Get In Touch
Workshop 17, The Bank
Corner Tyrwhitt & 24 Cradock Avenue
Rosebank, Johannesburg
Back

The Impact of Upcoming Amazon Marketplace on South African Retail Landscape

Once upon a time, it was prophesied that a titan of retail would set foot on the shores of South Africa, bringing about an era of seamless eCommerce, drop shipping opportunities and boundless profit. This Titan would come swiftly, in the dark of night, and shift the very fabric of the retail landscape. We believe the time is almost upon us, as the winds blow whispers of great commercial tide on the horizon. We’re ready for a new dawn. The age of Amazon is upon us. Are you ready yet?

It’s time to welcome the grand unveiling of a retail narrative like no other that’s come before. We think. We’re just picking up what the signs are putting down. According to MyBroadband, “the company is currently advertising 30 full-time positions in the country, a fair portion of which are marketplace-related,” and they’re looking for “a marketplace manager, B-BBEE programme manager, marketing head, ER and HR compliance manager, and several vendor managers.” Sounds promising, right?

As we creep ever closer to the inevitable Amazon era, we want to explore what it might mean for our current digital retail and marketing industry in South Africa, based on educated guesses made from FGX’s 25 years in the industry. If you’d like to learn a little more about selling on Amazon before we dive into the big current stuff, feel free to take a look at our guide on How to Sell on Amazon in South Africa so that you can get prepared to jump on trends upon launch. Now, let’s take a look at what the arrival of Amazon for vendors on our shores might mean for South African businesses.

Amazon’s Global Impact on Retail

The stage is set, the lights dimmed, and a digital symphony begins to play. It’s the Amazon overture, a crescendo of sales figures that have skyrocketed since the early 2010s. The good stuff, not the kind your gran might listen to. Picture this: a business that started as an online bookstore and transformed into an empire of eCommerce, boasting a remarkable annual net sales growth rate of over 25%.

Amazon’s digital presence trajectory has been a heroes’ journey, and that journey has been echoed in much of the trajectory of those who have leveraged the platform for tremendous gain in their own right. As of 2022, Amazon boasted a staggering market valuation exceeding $1.5 trillion—a testament to the power of innovation and the art of online retail.

The platform is reported to have sold over 353 million products, a massive indicator of wide-ranging and continuous consumer trust and loyalty globally. Are we, as South Africans, ready to pop that number over the 400 million mark?

1 1

The Current South African Retail Landscape

As we shift our gaze to sunny South Africa, we find a digital circus of commerce already in full swing. Even though our nation was a little behind in the early 2000s when it came to the dawn of digital retail, our local stalwarts in the online space —Takealot, Woolworths, and Makro— have taken massive strides in drawing in audiences with their online wares in the last two decades.

In the spotlight, Takealot shines bright, reporting a jaw-dropping 201% increase in active users in 2023, while Woolworths’ online food sales leap by an impressive 87%. Though these numbers are undoubtedly impressive, they do represent monopoly business ownerships, and not necessarily the opportunity for small, medium or independent businesses to make significant eCommerce impact.

Amazon has all the advertising and infrastructure capacity of one of these large local retailers, which allows the general public to access these resources, creating a significantly more “equal opportunity” paying field in which retailers can hash out their conversion battles.

Potential Impact on Small and Medium Businesses

Imagine a tapestry of entrepreneurship woven across South Africa—a tapestry comprising over 2.8 million small and medium enterprises (SMEs) contributing a surprising 22% to the country’s GDP. It’s a mosaic of dreams, ambition, and growth. And, also, threads of blood, sweat, tears, late nights and seemingly arbitrary Facebook Karens. We can’t deny it – Amazon’s arrival for vendors is going to drastically change the day-to-day of these mom-and-pop enterprises.

Whether this change is good or bad, however, is entirely dependent on if the business owners, commerce managers and marketing executives involved in these companies embrace this new opportunity or shun it in favour of outdated retail modalities.

We understand that large-scale change can be intimidating and unpleasant for established businesses. However, when one considers how Amazon’s algorithm prioritises established sellers with more reviews and a more robust Seo approach to product listing, we’re of the mindset that it would be much more beneficial to get your foot in the door early to edge out competitors in your industry space.

Impact on Large Retailers and Chains

As of 2021, the estimated online shopping expenditure in South Africa stood at around $2.7 billion. With Amazon’s impending entrance, that figure is poised to leap into new dimensions, especially due to the highly efficient distribution and warehousing mechanism boasted by the platform.

