Digital Storefront Amazon is to launch in South Africa and plans to take on Takealot.
Reports say that the retail giant is planning to launch in South Africa as part of a global expansion in the coming year.
The “global expansion” includes five countries worldwide including Belgium, Chile, Colombia and Nigeria, and of course South Africa.
The expansion project reportedly called “project Fela” (a name it shares with Nigeria) is planned for launch in February of next year. The Nigeria launch will reportedly happen in April of next year.
Amazon aims to introduce Prime memberships in addition to its online marketplace, which will offer a wide range of goods.
“My Broadband” revealed in January of this year that Amazon was looking at warehouse space in South Africa. At the time, Amazon made no comments regarding its plans for this “space.” It has now come to light that they have a warehouse facility secured and are in discussions with local fast-moving consumer goods (FMCG) shops and delivery services.
The biggest competition facing Amazon as they infiltrate the country will of course be Takelot which is owned by Cape Town Based multinational Naspers.
Takealot also owns Mr. D and the popular online fashion store Superbalist which have both recorded growth over the past fiscal year.
Takealot might even double in size in two years if it can sustain its trajectory, according to Peter Takaendesa, head of equities at Mergence.
Through its cloud services division, Amazon Web Services, the company has long had a presence in South Africa. In reality, Cape Town is home to a sizable (and expanding) Amazon software development center, and the city is where a piece of AWS’s cloud offering was originally built.
The expansion plans are a result of Amazon’s weak net sales growth, which fell from 44 percent in Q1 2021 to a pitiful 7 percent in Q1 2022.
The launch of Amazon in South Africa will mean huge competition for all other online retailers operating in the country.
Not to mention they will be even more of a threat because of their Amazon Prime subscription service which will undoubtedly draw a large following due to the extensive rewards and offerings that come with the service.
Takealot will need to be cautious, and should probably keep one eye open while they sleep.