Amazon comes to Africa 🛍️

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Last week, Amazon launched in South Africa - joining the race to own Africa’s e-commerce market.

Amazon is the global e-commerce leader - but will its magic work in Africa?

The Story

Amazon’s South African marketplace went live last week, letting users shop from local and international brands across 20 categories.

Here’s the fun part - the marketplace comes with benefits like:

• Same-day or next-day deliveries

• Free delivery on the first order

• And free deliveries on subsequent orders above R500 ($27).

These are benefits that Amazon Prime users in the US pay $15 a month for - but they’re free in South Africa.

That’s one hell of a launch, but what’s the play?

The Context

After flirting with Africa for two years, Amazon has finally taken the plunge.

In 2022, Amazon announced it would launch in Nigeria and South Africa in February 2023.

Two things happened:

1. It didn’t launch in 2023.

2. The Nigerian plan was ditched - for now at least.

It’s 2024, and they’ve gone live in South Africa.

They hired African executives, set up a fulfilment centre, and signed deals with local partners.

And it’s easy to see why Amazon is choosing South Africa:

• It’s Africa’s biggest e-commerce market - projected to reach $21 billion by next year.

• And e-commerce adoption is growing fast - with 72.3% of Africa’s population having internet access.

But Amazon is late to the party - and there’s already a lot going on in African e-commerce.

Nigeria and Kenya have Jumia, Egypt has Souq, and South Africa has Takealot - Amazon’s main competition.

Takealot is South Africa’s biggest online retailer.

It’s 13 years old and backed with $231 million from Naspers and Tiger Global.

Last year, Takealot made nearly $1 billion in revenue.

But that amount is a rounding error for Amazon, which made $574 billion last year alone.

Takealot can’t afford to lose to Amazon, but with Amazon’s firepower, the odds don’t look great.

The Tech Safari Take

The pricing war is on - and the winners are South African consumers.

Amazon’s strategy has always been to lose money while gaining market share.

This means faster deliveries, more products, and better support.

Takealot is responding by launching free deliveries with a monthly subscription.

Features like these take a toll - and Takealot is still unprofitable - despite being heavily funded by Naspers.

But Amazon has one of the deepest pockets on earth.

Takealot will likely lose the price war, and the market will be Amazon’s for the taking.

And the real winners? Everyday South Africans:

• Products get cheaper and arrive faster.

• Amazon will create more jobs - just like it did in India after it launched.

• They can access international brands like Apple, Sony, HP, LEGO, Chicco, and Maybelline easily.

Who do you think wins when Amazon comes to South Africa?

Hit reply and let us know.

What we’re reading

💡We’re reading jaw-dropping revenue figures from this article about the fastest-growing African companies in 2024. See for yourself here.

🤯 Google has killed more than 100 products to date. Check out its cemetery here.

💸 Remember when a few guys on Reddit sent GameStop stock price to the moon? It just happened again this week.

Tweet of the week

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