Will our local champions choose to duke it out in a winner-takes-all match, or will they heed the whispers of collaboration? It has been a historical precedent that retailers with their platforms bending – either completely or in part -to the Amazon marketplace have proven both lucrative and strategically advantageous for marketing endeavours.

The stakes are high, the strategies at the disposal of our big-name retailers are diverse, and the outcome is entirely dependent on the features Amazon does eventually decide to roll out on local shores, and when. We’re waiting with bated breath, ready to forge strategies at the click of that

03

Economic Implications

If we believed in magic, “job creation” would be the “abracadabra” of local economic sorcery. The words that make the change happen are soon to be uttered digital labour force! Amazon’s distribution centres, the buzzing hives of e-commerce activity, promise a potential windfall of jobs, especially in the burgeoning youth market in our employment pool.

A single Amazon fulfilment centre typically employs around 1,500 workers, and the flagship operation upon national opening might be even larger. In South Africa’s present economic climate, where employment opportunities are more precious than gold, this influx of jobs could be a game-changer for the communities in which Amazon chooses to settle.

Meanwhile, the wheels of supply and demand are in motion, potentially leading to competitive pricing strategies, stimulating both micro- and macro-enterprises alone. Provided they paddled out to the Amazon wave ahead of the prime opportunity to catch that tube, of course.

Picture it: shoppers rejoicing over discounted goods, communities invigorated by increased economic opportunity, and local businesses catching their fifteen minutes of fame in front of a global buyers’ market, all while the wheels of commerce continue to turn.

Consumer Perspective

At the onset of this near-promised eCommerce and delivery advancement, we anticipate a massive increase in consumer comfort and accessibility. The allure of convenience beckons, a siren song that 45% of South Africans can’t resist, according to Nielsen.

Our consumer casts their digital net, scooping up everything from tech gadgets to fashion essentials, all without having to put on a pair of summer “plakkies” to venture forth beyond the threshold of their homes. Yet, as the digital revolution unfolds, consumers might have to navigate a new realm—a world where shipping and handling fees might lead to a 4% increase in online prices.

Given how the inflation of prices on services like Uber Eats and Mr Delivery doesn’t appear to have deterred our consumer public from snatching up their convenient eats, we doubt the potential price increase will drastically affect projected buying behaviours. A small trade-off for the convenience of shopping from the comfort of one’s goblin cave, we’re guessing South Africa will still bite the bait of department-store-style browsing from home. Provided loadshedding doesn’t get in the way, of course.

Future Prospects and Predictions

The crystal ball is polished, and the soothsayers are in full voice. And by that, we mean we put one of our strategists in a fetching headscarf and asked them to use their uniquely South African digital market know-how to make some accurate predictions. It’s kinda the same thing. What lies ahead for South African retail? A glimpse into the future reveals tantalising possibilities and lucrative opportunities for those looking to enter the digital commerce space for the first time or expand and optimise their existing digital offering.

By 2025, predictions suggest that the South African e-commerce market could blossom into a colossal $5.3 billion affair—a true testament to the power of digital transformation, propelled ever forward by the torque of the Amazon brand.

As local retailers navigate the labyrinthine landscape of Amazon’s entry, those who deftly adapt could very well find themselves riding the wave of success. And with the right guide (ahem… we’re right here) cruising through the online commerce maze could present a total walk in the ePark.

2 1

So, where to from here?

If eCommerce is an odyssey, consider this one, the one with Amazon, to be the one where all the stuff happens. Because as soon as our suspicions are confirmed and Amazon touches down in sunny South Africa, the wheels are going to start turning and everything’s going to get set in motion for your business really, really fast. Provided you’re already set up and waiting in the driver’s seat, of course…

As a retail business owner, you’re about to be involved in a whole new world of innovation, competition, and progress. We’re here to support you. Picture FGX in the passenger seat while you barrel down the road to your new horizon of success.

Brace yourselves, South Africa because we’re unfurling the banner of Amazon Marketplace optimisation services, helping local retailers conquer the ever-evolving e-commerce landscape with finesse. Our 25 years of digital marketing expertise, encompassing everything from initial client strategy, to process building and product SEO, to customer-facing relationship management, we’ve got precisely the expertise you need to give you the Amazon head star you need, right out the gate.

The best preparation happens in advance. Start getting ready to catapult your eCommerce success ahead of the competition when you schedule a consultation call with one of our FGX-perts today.

×