What to expect from Amazon in South Africa

The launch of global e-commerce giant Amazon in South Africa in May this year fell below people’s expectations, as it went live without an extensive product catalogue or the company’s Prime subscription service.

However, based on how Amazon has entered other emerging e-commerce markets, the best of the American shopping powerhouse is yet to come.

One such example is Brazil, where Amazon set up shop in 2012 and sold only digital books and Kindles.

The sale of books was soon broadened to hard copies in 2014, and third-party sellers gained access to the marketplace in 2019 — seven years after launch.

“As in other markets, Amazon is in Brazil with a long-term vision. We are building an operation in a sustained way,” said Amazon Brazil’s head of operations Ricardo Pagani.

“These are important investments made now, initially with a return of investment horizon of five to 10 years.”

These investments seem to have paid off, as Brazil, Mexico, and Australia have become Amazon’s fastest-growing market worldwide.

In February 2023, Amazon in Brazil had 150 million visitors, three times the monthly visitors from three years prior.

Despite this surge in activity in recent years, Amazon has had its hands full with competition and is only the sixth-biggest online retailer in the country with R31 billion in goods sold, according to a 2022 report by consulting firm Varese Retail.

This includes third-party sales.

However, this is far off the top three, which are Mercado Libre (R211 billion), Lojas Americanas (R131 billion), and Magazine Luiza (R123 billion).

Although it did not make the top three by revenue, Amazon is the second most-visited e-commerce platform in Brazil, with 191 million visitors in September 2024, according to data by SemRush.

This is 15 times as many visitors as Shein had.

Mercado Livre had 222 million visitors in the same month, indicating evidence of sustained competition in the market.

When Amazon launched its Australian marketplace in December 2017, it also didn’t live up to the hype.

However, six months later, Amazon launched its Prime subscription service in Australia — in time for Prime Day in July.

Amazon Prime offers subscribers free delivery on certain orders, early access to lightning deals, shopping discounts, and several other bundled benefits.

After a year in Australia, the number of products on Amazon had grown from 7.5 million to almost 100 million by December 2018.

The number of marketplace sellers reportedly also grew from 2,000 to 25,000.

Interestingly, Marketplace Pulse’s research at the time showed that 40% of sellers were Australian locals. The other 60% were mainly from China.

Whether South Africa’s online marketplaces will evolve in the same way remains to be seen.

Bob Group managing director Andy Higgins previously told MyBroadband he thinks shoppers expected more fanfare from Amazon and a more orchestrated launch with special offers.

At the very least, people hoped for deals on Amazon-specific products like Kindle e-book readers, Echo smart speakers and displays, and Fire tablets and TVs.

“If Amazon has chosen not to go that route, which seems to be the case, I think they should have at least communicated this upfront to better manage consumers’ expectations,” said Higgins.

He said Amazon likely ran into legal hurdles and other red tape that made it challenging to launch its Prime subscription service and devices in South Africa.

Amazon would have done so if it were easy to offer these products at launch.

“My only guess is that due to internal and external obstacles, this is more challenging to get right than most of us as outsiders would think,” Higgins said.