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The interview starts at the 22:25 mark
JIMMY MOYAHA: Earlier this week we found out Amazon was coming into South Africa. Takealot has responded to that. I’m joined on the line by Wayne McCurrie of FNB [First National Bank] to take a look at what this means.
Wayne, good day; thanks so much for your time, as always. Takealot have said they’ve welcomed this. Do you believe they’re genuinely happy, or should they be a little concerned?
WAYNE MCCURRIE: No, they should be a little concerned and I’m sure they are concerned. But, of course, the good news is it’s not as though no one knew about this and all of the domestic players in this market have been preparing for this for a very long time.
JIMMY MOYAHA: Absolutely. Do you think that this introduction would bring about better pricing from the existing players in this space, given that we’ve seen that some of the players have a bit of a premium on some of the products that they put up online and that sort of thing?
Read: Takealot starts Cape Town rapid delivery before Amazon’s arrival
WAYNE MCCURRIE: Competition always brings down prices and you’re getting the biggest competitor in the world coming to your market. It will benefit the consumer and they’ll probably start with opening specials to get a bit of establishment and to get some people onto their books and for people to use the platform. So it is going to increase competition, which should bring down prices.
JIMMY MOYAHA: Let’s look at the Competition Commission’s ruling in the last couple of months. They came out expressing their unhappiness with the state of the e-commerce sector in South Africa, saying it requires more competition. Do you think that this is something that they are happy to see as well from their perspective?
Read/listen: New digital marketplace restrictions to be introduced to promote fair competition
WAYNE MCCURRIE: Yes, they are happy, but very similar terms and conditions will be put on Amazon as what’s been put on Takealot. But look, this is all essentially at the margin. What the Competition Commissioner has ruled and the laws that they’ve imposed is not their mainstream business for either Amazon or Takealot. So it’s not going to fundamentally affect their decision to come to South Africa or to establish themselves in South Africa and the actual main business lines. It is on the margin.
JIMMY MOYAHA: Wayne, if we have to put the businesses head-to-head, Takealot versus Amazon, for example, are there areas where each company might have an edge over the other? Are there areas where they may want to specialise and say, you know what, we do this really well, so we’re going to put a bit more effort into that as opposed to the rest of our offerings?
WAYNE MCCURRIE: Well, Amazon does everything well. That’s why they’re the world leader in this field. Takealot’s not sleeping though. Takealot is very, very well established in South Africa. They’ve got a bit of local flavour, they maybe understand the consumer a little bit better.
So I think Amazon is going to be huge competition for them, but it’s going to take a while to get established.
They’re not going to come in here on the first day with all cylinders firing. It’s probably going to take them a year or two to get their distribution sorted out because Takealot’s distribution is very good. So as I said earlier on, the local players aren’t sleeping here.
JIMMY MOYAHA: Wayne, let’s look at that distribution because Amazon Prime is world-class if you look at it in terms of what it’s able to achieve in the US. Do you think from a distribution point of view that’s something that would, I mean at least locally, bring about some different element alongside the e-commerce thing?
So there is that e-commerce component, which is the online marketplace, the purchases and all of that, but there’s also that big Amazon Prime business about getting things to you immediately.
WAYNE MCCURRIE: Yes and of course, that’s where maybe Takealot falls down a bit. It’s not an immediate delivery service, but Takealot is not the only player in this market. Checkers Sixty60, even though it’s Checkers, they’ve got a massive product range on their books, and they get it to you in 60 minutes. That’s not bad.
Read:
How Checkers Sixty60 dominates the on-demand grocery market [May 2022]
Can anyone catch Checkers Sixty60? (Hint: No) [Sept 2023]
JIMMY MOYAHA: Would it be wise for Amazon to onboard? They’re starting off with the suppliers and sellers and that sort of thing in their phase one, would it be wise for them to look at partnering with guys like Checkers 60Sixty?
Does that present unique benefits of scale or efficiencies that might allow both businesses to leverage or is it something where Amazon’s probably best positioned just bringing in some international products and dealing with things outside of what Checkers has in their range?
WAYNE MCCURRIE: I think that’s the answer, ja. It’s not Amazon’s business model to partner with other people and of course, the big thing they’ve got is access to their global supply chain. There’s stuff on Amazon, if you look at Amazon UK, there’s stuff there that we’ve never seen in South Africa. Tens of thousands of things and hundreds of thousands of product lines we just don’t see here.
So that will be their advantage. I don’t think they are going to come and compete against delivering food and coffee and long-life milk like Checkers does. I just don’t think that’s their field.
Their big advantage is they are a global company with global reach in respect of their product range that you just can’t get here in South Africa.
We’ve seen a couple of Chinese competitors coming in here, Shein; they can compete against the local guys.
But once again, McDonald’s came here many years ago, they were going to take over the world. Burger King came here many years ago, they were going to take over the world. The local guys are still here and they’re still doing quite well. Even though the global guys have taken market share, they haven’t killed the locals.
JIMMY MOYAHA: I like that you brought up Shein and the local component because I wanted to look at, from a seller’s point of view, the small businesses, businesses that are now able to leverage off of Amazon’s Easy Ship that are able to fulfil orders, bring in products, as you said, from outside of South Africa into South Africa in a timely manner. What’s that going to do for our economy?
Read: How mighty Shein is hurting TFG, Mr Price, others
WAYNE MCCURRIE: It can only be positive for our economy if local guys can get onto the Amazon logistics essentially because local guys could always sell globally, they could sell through eBay and so on, but there wasn’t a distribution, logistics framework for them to get their product out there because the biggest problem South African manufacturers have got, if you’re not truly massive value add, is that we are a long way from the big markets.
So if you can get the logistics of getting your product to the client in America or Europe or the UK, that can only help domestically enormously. Importing into South Africa, that happens all the time, we’re a very, very open economy.
Read/listen: Ecommerce ‘on fire’ in SA’s retail space
So I don’t think Amazon coming here is going to make a dramatic effect on the amount of stuff that we import, but it could have quite a nice effect on the stuff that we export, especially for the SMMEs [small, medium and micro enterprises] because you can have a great product or a great idea, if you can’t get it to your customer and sell, it’s irrelevant.
JIMMY MOYAHA: Well, we welcome Amazon, we welcome competition and all the best to them in the future. Thanks so much Wayne McCurrie of FNB, giving us his thoughts on Amazon’s announcement about their entrance into the South African market officially in 2024.
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Amazon Web Services’s plans for SA following skills centre launch
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