Can local e-commerce companies compete with their global counterparts?

As World Wide Worx described in its South African Online Retail 2024 report, Amazon’s launch on May 7 “is likely to be the biggest event for the local e-commerce industry since the launch of Checkers Sixty60 in 2020”.

The Jeff Bezos-owned company couldn’t have chosen a better time to enter the local market. A study by World Wide Worx, in partnership with Mastercard, Peach Payments and Ask Afrika, showed that online retail in South Africa surged to R71 billion last year, up 29% from 2022.

However, while the e-commerce giant has added more vibrancy to the local e-commerce scene, it remains to be seen whether Amazon will offer South African buyers a wider selection of products.

It’s also worth noting that Amazon doesn’t always succeed in the new international markets it enters.

Business of Apps, an app market analysis portal, said it was struggling outside of North America, based on its 2024 e-commerce app revenue and usage statistics.

“Shopee and Meesho’s annual downloads have surpassed Amazon, and Shopee has taken control of several countries in Southeast Asia.”

“Latin America is another region that seems to be less favored by Amazon’s publicity, with Mercado Libre, Shopee and AliExpress all vying for market share in the region.”

Craig Lubbe, head of markets at Bob Group, a South African e-commerce ecosystem, said never underestimate the power of local.

“We have seen consistent support from a strong community of buyers and sellers in the collectibles category. This includes antiques, coins, stamps and other collectibles. These categories make Bob Shop a unique space,” he said.

“While we offer mainstream consumer products sold at fixed prices, Bob Shop still offers both fixed price and auction formats for our sellers. Some of these buyers and sellers have been active on the platform since the beginning and have witnessed many changes in the products we offer over the years.”

Ensure return visit frequency

He added that consistency is key to ensuring frequent return visits to the home market.

For example, sellers on Bob Shop take less than two days on average to process orders, and the company’s integrated couriers deliver goods to South Africa in the same time frame. Coupled with automatic tracking updates for consumers, this feature helps provide a consistent experience for buyers on the platform.

Pricing is another important factor in determining return visit frequency.

In the South African e-commerce landscape, rules and pricing vary across local markets.

“While there may be benefits to trying different platforms, in the long run, sellers are better off focusing most of their efforts on one platform, in addition to their own e-commerce channels, which may be more manageable,” Lubbe said.

The product portfolios of emerging international markets and mature local platforms will certainly overlap significantly. However, the main differences will be in pricing and service.

Lubet noted that while asking sellers to lower prices can be an effective temporary measure, it is generally not a sustainable mechanism for retaining customers.

“Maintaining good delivery and communication standards, coupled with a wide product range, is an excellent mechanism for retaining customers.

“For example, what we did at Bob Shop was set up standard shipping and automated communication processes so that sellers can focus on selling. We also developed tools to help sellers easily integrate their e-commerce sites. You need these differentiators to stay competitive.”