Amazon’s limited offering in South Africa is deliberate

‘Underwhelming’ is, perhaps, a generous description of Amazon’s entry into South Africa last week. The launch of its Amazon.co.za marketplace has been eagerly anticipated for years, but the day-one offering was muted – deliberately so.

According to its announcement, Amazon is offering same-day and next-day delivery across 20 different product categories. Thirteen categories are live at present, but even this is charitable as ‘Load shedding solutions’ and ‘Outdoors and braai’ are hardly top-level categories. 

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The breadth of its offering remains limited, but this was always going to be the case when it launched. This is the playbook it follows in every new market it launches in.

What’s more surprising is just how limited each category’s selection is. 

Consider a popular category such as power banks … Amazon has about 120 items listed. Takealot? Nearly 1 600, or more than 13 times more. Amazon has less than 300 fragrances listed, while Takealot has more than 5 000.

So not only is the number of categories limited, there is also very limited depth across these too. Of these items – and across many (most?) categories – there are countless items listed but unavailable as they are “temporarily out of stock”.

This means that would-be shoppers and those who already shop on Amazon.com (effectively ‘importing’ into the country) would have left very disappointed after a quick browse of the site over the past week. This year’s World Wide Worx’s Online Retail in South Africa report shows that around 6% of South Africans already use Amazon. 

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This contrasts with 20.9% for Takealot (and a further 8.3% for Superbalist, likely with the majority of these already counted in the Takealot number). 

Payment options and delivery

As with its range of available merchandise (either sold directly or via third-party sellers), payment methods are limited to the standard few: debit and credit cards, gift cards, and EFTs (via Cape Town-based fintech Stitch).

Takealot has an additional seven, including several buy-now-pay-later services, cash on delivery, and integrations with virtual/rewards currencies eBucks and Discovery Miles. 

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Takealot’s Pickup Point infrastructure is another advantage for the group, with a more than decade-long head start on the world’s largest online retailer. 

But that’s what this phase of Amazon’s launch in the country is about – fine-tuning its supplier, logistics, and delivery processes and infrastructure.

It promises same-day or next-day delivery, depending on when the order is placed. It’s leveraging the infrastructure of partners The Courier Guy (including its branches and kiosks) and Pargo, which uses a network of 4 000 retailers as pickup points. It’s about scaling up this fulfilment part of the puzzle over the coming weeks and months, something Amazon knows one or two things about. Over this time, it will continue onboarding sellers and add more products that it will offer directly. 

Takealot has had some time to get this right, and its same/next-day delivery is mostly seamless these days – and free – in major centres. 

It has launched TakealotMORE, its subscription service at either R39 or R99 per month, ahead of Amazon’s likely launch of Amazon Prime at some point.

At the higher price point, TakealotMORE customers get unlimited free same-day and next-day delivery and five free restaurant/shop deliveries on Mr D each month. This applies to shoppers in Cape Town, Johannesburg and Pretoria. Durban appears to be mostly included, but this relies on items being fulfilled from Joburg.

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A 43 000m² distribution centre is currently under construction for Takealot near Riverhorse Valley in Durban, which will improve delivery times up and down the coast in KZN. 

At this point, like Takealot, Amazon has warehouse space in Gauteng and Cape Town. The former is Eastport Logistics Park between OR Tambo International Airport and Pretoria, while the Cape warehouse is in Montague Gardens.

What shoppers want

What most local shoppers are waiting for is for Amazon to start selling its own products – Echo and Alexa smart speakers, Fire tablets and sticks, and Amazon Basics private label items across most categories – in this market. 

Read: Amazon’s edge over SA e-tailers? ‘Loyalty discounts’

Its major retail event globally – Prime Day – is likely to take place in July this year. The smart money would be on it launching somewhat more ‘publicly’ around then, with a lot more on offer. This would provide the perfect opportunity for it to test its processes with a fair amount of order volume ahead of the peak November/Black Friday shopping period.

By then, expect fierce competition between Amazon and Takealot. For now, shoppers will have to wait. 

This article was republished from Moneyweb. Read the original here