Amazon.com’s ambitions to introduce online shopping services in South Africa by 2023 have been exposed in leaked documents, which could spell bad news for South African online retailers.
Amazon plans to launch its online marketplace in 5 new countries by early next year, even as it dials back parts of its retail business in the US, Insider has learned. | @BISouthAfrica https://t.co/JgrjPkqUPf
— News24 (@News24) June 20, 2022
Amazon (Amazon.com) is the biggest online retailer in the world and a well-known cloud service provider, Amazon began as an online bookstore but has now evolved into a web-based company primarily specializing in e-commerce, cloud computing, digital streaming, and artificial intelligence (AI) services.
Online purchasing services are also anticipated to debut in four more nations, according to Business Insider, citing undisclosed papers. According to internal documents from Amazon, the five markets it will grow into over the coming year are South Africa, Nigeria, Belgium, Chile, and Colombia.
Currently, Takealot.com is the dominant participant in the South African eCommerce market. The e-commerce site recorded 11.6 million visits from throughout the globe in March 2022. Over 90% of the visits in that month were counted as coming from South Africa. The number of visitors peaked in November 2021 at around 15 million, between January 2020 and March 2022. The Takealot group’s revenue climbed dramatically in 2021. Revenue from the platform reached 392 million U.S Dollars in 2020 and 606 million U.S dollars in 2021.
MyBroadband revealed in January 2022 that Amazon was looking into South African warehouse space. Regarding its ambitions for the facilities, Amazon remained silent, but industry rumors stated that it was preparing to introduce online shopping services.MyBroadband has now heard, nevertheless, that Amazon has negotiated terms with courier services and regional fast-moving consumer goods (FMCG) merchants and has secured warehouse space in South Africa.
Amazon is up against rivals in the online retail market, most notably Takealot, which is controlled by Naspers. Under its local umbrella, Takealot also owns the delivery service Mr D and the online clothing retailer Superbalist. Revenues increased by 36%, while trading losses dropped to $2 million, or about break-even, in the group’s results reported in November (R31 million).
As consumer spending changed from eating out to ordering food online, Mr. D Food produced strong results, according to Naspers, with order volumes jumping 88 percent. Despite increased competition from brick-and-mortar apparel retailers, Superbalist increased revenue and trade margins. Several significant shops like OneDayOnly which adopted online purchasing in the wake of the Covid-19 outbreak are some other retailers who might feel the pain of Amazon’s hold on the South African retail market.
In March a judge ordered the construction of the building to stop, claiming that the developers had not properly consulted Indigenous South Africans, putting the tech giant Amazon’s plan to build an African headquarters in Cape Town in jeopardy. The developer engaged in a prejudiced consultation process that excluded many Indigenous groups, according to the Western Cape High Court’s Patricia Goliath, who concluded that the developer had exacerbated such divisions.“The fundamental right to culture and heritage of Indigenous groups,” she wrote, was “under threat in the absence of proper consultation.”
The Khoisan people (indigenous to South Africa) are trying to fight against Amazon. Amazon is taking over their land by trying to build an Amazon Headquarter on their Sacred Grounds, they’re saying it’s Modern day colonization and no one is talking about it pic.twitter.com/zSTpJcNg4c
— god tier hoochie ❤️🔥 (@_benjvmins_) February 7, 2022
Amazon is set to provide easy importation for local customers in a form of calculating taxes and import charges for goods it can send to South Africa, It offers a guarantee on this price estimate. The eCommerce retailer refunds you back the difference if taxes turn out to be cheaper. Amazon bears the loss if taxes turn out to be greater than anticipated.Souk.com, which was the biggest e-commerce site in the Arabic-speaking world, is a recent example of how Amazon acquired a regional business.
Amazon changed the names of Souk’s operations in the UAE, Saudi Arabia, and Egypt to Amazon. ae, Amazon. sa, and Amazon. eg between 2019 and 2021. The company now solely has a retail presence in Egypt. Currently, Amazon.co.za is sent to Amazon.com’s home page. Before Amazon purchased Souk.com in 2017 for an unknown sum, Naspers and Tiger Global Management where the company’s owners. According to later accounts, Amazon paid $580 million in cash for Souk.com, which was equivalent to R7.6 billion at the time.