Amazon targets share of
R90bn SA market

The long-awaited announcement of Amazon.com’s plans for South Africa has finally been made. While a firm date has not been set, the world’s biggest retailer has announced that it will launch amazon.co.za during 2024.

The big news, for now, is that Amazon has opened registration for local independent sellers. This means that it will both attempt to entice the vast retailer base that sells through Takealot, and build up its available product range via third parties as it prepares to take on the country’s biggest online retailer.

According to research conducted by World Wide Worx and Mastercard, in the Online Retail in SA 2023 study, total online retail sales in this country reached R55-billion in 2022. Takealot made up about a quarter of these sales. It uses a similar business model as Amazon.com, which depends on a vast network of third-party merchants to bulk out its offering. Now Amazon will utilise its own business model in a retail war against the company that copied that model. Based on current trends, total online retail should pass R70-billion in 2023 and come close to R90-billion in 2024. It is a share of that R90-billion that Amazon has firmly in its sights.

More than 60% of sales in Amazon’s store are from third party retailers, providing a vast selection of products and competitive prices. However, these often come at the expense of small businesses not being able to become profitable on these platforms. 

_{Robert Koen, general manager of the Sub-Saharan Africa region for Amazon}

Amazon has appointed a veteran of its US online retail business, Robert Koen, as general manager of the Sub-Saharan Africa region for Amazon. Koen is a former South African who graduated from Wits University and worked here for IBM in the late 1990s before joining that company in the United Kingdom, and then heading to Silicon Valley. He worked in Amazon’s Seller Services Marketplace for a year before becoming US head of its Partner Network from 2015 to 2021. He then became director of the highly strategic Amazon ecommerce division, Buy with Prime, before being appointed to run the sub-Saharan operation.

The appointment was made at the end of 2022, indicating that Amazon has been preparing for the launch since the beginning of this year. Kopen’s deep experience of managing partners is also a clear indication of where a major focus will lie for the business in South Africa.

“We look forward to launching Amazon.co.za in South Africa, providing local sellers, brand owners, and entrepreneurs – small and large – the opportunity to grow their business with Amazon, and delivering great value and a convenient shopping experience for customers across South Africa,” he said yesterday.

One of the first local merchants to be signed up is Johannesburg-based African Mamas Crafts, which employs home-based crafters in rural areas.

Nomaswazi Tinus, founder and director of the business, said she would be “working with Amazon locally to leverage their tools and expertise to grow our ecommerce business”.

Amazon offers a range of tools, programs and services to sellers, including hundreds of thousands of hours of educational content, such as articles, videos, webinars and case studies, available at sell.amazon.com/south-africa. That is also the site for prospective retail partners to register their businesses.