Takealot's management hopes that the company's knowledge of the specifics of the South African e-commerce market will help it compete with Amazon.
Naspers CFO Basil Sgourdos said they would pump money into Takealot to ensure it is fighting fit for its looming battle against global eCommerce giant Amazon.
In October, Amazon finally officially confirmed that it will be launching Amazon.co.za in the South African market in 2024.
The launch of Amazon.co.za in 2024 will provide independent sellers nationwide an opportunity to launch, grow, and scale their businesses rapidly. More than 60% of sales in Amazon’s stores are from independent sellers, most of which are small and medium-sized businesses.
Amazon will compete directly against prominent South African eCommerce players like Takealot, Makro, and Bash.
Takealot management has previously said that Amazon's launch in South Africa shows that the local market is poised for growth. According to the company's CEO, Takealot has built an investment case big enough for global companies like Amazon to take note.
The Sunday Times quoted Sgourdos as saying Takealot is a fantastic business and that they will continue to invest in it to improve its value proposition.
Although Amazon is a formidable opponent, Takealot has many advantages in South Africa because of its longevity in the market. It has its own logistics network through Mr D, unrivalled knowledge of the local eCommerce market, and strong relationships with local sellers and suppliers.
As Naspers’s representatives noted in an interview with the Sunday Times, Amazon has failed in some territories because of the lack of local knowledge of businesses there. Amazon has not always been successful when moving into new markets. For example, in Poland, the local incumbent Allegro still dominates. It may take Amazon longer than many expect to succeed in South Africa.
In July, the Competition Commission of South Africa released its Online Intermediation Platforms Market Inquiry (OIPMI) final report. The Commission ordered Takealot to split its marketplace business from its retail business so that it could not use its position as a dominant marketplace to promote its own retail products. Some experts say the Commission's requirement will make it harder for Takealot to compete with a powerful player like Amazon.
Source: Daily Investor