In brief
- In May, international giant Amazon quietly stepped into South Africa's e-commerce space. Despite its launch drawing initial skepticism, early data indicates a promising start – and a sizeable increase in market share in the General Merchandise category.
- Checkers Sixty60 continues to drive innovation with it’s BETA app, adding Checkers Hyper products to its 60-minute delivery service. Increased sales within select Cape Town suburbs reveal the potential value of Q-commerce (quick commerce) to a greater market segment.
If you’ve read our recent reports, you’ll be familiar with the extensive impact that Chinese e-commerce sites, Shein and Temu, have had on South Africa’s online retail landscape. And let's not forget about the launch of Amazon South Africa...
Even though there are ongoing legal battles to regulate import taxes and protect local suppliers, local retailers have still been forced to shift their approaches to reassert dominance and differentiate themselves from their international rivals.
Let’s take a look at what’s been happening…
The sleeping giant wakes
Amazon South Africa officially launched on 6 May 2024, but the response was underwhelming. Some sources in the media criticised the brand for forgoing its unique products, including the beloved Kindle e-reader, Fire TV, Ring video doorbell and Amazon’s famous Alexa. In addition, buyers were faced with 'out of stock' notifications during checkout.
Despite this, among the South African users we track, there were more purchases at the local Amazon in May than on Amazon international for the the whole year.
Amazon’s combined May figures not only record the highest number of users across the entire 2024 period, but reveal that the brand’s market share in the General Merchandise category has doubled.
USER NUMBERS: AMAZON.COM vs AMAZON.CO.ZA
Interestingly, despite Amazon South African having a greater number of users, Amazon international users transacted more frequently. Average basket value on the local site matched competitors like Takealot and Makro.
Reveal’s data suggests that local retailers should remain vigilant in upcoming months. The next few months will tell if Amazon South Africa's 'quiet' launch was in fact the formidable foe just biding its time...
Checkers Sixty60: Hyper-fast in Cape Town
Checkers has always been at the forefront of all things e-commerce in South Africa, and this latest development is no exception: They're challenging Takealot’s new offerings in the General Merchandise space with an all-new app of their own. Users in select Cape Town suburbs can now order general merchandise from Checkers Hyper and get it delivered within 60 minutes via the Checkers Sixty60 app.
We analysed all users who regularly shop on Sixty60, and we identified the customers transacting in the suburbs where the new Beta app is available – to account for other outside variables and measure the potential effect of selling Hyper products on the Sixty60 app.
The number of customers using the Sixty60 app in these suburbs increased in May, despite a noticable decline in the overall Sixty60 user base since March.
PERCENTAGE CHANGE: NUMBER OF SIXTY60 USERS
When it comes to average transaction value and number of transactions per user, both metrics showed minor changes from April to May. For the target users on the Beta app, both metrics increased; for the users of the regular app, average transaction value decreased slightly while average number of transactions increased slightly.
The total spend for users in suburbs where the new app was rolled out reached its highest value for the year in May. Although the total spend for the entire base also increased in May, growth on the regular app was less than half of that observed for the Beta app.
In summary, the early data suggests that customers using the beta version of Sixty60, with access to a far wider range of products, are likely to shop more frequently and spend slightly more each time, compared to the customers using the original app.
Time will reveal a more complete picture in the months ahead. Watch this space...
PERCENTAGE CHANGE IN TOTAL SPEND: SIXTY60 USERS
Takealot jumps on the subscription bandwagon
In Mission Possible, we analysed the effectiveness of Checkers' new Sixty60 subscription service. Now Takealot has thrown its hat into the ring with TakealotMORE – a similar subscription service where users can access unlimited free deliveries from Takealot and parter delivery services like Mr D and Pick n Pay asap!
On 13 May, TakealotMORE launched with a free 7-day trial, followed by unlimited free next-day deliveries for just R39 a month or R99 for a premium subscription with no minimum spend.
We segmented users who subscribed to TakealotMORE in May and compared their spending at Takealot, Mr D and Pick n Pay asap! before and after signing up for the subscription service.
The results are fascinating...
The full report is available to clients. Contact us to learn how you can access research via your broker or subscribe directly.
