Amazon plans to enter South Africa as Generation Z drives online shopping boom

At present, e-commerce giant Amazon does plan to enter the South African online shopping market and has made a series of preparations for this. According to leaked documents, Amazon's plan - code-named "Project Fela" - will launch its South African market by February 2023. It is reported that Amazon is recruiting more than 300 jobs in South Africa. Amazon also plans to launch Amazon Logistics services for third-party sellers in the country. Its Prime membership program will also reportedly be open to South Africans shortly after its launch.

Amazon's entry will undoubtedly affect the profit margins of local small businesses, and will compete with large online retailers such as Takealot and Makro in the country and occupy a large part of the market share in online sales. But on the other hand, Amazon's entry into South Africa will open up opportunities for local entrepreneurs. The Seller Marketplace will be part of Amazon's launch in South Africa. This will enable South African businesses to upload their products to one of the largest global marketplaces.

Amazon isn’t the only company that sees potential in South Africa. Magriet Groenewald, a South African social media expert, said: “Many of the big retailers around the world have also spotted this trend and are already making some big changes in how they approach this new opportunity. We have to be ready for them or we’ll lose this huge opportunity. ”

During the pandemic, South Africa's traditional retail industry was hit, pushing online shopping figures to an all-time high. As the pandemic entered its later stages, online shopping continued to thrive. Data shows that South Africa's e-commerce sales reached 30.2 billion rand in 2020, compared with only 14.1 billion rand in 2018, an increase of 66% in 2020. By 2022, it is estimated that this figure has exceeded 42 billion rand. From this point of view, online shopping in South Africa is developing very rapidly.

It is understood that one reason for the continuous development of the online retail market is that Generation Z is about to take over the purchasing power.

While the strongest group of online shoppers has traditionally been those aged 25 to 40, the fastest growing group of local online shoppers in South Africa is Generation Z, aged 18 to 24, according to data provided by online payment gateway PayFast. Data shows that their income is growing the fastest, increasing by 140% in the five years after 2021 to reach $1.7 trillion by 2025. Jonathan Smit, founder and MD of PayFast, said: "Our payment engine showed a year-on-year growth of 218% among the 18 to 24 age group (Generation Z). Young buyers are using their smartphones and social media to shop . " They have lived in the Internet age since childhood and are greatly influenced by instant messaging and social media. Compared with going to physical stores, they prefer to choose convenient online shopping. Generation Z is driving a new wave of e-commerce boom in South Africa.

The rise of e-commerce in South Africa has led to a fundamental shift in the retail industry. In order to survive in the retail market, many major retailers that traditionally only had physical stores have transitioned to offering their products online. However, according to surveys, although online sales in South Africa have tripled in the past two years, they still only account for 20% of total sales. 5%, which shows that there is still a lot of room for development in the South African online market.

Amazon Platform

South African Market

Amazon

Generation Z