Takealot says its ready for the Amazon fight

Naspers and Prosus Group CFO Basil Sgourdos expressed confidence that Takealot is prepared to confront Amazon head-on upon its launch in South Africa, citing the competitive advantages held by Naspers, as reported by the Sunday Times.

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During Naspers’ company results presentation, Sgourdos emphasized the robustness of Takealot’s business and the commitment to invest adequately to fortify and distinguish its offerings. Interim Naspers and Prosus CEO Ervin Tu echoed this sentiment, underscoring the comprehensive investment planned for Takealot.

Anticipating Amazon’s entry, Tu acknowledged the likelihood of Amazon establishing a presence across both consumer and seller communities. He affirmed Naspers’ readiness to compete on various fronts, emphasizing a welcoming attitude towards competition and an unwavering commitment to facing it confidently.

Naspers South Africa CEO Phuthi Mahanyele-Dabengwa highlighted the significance of Takealot’s local knowledge, citing instances globally where Amazon faced challenges due to a lack of familiarity with local businesses.

The competition between Takealot and Amazon is expected to yield benefits for South African consumers. Amazon’s forthcoming launch of the Amazon.co.za marketplace includes plans to embrace local sellers, reflecting its global strategy where over 60% of sales come from independent sellers.

Amazon’s aggressive entry is poised to influence pricing dynamics, prompting potential adjustments in Takealot’s pricing and marketplace seller fees. The Competition Commission has imposed strict conditions on Takealot, indicating a likelihood of similar requirements for Amazon.

While Amazon aims to gain market share, it faces challenges, including the existing superior infrastructure of Takealot, ensuring high service levels that Amazon may initially struggle to match. Consequently, Amazon may need to explore alternative strategies, such as offering significantly better pricing, to compete effectively with Takealot.