Online SA retail wars: Amazon Everything
by Sanet Yelland. With ecommerce giant Amazon set to enter South Africa in 2023, there will be an anticipated shake-up of current retail players. Here’s how you keep your customer.
by Sanet Yelland. The growth and acceleration of South African online ecommerce players have accelerated over the last two years as more consumers and shoppers demand hyper convenience, seamless retail channel experiences and the benefit of more personalised online shopping.
Recent data from FNB Merchant Services revealed that the South African online ecommerce market has grown rapidly and is currently estimated at just under R200 billion per annum. According to FNB, this increase is indicative of how Covid exponentially accelerated the adoption of ecommerce.
This growth has seen the ecommerce giant Amazon set to enter South Africa in 2023, with an anticipated shake-up of the current market players based on scale and broader offerings. Much debate has ensued about the rivalled successes and trade-offs between the commerce players and where growth, cannibalisation and switching will come from.
Optimistically, the competition between Amazon and Takealot could serve smaller retailers by presenting more opportunities/platforms for product listings, broadening the customer reach and potentially offering better deals. Competition can also inspire better service. Conversely, most local retailer players online have ramped up their efforts to accelerate their online services.
Following SPAR’s integrated ecommerce platform in August 2021, the brand launched a newer version, SPAR2U, in March 2022. It was relatively late to the game. The highly successful Checkers Sixty60 app, launched in November 2019, had already been downloaded 1.4m times by mid-2020. Having acquired the Bottles app in October 2020, Pick n Pay accelerated its ecommerce offer since 2019, rebranding it to ASAP! in 2021. Furthermore, Woolworths launched its same-day service Woolies Dash in December 2020; and Massmart announced a new ecommerce strategy in August 2021.
While Amazon will compete head-on for shopper baskets and day-to-day product essentials, it’s useful to note some of the broader strategic focus acquisitions that Amazon is driving on smart homes. The ‘Amazon Everything’ destination proposition aims to offer products and services that elevate to a lifestyle association and the hyper-connected shopping world, which is essentially Amazon-fuelled.
Amazon.com will acquire the maker of the robotic vacuum cleaner Roomba (iRobot) in a US$1.7-billion deal in the latest push by the world’s largest online retailer to expand its stable smart home devices. The acquisition realises a 2021 Amazon vision inspired by the brand’s belief that each home will have one or more robots within the next five to 10 years, including Alexa, Ring, Siri etc., that will become a core part of everyday life.
Making SA online shopping a loyal destination
1. Reinforce local: Local entrepreneurs have the opportunity to drive a strong local preference and selection for home-grown products that are proudly South African. It’s essential that this strategy be applied to all touchpoints, including the payment platform for checkouts to the domain extension on websites. For example, a local .co.za domain tells customers that you are based in South Africa and support local yourself. Online purchases have the potential to negatively impact local economic growth; for instance, suppose a customer buys a gift from Amazon instead of supporting a local business, and the proceeds go to the retailer instead of the local community, resulting in a loss of income that can harm the local economy.
2. Understand local shopper dynamics and behaviour: The better online retailers can package innovative product solutions, service delivery, and personalisation of offers, the better loyalty and repeat purchases will follow for platforms that are trusted and known for great service, reports Becomedistinct.com. Coupled with the challenges South African shoppers face across multiple cost hikes across categories, securing more value across every shop will be key to retention.
3. The value equation in driving differentiation in online commerce:
- Broader value proposition as an enabler brand to extend the reach and new audiences.
- Personalisation coupled with better predictive modelling.
- Activation lifestyle rewards (value beyond the product).
- Customised products versus off-the-shelf.
- Solutions through better service and value adds.
Undoubtedly, the ecommerce turf is a dynamic space with all the innovation and the demand for customers’ wallets. Whether loyalty to a specific retailer entity will always be possible remains to be seen. As the saying goes, ‘variety is the spice of life’, and this is no different to the online space where shoppers want to feel that they can explore and shop around, and Amazon will come with a natural intrigue to shop.
Main image credit: Supplied.
Sanet Yelland is the CEO and founder of Streamline Advertising, a full service agency. She has worked across the industry for 30 years, on clients within financial services, wholesale, retail, FMCG and government sectors on notable brands, including Massmart, Dis-chem, SAA, City of Johannesburg, Nedbank, Absa Bank, and Pick ‘n Pay (Score Supermarkets and RiteValue brands). Yelland started the Young Community Shapers initiative in 2000. This project acknowledges and celebrates the achievements of young people from disadvantaged backgrounds by providing funding, bursaries, and mentorship.
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