Amazon optimistic about South African e-commerce growth

American e-commerce giant Amazon is optimistic about its growth prospects in South Africa after officially launching its online marketplace in the country last month.

"With online retail accounting for around 4% of total sales in South Africa, compared to significantly higher figures in other countries, there's significant room for growth," Robert Koen, managing director for sub-Saharan Africa at Amazon, told Connecting Africa in an interview.

"South Africa offers opportunities for multiple e-commerce players to enter and grow to meet the growing customer demand. This will generate more value for customers and ensure that customer expectations are met," Koen added.

The launch of Amazon.co.za was highly anticipated after the company announced its plans to expand into South Africa back in October 2023.

"Amazon launches in countries where it can make a material difference to our customers. Our aim is to cater to both shoppers, independent sellers, and retailers in South Africa," Koen said about the company's reasons for launching its first African operation in South Africa.

For now, the company has no plans to launch anywhere else in Africa in the near term.

"We have just launched our South African store, Amazon.co.za. This is a major milestone for us and we are currently focused on enhancing the store offering to meet local customer needs as we become more familiar with them. At this stage, we do not have anything to announce regarding further developments in Africa," the MD confirmed.

Developing local offerings

The launch of Amazon.co.za is a step forward for the group's local journey, but Koen said it is just the first step as the retailer develops its local offerings.

"Our goal is for South African shoppers to experience the great convenience of shopping online with Amazon and we will work hard to continue enhancing our local store offering to match the shopping preferences of all our South African customers. We plan to earn our South African customers' trust by continuing to innovate to meet their needs," he added.

Robert Koen, managing director for sub-Saharan Africa at Amazon. (Source: Amazon)

Amazon's launch is expected to impact the local e-commerce market and provide competition to big players like Naspers-owned Takealot, which runs a similar online retail service.

"Competition has been a constant in every country where we operate and we have seen that healthy competition is good for customers, good for businesses, and drives innovation," he commented.

"Our core value of customer obsession means we prioritize their needs over focusing on competition, so we stay focused on the things that matter most to our customers in every country we operate in - low prices, vast selection, fast, reliable delivery, and an overall good experience," he added.

Koen could not provide any information on Amazon's sales targets in South Africa because the company is publicly listed in the US, but he said its primary objective is "to become South Africa's most loved and trusted online store by earning our customers' trust over time."

Inclusion for local sellers & Black-owned businesses

Koen said Amazon's third-party business model aims to enable independent sellers – both small and large – to expand their customer bases.

"We've had an incredible response from sellers and launched the store with thousands of registered businesses. We have been very busy helping many more register and list their products every day since we launched the store, and this will continue in the coming weeks and months. We're very excited to see the growth and development of our local independent sellers," he explained.

Koen said that more than 60% of items sold in Amazon's stores globally are from independent sellers – most of which are small- and medium-sized businesses (SMBs).

"To empower our independent sellers, Amazon has invested billions of dollars in infrastructure and technical services that help SMBs reach new customers, both locally and around the world, with open and transparent selling conditions and pricing. They also have access to simple onboarding tools and reports and analytics tools to improve sales and help them grow," he added.

The company has also committed to assisting Black-owned South African businesses to sell through the platform.

"The only way we can grow in the country is if we bring all South Africans along with us, so driving empowerment and inclusivity is a key business priority from day one," he said.

"Though we are just starting out, one of the key ways that Amazon contributes to the economy wherever we operate our stores is through empowering Black-owned and SMBs to be successful sellers," Koen said.

"Through empowering independent sellers in our local marketplace to grow their businesses, Amazon indirectly contributes to job creation in South Africa," he added.

Koen confirmed that Amazon has two fulfillment centers in SA – one in Johannesburg and one in Cape Town – and is partnering with local companies for fulfillment and transportation. It offers same-day and next-day delivery across the country as well as 3,000 pick-up points.

Koen also said Amazon is currently hiring in SA and has many employment opportunities across its different departments.

The retailer's services were previously available locally via the international platform, but purchases included import duties on products shipped from international depots. Koen said that when local customers shop on Amazon.co.za now the price they see will be the total price charged.

"We have a long journey ahead of us and we will continue to invest in services that improve the customer and delivery experience," he said.

— Paula Gilbert, Editor, Connecting Africa