Takealot’s fight against Amazon in South Africa

Amazon launched in South Africa in early May 2024, and it could be set to disrupt the e-commerce space by directly competing with Takealot, the space’s biggest player, among others.

However, initial impressions haven’t been great, with a limited product range, high pricing, and the lack of an Amazon Prime Membership subscription.

Various MyBroadband analyses have revealed that products common to both e-commerce platforms are generally more affordable through Takealot.

The Naspers-owned e-commerce giant launched TakealotMore, an Amazon Prime-esque online shopping and on-demand subscription service, in the wake of Amazon’s local launch.

Takealot told MyBroadband that it has seen an “overwhelmingly positive” response to the subscription since it launched on 9 May 2024.

It said the subscription’s wholly online shopping offering makes it unrivalled in South Africa. That will hold true until Amazon launches its Prime Membership.

While Amazon hasn’t confirmed plans to launch the subscription in South Africa, several industry experts have said it is a no-brainer for the international e-commerce giant.

“If you observe their launch strategies across other markets, they lead with Prime and the associated benefits of the programme,” said TFG Labs co-head and Superbalist co-founder Claude Hanan.

“This is consistent across developed and emerging markets. I see no reason why they would not do the same in South Africa.”

However, the TakealotMore offering is markedly different from Amazon’s Prime Membership in that it has two tiers: Standard and Premium. They are priced at R39 per month and R99 per month, respectively.

In comparison, Amazon only offers one Prime Membership subscription, priced at $14.99 (R280) in the US.

However, it gives subscribers free access to services like Prime Video, Amazon Music, Amazon Prime Reading, and Prime Gaming.

Amazon also hosts an annual Prime Day, which is exclusive to Prime members and immensely popular. Its most recent Prime Day event generated roughly $13 billion (R240 billion).

If the international e-commerce giant has plans to launch the subscription in South Africa, it may still be evaluating pain points specific to South African consumers.

While it remains to be seen whether Amazon or Takealot will come out on top, award-winning economist Dawie Roodt said South African consumers will the big winners in the fight for dominance.

Dawie Roodt, Efficient Group chief economist

While he acknowledged that it won’t be easy for Amazon to compete with Takealot, he said the fight for dominance between the two will lead to lower prices and better service for consumers.

Bob Group managing director Andy Higgins echoed Roodt’s view, saying Amazon’s success isn’t guaranteed.

“There is a big difference with e-commerce that makes it more challenging, and that is the logistics component,” he said.

Higgins said Amazon typically likes to control and own its own logistics in the countries in which it operates. However, this is unlikely to happen in South Africa, forcing it to use third-party logistics partners.

“Local e-commerce players can compete by owning and controlling their own logistics,” Higgins added.

During a recent World Wide Worx-hosted panel discussion, several experts said Amazon’s entrance would grow South Africa’s e-commerce space rather than absorb sales from local players.

Ask Afrika founder and executive chair Andrea Rademayer said Amazon’s local marketplace could appeal to more conservative and sceptical shoppers.

This is because Amazon has a long history of trust and security surrounding its online shopping operation.

MyBroadband asked Takealot about its plans for the year to help it stay ahead of Amazon in South Africa, but it hadn’t answered our questions by the time of publication.

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Takealot’s fight against Amazon in South Africa