By Nqobile Dludla
JOHANNESBURG (Reuters) -Amazon said on Tuesday it would launch its online shopping service in South Africa next year, making it only the second African country after Egypt where the U.S. e-commerce giant has set up a locally-dedicated website.
South Africa will be Amazon (NASDAQ:AMZN)'s 21st country with a local domain name-based website, challenging a slew of online retailers dominated mainly by Naspers' Takealot.com.
"The launch of Amazon.co.za in 2024 will provide independent sellers throughout the country an opportunity to rapidly launch, grow, and scale their businesses," Amazon said in a statement.
Africa's most advanced economy is usually seen as a beachhead for companies to expand into the continent and Amazon could be doing the same, analysts have said in the past.
The launch of its service comes at a time when South Africa has seen a sharp rise in online shopping after the pandemic created an opportunity for e-commerce to finally take hold, with retailers doubling down on investments in response.
But of late the spike in online sales appears to have peaked as South Africans return to shopping malls.
Also, given South Africa's anaemic growth, high unemployment, power supply and transportation problems, analysts do not see the launch as a game-changer for Amazon or a major disruptor for the local industry.
"I don't think their takeover of South Africa retail is a slam dunk," said Sasfin Wealth senior equity analyst Alec Abraham.
While Amazon is expected to intensify competition with local online and traditional retailers, "the reality is that the consumer pie in South Africa is not growing," he said.
Last year, Takealot Group Chief Executive Officer Mamongae Mahlare told Reuters the company's vast delivery network and local appeal would ensure it competes well with Amazon.
It is not yet known how Amazon's platform will be configured as it will have to comply with the local competition authority's rules which mandate online retailers to separate their retail division from their marketplace operations.