Takealot’s plan to compete with Amazon in South Africa

Takealot believes the plans it implemented during the Covid-19 pandemic and the years that followed will help it remain competitive in the South African e-commerce market when Amazon launches in the country.

That is according to Takealot Group CEO Fred Zietsman, speaking in a recent interview on 702.

Zietsman said he doesn’t expect suppliers to favour any marketplaces as this would reduce their potential reach.

“In the South African context, we understand the consumer quite well. We’ve built up a good understanding of what they appreciate and what they want us to improve,” said Zietsman.

He noted that the Covid-19 pandemic and associated lockdowns allowed Takealot to reflect on its model due to the volume of business on its platform.

“A lot of that planning is coming into fruition in 2024. The Takealot.com business will definitely have step changes this year, one of which is coming in the next month,” he said.

He added that the adjustments would significantly change how it presents its model to customers, without providing further details.

Zietsman said Takealot welcomed the competition presented by Amazon’s local marketplace.

More competitors in the market will likely result in better service levels, a wider range of products and platforms, and better pricing for consumers, he explained.

He added that it was also good for keeping Takealot on its toes.

“When it comes to competition, I think competition is good,” said Zietsman.

“It gives us the opportunity to self-evaluate and refine where appropriate, but I don’t think we are reacting to the competition; it’s more about our plans coming to fruition.”

When asked whether he believes suppliers will have to choose between listing their products on Amazon or Takealot, Zietsman said it would likely be to their detriment if they did so.

“If you’re a supplier, I think you want as many routes to market as you can; otherwise, you’re beholden to one channel,” he said.

“If you look at consumer markets, there are big categories like consumer electronics, appliances, and homeware, which will have strategies that they will apply in South Africa, as they do globally.”

“I don’t think it’s wise for anyone to be beholden and sell through only one channel,” Zietsman added.

He also explained that Takealot offered other services, such as food and grocery deliveries, through its Mr D platform, which differentiates its services from Amazon’s.

“As a group, we’ve learned that Mr D in our portfolio, which has recently expanded its offer to groceries through Pick n Pay as well as other verticles, offers a nice proposition for the consumer,” he said.

It remains to be seen whether Amazon also plans to roll out its grocery offering in South Africa, which will also face an uphill battle against the likes of Checkers Sixty60 and Woolies Dash.

Amazon faces an uphill battle in South Africa

Amazon plans to launch its Amazon.co.za marketplace in 2024, allowing local suppliers to reach more customers nationwide.

However, in October 2023, Bob Group managing director Andy Higgins said he believes Amazon will initially struggle against established South African e-commerce platforms like Takealot, Bob Shop, and Bash.

Higgins explained Amazon.co.za was more likely to gradually gain momentum over time rather than launching with a bang.

He explained that a critical aspect of the international e-commerce giant’s success in South Africa will be whether the tech it uses in other markets will work in the South African market.

Amazon hasn’t always been successful when launching in new markets. For example, its Polish marketplace is still second to the local e-commerce giant Allegro.

On the other hand, it faced a battle with Walmart subsidiary Flipkart in India, which it overcame. Following heavy investment in the market, it is now recognised as having the lead in the country.

Higgens added that Amazon’s launch will likely positively impact the e-commerce space in South Africa by encouraging more residents to shop online, which will benefit all online marketplaces, including Takealot and Bob Shop.