No easy ride as Amazon takes on SA, Nigeria online giants
US-based online behemoth Amazon is planning to launch a marketplace in SA and Nigeria. Statista put the number of digital shoppers in Africa at 281-million in 2020, and estimates an increase to 520-million by 2025.
At its peak, Naspers-owned Takealot delivers more than 5-million packages a month in SA. Takealot also owns the Mr D Food delivery app with 2.5-million customers. Active users on Africa’s largest e-commerce platform Jumia stand at 8- million, creating a fertile market for investment opportunities.
What should online retailers and shoppers in SA and Nigeria expect from Amazon? Will the US online giant be aggressive with its plans to launch online shopping services in both key African markets? In SA, Amazon will compete with Takealot, the country’s largest e-commerce platform. Nigeria is home to Africa’s popular online marketplaces Jumia and Konga.
The SA launch of Amazon, reportedly code-named “Project Fela” (a code name that it shares with Nigeria), is planned for February 2023, Business Insider said this week, citing internal Amazon documents that t obtained. The Nigeria Amazon marketplace launch is set for April 2023.
“Fela” is associated with the late Nigerian musician Fela Kuti, a leading human rights activist in his country. Kuti was one of Africa’s most enchanting and charismatic music performers at the height of his popularity. Kuti once said of his art: I am playing deep African music. I’ve studied my culture deeply, and I’m very aware of my tradition. The rhythm, the sounds, the tonality, the chord sequences, the individual effect of each instrument and each section of the band, I’m talking about a whole continent in my music.”
I wonder whether Amazon chose the code name “Project Fela” for its planned African expansion with the qualities of Fela Kuti in mind? If that’s the case, Amazon might be aiming to respond to customer needs and upend Africa’s e-commerce space. That would be welcome. But it is not exactly news that Amazon wants to set up shop in Africa.
The global e-commerce giant has been embroiled in controversy regarding its plans to build its new African headquarters in Cape Town. Indigenous inhabitants of the area where Amazon wants to build are against constructing a multibillion-rand office complex on what they say is sacred ancestral land.
Will Takealot, Konga and Jumia roll over and allow Amazon space in the markets they have cultivated for themselves? I don’t think so. Undoubtedly, the Covid-19 pandemic has reinforced the relevance of e-commerce in Africa as shoppers gravitate towards online shopping.
Global tech investor Naspers will defend Takealot’s dominant position in SA. It could do so by making strategic investments to enable the local e-commerce giant to maintain its pole position. Naspers has enough cash resources to compete aggressively.
It will not be an easy ride for Amazon in SA. Indeed, the recent history of American entities in SA generally has not been rosy. US giant retailer Walmart’s subsidiary Massmart, owner of Game, Makro and Builders Warehouse, has struggled to conquer SA’s market. In 2016, US-based private equity firm Bain walked away from SA’s biggest clothing retailer Edcon after spending R25bn on buying it in 2007.
However, Amazon may have the advantage in having been in SA for years with its cloud services business, Amazon Web Services (AWS). AWS has been ploughing in a lot of capital to develop data centres in the country. The expansion of Amazon into Africa started 16 years ago when it created a development centre in Cape Town, which eventually went on to build Amazon’s first cloud platform – the Amazon Elastic Compute Cloud. Through AWS expertise, Amazon is probable fully aware of what the SA e-commerce market requires and what sort of tonality it must use to respond to customers.
Further afield Amazon would need to navigate the Nigerian’s complex business culture to conquer e-commerce in Africa’s most populous country.
Hopefully, Amazon will not misunderstand SA and Nigeria’s market as they did in Germany. In 2013, Die Welt, a German newspaper, reported that American firms such as Amazon often fail to understand the German market. When things go wrong their managers and public relations people often feel they are maliciously misunderstood.
In Nigeria, the bosses at Amazon may be wise to buy Konga or partner with the platform to enter Africa’s crowded market. Konga may enable a seamless entry into Nigeria and provide local knowledge for Amazon to navigate a tough market with an underdeveloped public transport infrastructure network.
Like musician Kuti, Amazon hopefully is aware of Nigeria and SA’s challenges and customer needs. Amazon has recently been accused of short-changing workers on salaries, tax avoidance, and anti-competitive behavior. For Amazon to succeed in SA and Nigeria, it must do its business ethically.
It will be even more interesting if China’s Alibaba, which helped Vodacom to develop its super app, VodaPay, sets up shop in SA and Nigeria. This will make Africa’s e-commerce space more competitive.
Source: https://www.businesslive.co.za/bd/opinion/columnists/2022-06-22-gugu-lourie-amazon-has-its-work-cut-out-as-it- takes-on-sa-and-nigerian-online-giants/
FORMATIVE ASSESSMENT 2 [100 MARKS]
REQUIREMENTS FOR THE PROPOSED STUDY:
As a business researcher with a keen interest in how technological innovations influence businesses and societies across the African Continent, you are proposing a quantitative study with the aim of investigating the optimality of the strategic responses of the three African e-commerce businesses to Amazon’s planned entry unto the South African and Nigerian e- commerce space.
In this regard, you are required to develop a research proposal meant to showcase how you would approach the research project. Your proposal is expected to address key questions relating to the research project and should be structured using the following sectional headings:
1. Title of study Marks
2. Introduction 2
3. Background to the problem 2
4. Problem statement 3
5. Aim of the study 2
6. Research Objectives (formulate three research objectives) 3
7. Research Questions (formulate three research question) 3
8. Significance of the study 2
9. Literature review 25
10. Research design 8
11. Research Methodology 25
12. Ethical considerations 8
13. References/ Bibliography 5
14. Research Instrument 8
Answer to Above Questions
An appropriate title in the given case scenario is “An empirical analysis on how e-commerce businesses in Africa responded to the entry of Amazon in South African and Nigerian markets”
Get completed answers on the above questions on Amazon case study from the do my assignment South Africa experts of Student Life Saviour.
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