The company is gearing up to compete in the South African e-comm sector with the global tech giant.
Takealot, South Africa’s leading online retailer, is introducing delivery within an hour for items ranging from phone chargers to toys as it braces for Amazon.com Inc. to enter the country’s e-commerce sector.
The rapid delivery service will initially be offered in parts of Cape Town, where Takealot parent Naspers Ltd. has its headquarters, before expanding more widely, the retailer said in a statement on Wednesday. Products will be shipped until 10 p.m., with no fee charged during the first month.
South Africa is the continent’s most developed economy and has a youthful population, together with one of the largest upper-middle-income markets in the region. It’s potential is drawing increasing attention from retail giants like Walmart Inc. and Amazon, which could roll out online delivery there this year.
Amazon's new African headquarters is being built in Cape Town, and the company itself has advertised 31 full-time jobs, several of which are marketplace management positions. However, Amazon's entry to South Africa has not been officially confirmed.
As Takealot Chief Executive Officer Mamongae Mahlare noted in an Bloomberg interview, e-commerce makes up about 4% of South African retail, which presents a market growth opportunity three to five times bigger than in peer countries.
Online retail sales in South Africa grew 30% to 55 billion rand ($2.9 billion) last year, according to a study by World Wide Worx market researcher.
“South Africa is still nowhere in terms of online sales, which means that there’s massive opportunity for growth,”
Mahlare said.
The Takealot director had previously welcomed Amazon's arrival in South Africa. “When you get a big player like that into the economy, it demonstrates the potential that sits within this market,” he said in an interview with Bloomberg TV in April. Takealot will focus on its local advantage and boosting profitable growth of its three business units, Malare added.
In July, the Competition Commission of South Africa released its Online Intermediation Platforms Market Inquiry (OIPMI) final report. The report listed the actions that platforms and certain companies must take to address anticompetitive factors identified in the market.
In particular, 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. The Commission is essentially punishing successful companies for growing and diversifying, instead of boosting competition by addressing government-controlled barriers, the experts believe.
Takealot was founded in 2011 and reported $827 million in revenue in 2022. Its new service will compete with companies that offer fast grocery delivery, including Shoprite Holdings Ltd.’s Sixty60 app.
Sources: Bloomberg, Business Tech
