Amazon’s ‘local is lekker’ strategy taps into growth potential

10 May, 2024 - 00:05 0 Views
Amazon’s ‘local is lekker’ strategy taps into growth potential Amazon

eBusiness Weekly

Online retail giant Amazon.com, which started as a bookseller in 1995 out of founder Jeff Bezos’s garage, launched a South African shopping portal with a .co.za domain yesterday as it seeks to capture some of the more than a third of South African adults who shop online.

Amazon.co.za is promising shoppers a reliable online shopping experience featuring great value, including same-day delivery, more than 3 000 pick-up points, easy returns, 24/7 customer support and free delivery on first orders either via its app or in a browser.

Amazon managing director of Sub-Saharan Africa, Robert Koen, said they were excited to launch Amazon.co.za, along with thousands of independent sellers in South Africa.

nlightencx marketing specialist Mathabo Sekhonyana added that Amazon was viewed as having strong brand credibility and a reputation for delivering on its promise.

“South Africans do expect the US giant’s online offering to come at a slight premium but have the peace of mind of knowing their goods will arrive as advertised and on time. Or, at least, that’s the hope,” Sekhonyana said.

Amazon is competing head-on with Takealot, South Africa’s largest online retailer, but Takealot has a significant advantage in that it has been operating in South Africa since June 2011.

The US retailer will also compete with Loot.co.za and other online retailers, such as Makro.
MD of World Wide Worx, Arthur Goldstuck, said Takealot was in a period of stagnation even though online retail was growing rapidly in South Africa, especially driven by grocery retailers.

World Wide Worx will release figures on online shopping in South Africa today.

“There is still potential for significant growth and Amazon is launching into that growth, not into Takealot’s relative stagnation,” Goldstuck said.

He also said that Amazon has a larger ecosystem than Takealot and, with its global strategy of ensuring that 60% of its suppliers were independent companies, it has thousands of potential providers available.

Goldstuck said Amazon aimed to make itself the platform of choice for these companies.

“Amazon’s growth strategy is to tap into a growing market, support local independent companies, and expand into new categories continually as they get feedback from what customers want and demand,” Goldstuck said.

“They also aim to be efficient, having appointed two courier companies as their delivery partners so they don’t have to build their own infrastructure.”

Amazon.com is perhaps best known for its shopping offerings, but its cloud unit, Amazon Web Services, accounts for the bulk of its profits.

The multibillion-dollar company is also making inroads into artificial intelligence, and has a finger in the streaming pie through Amazon Prime.

The internet behemoth certainly has the money to make its South African venture work, as it has a market capitalisation of $1.96 trillion (R36.1 trillion), making it one of the biggest companies in the world.

Classed as one of the Magnificent Seven stocks, Amazon has gained 19% in share price so far this year, according to Moonstone.

For the first quarter at the end of April, Amazon reported net income of $10.4 billion, compared with $3.2bn in the first quarter of 2023, while sales came in at $143.3bn, a 13% increase year-on-year.

“It was a good start to the year across the business, and you can see that in both our customer experience improvements and financial results,” said Andy Jassy, Amazon president and CEO.

In fact, as nlightencx CEO Nathalie Schooling puts it, Amazon.co.za’s arrival will drive local players to step up their customer experience game so that they can retain the loyalty of consumers, and reinforce their position in the market.

“If you ask me, it’s about time,” Schooling said yesterday. — Businesss Report

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