Signpost: Amazon’s slow burn
sets digital SA alight

The launch of Amazon.co.za in South Africa two years ago was sometimes described as a damp squib, because it did not instantly overturn the balance of pricing power in this country. A more accurate description would have been a slow burn.

Amazon.co.za MD Robert Koen made it clear from the start, including in an interview published in these pages, that the first priorities were to create an exceptional customer experience, and to learn what customers wanted.

Exactly 25 months later, it seems, the learning curve has reached a take-off trajectory. On Wednesday, Amazon.co.za announced the local launch of Amazon Prime, a bundled service that includes free same-day delivery in South Africa’s largest cities, a subscription to Amazon Prime Video, which previously cost R79 a month by itself, and access to and free gaming with Amazon Luna. The new monthly bundled cost of R59 is a serious challenge to Netflix, which costs three times as much for its standard service, and restores competition to the streaming market after Multichoice closed down its Showmax streaming service in April.

Koen told Gadget last week that the local store has had one of the highest repeat purchase rates of any new store Amazon has launched globally. He attributed it entirely to listening to the customer.

“I spend time with the call centre associates, just learning from them what they’re hearing from customers,” he said. “(I am) getting out on deliveries and going to make deliveries with our delivery teams. It’s so valuable. We obsess about every single piece of feedback. If something does go wrong, what was the root cause? How can we fix it? How can we make it better? The whole team is really geared that way to listen very, very carefully to what customers are saying.”

That slow burn is also seeing Amazon.co.za gradually expanding its reach to every city and town in South Africa. While this may not be the big bang that saw it upend the courier industry in this country two years ago with a massive investment in logistics, it represents steady growth that is finally turning it into a household name countrywide.

“We’ve always said this is a journey, and we’ll continue to invest in that network, and innovating for our customers. If you look at a heat map of South Africa, we’re delivering everywhere in the country, just about every postcode, rural Eastern Cape, Northern Cape, all over the country. We have more than 4,000 pickup points around the country.”

The strategy of listening closely to customers was reiterated by Amazon vice president Jamil Ghani, worldwide leader of the Amazon Prime programme, in an exclusive interview with Gadget.

“Everything we do – from expanding our product selection to enabling faster delivery – has been driven by what South African customers have told us they want and expect from Amazon,” he said. “And the launch of Prime is the next big step in bringing even more value to our customers. And we are just getting started.”

The bundled offering, he said, would be key to the expansion of the online retail offering.

“Members value the bundle. They may join for one reason – perhaps it’s delivery, perhaps it’s Prime Video – but they stay because the combination of benefits become integral to their daily lives. Members really appreciate Prime’s disproportionate value.

“Prime delivers the most value when it is woven into … their daily lives. A member who discovers that Prime saves them time on everyday essentials, entertains them in the evening, and gives them access to exclusive deals saving them money, gets the most out of the Prime membership. The magic is in the combination.”

He said that Amazon Prime was now in 27 countries, and that each launch had confirmed that customer needs are remarkably consistent worldwide; great value, broad selection, and exceptional experience.

“South Africa is no different. We focus on understanding local preferences and adapting rapidly.”

Bu there is a further secret sauce in the combination: the ability to join the dots of what customers buy,  how they discover new products, and the connection to activities across their day.

“A member who watches a cooking show and then shops for kitchen equipment the next morning is showing us how to be more helpful. That understanding allows us to anticipate needs, offer more relevant deals, and keep improving the experience.”

* Arthur Goldstuck is CEO of World Wide Worx, editor-in-chief of Gadget.co.za, and author of “The Hitchhiker’s Guide to AI – The African Edge”.