Naspers and Prosus Group CFO Basil Sgourdos has said Takealot will “take the fight” to Amazon when it launches in South Africa because Naspers “has things to fight with,” reports the Sunday Times.
“We have a fantastic business, and we will invest what it takes to continue to build the business and deliver value — and to differentiate our proposition,” said Sgourdos at Naspers’ company results presentation.
Interim Naspers and Prosus CEO Ervin Tu echoed these statements, saying Naspers will invest in Takealot across the board.
“We understand that they [Amazon] will try to enter comprehensively, meaning that they will establish a foothold not just on the consumer side but also in the seller community,” said Tu.
“They need to attract sellers to their platform. We will be ready across multiple fronts.”
“We welcome competition; we are untroubled by it,” Tu stated.
Naspers South Africa CEO Phuthi Mahanyele-Dabengwa noted the importance of Takealot having local knowledge.
“We have seen other areas in the world where Amazon has not been able to be successful because of the lack of local knowledge of businesses that are there,” said Mahanyele-Dabengwa.
Consumers will benefit
Daily Investor reported that the battle between Takealot and Amazon will likely benefit South African consumers.
Amazon is set to launch its Amazon.co.za marketplace next year and has big plans to embrace local sellers on this platform.
Globally, over 60% of all Amazon store sales are from independent sellers, and Amazon plans to replicate this in South Africa.
It has already begun these efforts by slashing its professional seller fees from the regular R400 per month to only R1 per month.
Amazon’s aggressive entry into South Africa will likely pressure Takealot to change its pricing on regular products and its marketplace seller fees.
The Competition Commission has already placed strict conditions on Takealot and will likely do the same for Amazon.
“Whilst Amazon has not entered South Africa, were it or any other large e-commerce player to do so, they will similarly be expected to comply with similar provisions set out for Takealot,” said the commission.
It has already engaged with Amazon on its planned entry and the resultant compliance requirements.
Another challenge for Amazon will be that Takealot has exceptional infrastructure in place that enables high service levels — something Amazon may struggle to match initially.
It will therefore have to rely on other ways to gain market share from Takealot — such as significantly better pricing.