Amazon making Takealot and South African online stores sweat

The launch of Amazon.co.za has raised the bar for local e-commerce and courier services, which has benefited the online shopper’s experience in South Africa.

That is according to South African Express Parcel Association (Saepa) chairman Garry Marshall.

After many years of rumours and speculation about an impending entry, Amazon launched its local e-commerce marketplace in May 2024.

South Africans initially appeared to flock to the website, with Google Trends data showing searches for “Amazon” surpassing Takealot.

However, the hype was short-lived as many were disappointed by the store’s limited catalogue and Takealot-comparable pricing.

Another feature that many felt was missing from the launch was Amazon’s Prime subscription, which is immensely popular in the US.

Prime bundles numerous entertainment services, delivery perks, and other health and lifestyle benefits into a monthly affordable subscription.

While it may lack momentum, two e-commerce veterans recently told MyBroadband that the “slow” launch was not unusual and that online shoppers should not be surprised if it works in the long run.

Although it has not taken down the door in its South African entry, it is getting off to a good start by getting basics right.

MyBroadband’s testing of Amazon.co.za’s service in the past year has shown, time and again, that the company is capable of fulfilling or beating its delivery promises.

Partnering with experienced local courier companies, such as DPD Laser and The Courier Guy, has been key to its impressive performance.

Saepa is one of the country’s largest courier representatives, and Marshall has vast experience in a core part of what makes Amazon tick — last-mile logistics.

Marshall counts himself among the many happy Amazon.co.za users.

“From my own observations, the service is absolutely excellent,” Marshall said. “I order on a Saturday night, and on Monday morning around 08:00, the delivery is waiting at my gate.”

He said that courier companies doing business with Amazon understood the firm’s high expectations and that they could not afford to mess around.

“Amazon is very explicit in what they do. There are no second chances there,” he said.

Encouraging innovation in its rivals

Marshall told MyBroadband that even though Amazon had not really done anything remarkable or unusual in the market, it was already having an effect on the industry.

“Not only do they have a positive impact on couriers, they also uplift the entire standards of the broader supply chain industry,” he said.

He said the company’s presence had already spurred local e-commerce competitors to innovate.

One good example of this is how Takealot launched its Prime-like TakealotMore subscription only a few days after Amazon.co.za went live.

The retailer has also made significant improvements to its on-demand TakealotNow service in the past year.

“All of these developments, to some extent, are Takealot upping their game,” Marshall said. “That is no doubt in anticipation of fierce competition from Amazon.”

Internal delivery team on the cards — but full independence difficult

Marshall said that Amazon was likely to set up its own delivery fleet in South Africa in the future, it was just a question of timing.

“I can’t imagine that they won’t, but it does depend on their market take-up,” Marshall said.

“They may get to a point where the cost of doing it yourself is better than the cost of outsourcing or the service standard that they expect is better when doing it internally.”

However, he said that South Africa had a much smaller addressable market than Amazon’s major markets.

Marshall said that setting up your own delivery service required two things — an extensive footprint and high volumes.

Because of the big distances involved in South Africa and the volumes of e-commerce orders to rural areas being lower, he does not believe Amazon will fully wean itself off delivery partners.

He said that Takealot provided a good blueprint for the ideal delivery model in South Africa.

Where demand enables high-volume orders at short intervals — like in the cities — it uses its own Mr D and Takealot delivery drivers.

For fulfilment in far-flung parts of the country, the company uses third-party contractors.