South Africa’s leading online retailer, Takealot, sees Amazon’s plans to enter the country’s e-commerce market as a sign of potential growth, despite challenges such as power cuts, antitrust issues, and inflationary pressures. Takealot, owned by Naspers, launched in 2011 and has become the largest online retailer in South Africa with $827 million in revenue reported in 2022.
E-commerce currently accounts for only about 4% of South African retail, presenting a significant growth opportunity that is three to five times the size of peer countries, according to Takealot CEO Mamongae Mahlare.
South Africa has a growing, tech-savvy, and youthful population, coupled with one of the largest upper-middle-income economies in Africa, making it an attractive market for global tech giants like Amazon and Microsoft to expand their operations on the continent. While Amazon has been providing web services in South Africa since 2004, it has held off on launching its e-commerce business due to challenges such as a less affluent customer base and issues with power and connectivity in some areas. However, Takealot remains optimistic about the potential of the market despite these challenges.
Mahlare emphasized the importance of having an enabling regulatory environment in South Africa’s digital sector to ensure continued growth, as it has a significant impact on job creation and inclusivity by providing equal access to products and services. Takealot’s strategy will focus on leveraging its local advantage and driving profitable growth in its three business units: Takealot.com, Superbalist (an online fashion platform), and Mr D Food (a food delivery service). Takealot.com achieved profitability in 2021, and the company aims to achieve profitability for Superbalist and Mr D Food in the next two financial years.
To address the issue of power cuts, Takealot is currently using generators and exploring options for solar power. Mahlare acknowledged that there may be challenges that do not always go according to plan, but the company aims to remain agile and responsive in dealing with them.
Takealot’s CEO also highlighted that South Africa’s digital sector has significant potential for job creation and inclusivity, and it is crucial to have a regulatory environment that fosters growth. As a key player in the country’s e-commerce market, Takealot remains optimistic about the future of the industry and is committed to driving profitable growth in its business units.
Amazon’s entry into the South African market is seen as a positive indicator of the potential for growth in the e-commerce sector. Despite challenges such as power cuts, antitrust issues, and inflationary pressures, Takealot believes that South Africa’s growing population, increasing tech-savviness, and strong economy make it an attractive market for global e-commerce giants. The company remains focused on leveraging its local advantage, pursuing profitability in its business units, and addressing challenges such as power cuts through innovative solutions. With the right regulatory environment and continued efforts towards growth, South Africa’s e-commerce market has the potential to expand significantly in the coming years.