Amazon launches Prime-free marketplace in South Africa, first in sub-Saharan Africa

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Two years after announcing its plans, Amazon’s long-awaited entry into e-commerce in sub-Saharan Africa has finally become a reality. On Tuesday, the tech giant launched its marketplace in South Africa.

South Africa is the e-commerce giant’s first market in the sub-Saharan region (it already has an operation outside Egypt after the acquisition of Souq in 2017), and it will take on local players in the country. such as Takealot (majority owned by media giant Naspers), as well as Makro and Bob Group’s bidorbuy to tap into what is estimated to be e-commerce revenues worth $3 billion annually.

But notably, Amazon is launching in South Africa without its famous Prime membership program. That means no media services, no Prime-exclusive service tiers like free shipping on lots of items, and no sticky tools to keep people coming back to your site again and again instead of other purchasing options ( and pay Amazon for the privilege).

We’ve reached out to Amazon to ask when, or if, it’s likely to add Prime in the region and we’ll update this post as we learn more.

The services e-commerce giant said it initially plans to sell international brands and local products spanning about 20 product categories. Amazon will offer same-day and next-day delivery, as well as 3,000 pickup locations, and without the Prime benefit of free delivery on a wide range of items, to attract customers, Amazon is offering free delivery for anyone’s first order, as well as subsequent orders exceeding R500 (~$27).

It is unclear to what extent the country’s market currently wants or needs another player, and one that is parachuting in from the United States. However, local e-commerce entrepreneurs see it as a strong signal about the overall strength of the country’s e-commerce market, which faltered globally after its peak in usage during the height of the Covid-19 pandemic.

“Competition is first and foremost good news as it validates African e-commerce opportunities and helps grow the market. However, South Africa is a very specific market, different from most African countries, with mature retail networks, stable supply and a very competitive e-commerce space,” Francis Dufay, CEO of Jumia, told TechCrunch about the arrival of Amazon.

However, the debut was a long time coming: Amazon had first said it would launch on the continent two years ago, in two countries, Nigeria and South Africa. That in itself seemed to be taking advantage of Amazon putting South Africa and the African continent in greater focus generally: in 2020, it had announced its first AWS region for the continent, also outside of South Africa.

But as a result of that announcement, Amazon delayed the release dates of both. South Africa was originally supposed to debut in April 2023. It was then postponed to October 2023, but that month, it only started adding independent sellers in the country and was still hiring in business development, software development, and operations.

Meanwhile, its launch in Nigeria, scheduled for February 2023, has also been put on hold and the company is yet to provide an update on when it might open its doors.

Amazon.co.za

The opportunity, however, is clear. Africa as a continent is still in the early stages when it comes to digital commerce, and while that could mean significantly greater challenges in solving supply chains and logistics, and changing consumer habits by getting more consumers to select and pay for goods online, represents significantly greater growth potential than other more mature markets for the company.

“We are excited to launch Amazon.co.za, alongside thousands of independent sellers in South Africa. “We offer customers great value, a wide selection, including local and international products, and a convenient delivery experience,” Robert Koen, CEO of Amazon Sub-Saharan Africa, said in a statement. “Building strong relationships with South African brands and businesses, small or large, is incredibly important to us. “We want Amazon.co.za to be the place where they can reach millions of customers.”

Amazon’s entry into the South African market introduces competition to an industry largely dominated by Naspers-owned Takealot, which controls almost half of all online sales in the southern African country. Walmart-owned Massmart is also preparing for its own push into e-commerce. The timing of Amazon’s launch also coincides with a surge in online shopping in South Africa following the pandemic, which has spurred greater investment by retailers in the e-commerce sector.

Updated to note that Amazon already had an e-commerce operation outside of Egypt. The South African market is the first in sub-Saharan Africa.