exceptionally difficult out there, and increasingly businesses that succeed will be the ones able to use technology and innovation to differentiate themselves. Shoprite is arguably doing this better than anyone else right now, but most retailers are working hard to lift their game. This is great news for consumers.
And when the economy eventually turns, the big winners in the tech-infused and increasingly globalised retail landscape of the future will be the ones that put in the hard yards now.
“We have really brilliant operators in South Africa, and we’ve seen that offshore talent is not always the answer,” says Treurnicht. Put another way, Amazon should watch out: South Africa’s battle-hardened retailers are not afraid to invest. They’re also not afraid of a good scrap.
*McLeod is editor of TechCentral.co.za
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