Amazon has been gearing up to launch in South Africa, and launched earlier this week with an early product range. With Takealot being the dominant player in large scale ecommerce marketplaces in South Africa, I believe there’s a lot we can learn from Amazon’s proven business model, and how Takealot responds to a new (to South Africa) player in their sandbox.
Service delivery > Product Inventory
On the surface, Amazon and Takealot offer similar services. A range of products, purchasable in a convenient online space, with delivery to your door. At the inventory level, Takealot has a far wider range of products than are available today on Amazon. At the outset, this positions Takealot as the go-to place for buying the things you need beyond technology products and toys (a lot of what is currently available at Amazon South Africa).
The Last Mile
I remember buying CDs and DVDs from what was then Take2, with a warehouse in Montague Gardens near Century city. These were different times, and a very different version of ecommerce in South Africa. Takealot did amazing work with scaling their inventory and operations when rebranding from Take2, and took their business to a whole new market in the process. Despite scaling concerns with their last mile, it is undeniable that they’ve done a lot of work to scale their operation. The introduction of Amazon to the market is fuel for Takealot to truly perfect their last mile delivery from a reliability, branding, and overall consistency point of view.
As an example, Takealot introduced pick-up points across the country as an alternative convenience to home delivery “before 5pm on Monday”. Home delivery isn’t always as convenient as it sounds when this is the timeframe we’re given.
We’ve seen in the mobile grocery delivery industry how Checkers Sixty60 is outpacing it’s competition in leaps and bounds, simply by investing in a fantastic last mile experience. Being able to select product alternatives is commonplace across all of the grocery apps, though a perfect last mile experience within 1 hour is exclusive to Checkers. When it becomes commonplace as well, Checkers was still first to market and has had the most time to learn and perfect their offering. This example illustrates the power of a fantastic last mile experience.
Free delivery on orders over R500
Both players offer a similar delivery discount. This approach still relies on having wider inventory to incentivize larger basket sizes.
Amazon Prime
Eventually, I’m hopeful we see Amazon Prime launch to South Africa at it’s fullest. Free same day delivery, discounts, and all that Prime has to offer. This is, I believe, a threat to Takealot though not because of the reduced delivery fee.
Convenience and recurring revenue
To me, the ability to put certain products on order and “set and forget” is the piece missing from the Takealot puzzle. Amazon Prime introduces this along with a host of other features, all for a fixed monthly fee.
There are items we need on a regular basis. Household items, toothpaste, a new toothbrush every couple of months, etc. If I could set this up and “forget” about it, this would be a big time-saver. Especially if I could also get discounts on repeat orders. Amazon Prime offers this feature today, where Takealot does not.
A rising tide raises all ships
Overall, there is always room for competition, especially when it fosters growth of the overall ecommerce space. South Africans take time to warm up and trust online shopping. Takealot has worked hard to build this trust, as has Amazon. The playing field is no longer about inventory alone, as there is no more monopoly in South Africa on broad-range online shopping.
Convenience for the customer, and excellent reliable service delivery are where we’ll see true innovation and the biggest win for the consumer. Both Amazon and Takealot have a renewed incentive to do amazing work for South African consumers, growing the pie for everyone in online retail in the process.
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