Amazon enters SA amidst regulatory pushback against e-commerce leaders

Amazon has announced that its South Africa e-commerce marketplace will commence operation in 2024.

Amazon has announced that it will launch its marketplace in South Africa in 2024. The marketplace will sit on Amazon.co.za starting today and independent sellers in South Africa can register their businesses on sell.amazon.com/south-africa. “We look forward to launching Amazon.co.za in South Africa, providing local sellers, brand owners, and entrepreneurs — small and large — the opportunity to grow their business with Amazon, and deliver great value and a convenient shopping experience for customers across South Africa,” said Robert Koen, general manager of the Sub-Saharan Africa region for Amazon.

Naspers’ owned Takealot currently leads South Africa’s online retail market with a gross merchandise value (GMV) of R27 billion. Other players include Massmart-owned Makro, Checkers Sixty60 and Mr Price. Data from Statista projects that the e-commerce market will grow by 11.89% over the next three years. While an estimated 2% of retail sales happen online, high internet and smartphone penetration and a change in customer behaviour driven by Covid 19 are expected to propel growth to around 6.8%.

News of Amazon’s marketplace launch initially broke in early 2022, with February 2023 slated as the launch date in South Africa. Over the last few months, the company has made hires in South Africa for the marketplace, signalling its imminent arrival. Some of the roles it hired for include merchant development, software development, and operations.

Amazon enters a South African e-commerce market fraught with regulatory complications. In July, the country’s competition regulator released a report outlining the findings of an investigation into competitive practices of some leading online platforms. For Naspers’ owned Takealot, the regulator stated that the platform faced a conflict of interest on its site as its retail division competes with the marketplace sellers leading to behaviour that has disadvantaged sellers.

As a remedial action, Takealot was ordered to segregate its retail division from its marketplace operations, preventing its retail services from accessing seller data and unilaterally stopping sellers from competing for certain brands. This factor will also impact Amazon as it offers both its own retail division and a marketplace for third-party sellers.

South Africa’s e-commerce industry will see the amalgamation of factors, including competition and regulation, play the role of kingmaker among incumbents such as Takealot and Massmart, as well as new arrivals including Amazon, in an industry with growth prospects.