2024 may go down as the year South Africa opened its gates to the world … at least in online retail terms, that is. With Amazon, Temu, and Shein all vying for their place as the top online retail platform, the South African online marketplace has undoubtedly entered a new era.
But with Amazon’s soft launch that’s only offering limited stock availability and both the Chinese platform’s “unbeatable” prices, the next phase of SA eCommerce is still uncertain. But Amazon isn’t sitting idly on their hands.
But is it a counterplan for the best of South African business growth? And what should small businesses and local sellers do to avoid being pulled into the fallout of the race for marketplace dominance?
Before the launch, Amazon Sub-Saharan Africa region general manager Robert Koen made it clear that the initial soft launch was aimed at giving local sellers an unbeatable sales platform instead of necessarily giving local buyers access to all the international deals they’d been hoping for:
“[We look forward to] providing local sellers, brand owners, and entrepreneurs – small and large – the opportunity to grow their business with Amazon, and delivering great value and a convenient shopping experience for customers across South Africa.”
That may be one of the biggest reasons there hasn’t been much fanfare around the Amazon launch, with the online bargain-hunters opting for the buyer-focused launch of Temu and Shein, and walking away entirely underwhelmed by Amazon.co.za.
But the thing is, this move is giving local sellers the opportunity to make the marketplace their own and turn it into something truly “Proudly SA”.
The impact of Temu and Shein on local economies, however, isn’t a “Proudly SA” matter at all. Far from it. The battle between Amazon and Temu/Shein is an international one that’s got the Seattle-based company in battle stations.
The eCommerce giant recently announced plans to launch a low-price mall of its own, opening its doors to many of the third-party Chinese sellers that are already selling on Shein, which is also open to public sellers. This new endeavour is currently in the process of accepting applications from sellers.
“We are always exploring new ways to work with our selling partners to delight our customers with more selection, lower prices, and greater convenience,” Amazon spokesperson Maria Boschetti said at the information session held to announce the new direction.
This new marketplace will be aimed at apparel and home goods, much like the competitors amazon is trying to regain valuable eCommerce ground from. The service will offer the same speedy service amazon is known for thanks to its existing logistics channels and warehouse locations.
While it’s a move that will most drastically benefit Chinese and US buyers upon its launch, it’s only time before this move starts impacting South Africa’s small businesses in much the same way as Temu and Shein is doing right now.
The Daily Investor recently reported on Takealot’s warning against the influx of foreign marketplace platforms that are diminishing economic growth, no matter how promising the bargain basement promotions on offer.
Instead of helping to lay the foundation for change in the South African eCommerce landscape, to help strengthen the policies and frameworks needed for a sustainable online marketplace community, Amazon, Shein, and Temu are exploiting outdated frameworks and tax laws to improve their own profit margins and increase their market shares.
A first step towards a better-monitored landscape has been taken, though. The international importers were previously able to break up large imports into smaller packages to benefit from lower tax rates on imports under R500. As of 1 July 2024, thanks to a bit of legislative tweaking, the 45% import duty of large orders will apply on smaller apparel orders as well.
While it may not level the playing field unilaterally when it comes to sales prices, the move should curb international importers’ ability to sidestep the import duties that local sellers have to succumb to.
Selling on Amazon.co.za has become a valuable marketplace option for local sellers. The marketplace has a powerhouse of a company behind its frameworks and systems. It brings the promise of being part of whatever new developments Amazon brings to its offering. And that’s not even mentioning the brand recognition and reach of the site’s existing audience.
But is it the best for your brand? And the country’s economy? Only time will tell.
For the time-being, the best option is still to diversify your marketplace presence and sell on multiple sites, both local- and internationally-owned.
The future of SA eCommerce may still be up in the air, but at least your inventory management remains as simple as ever thanks to Airpool. We help you simplify your stock orders from China and help you minimise costs without cutting corners (“Cough … Temu … cough … Shein.”)
Landed cost is the sum of all expenses associated with importing your goods from China to South Africa. This includes the cost of the goods paid to your supplier, the shipping costs, clearance costs and the import taxes & duties.
It is represented on a per unit cost and helps you with:
Note: This is not what you are paying to Airpool but rather what you are paying to all the suppliers and relevant parties: Airpool, the Manufacturer of the goods and the Import Taxes (VAT & Duties)
