EcommerceMaking the news

Amazon’s Africa expansion confirmed, as South African and Nigerian domains become available

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The news

  • Amazon now has Amazon.com.ng and Amazon.co.za among domains where you can request customer support. While the domains still link back to Amazon.com, it confirms the eCommerce giant’s plan to expand into Africa.
  • Leaked documents found by Insider in June 2022 revealed that Amazon has plans to launch in five new countries — Belgium, Chile, Colombia, Nigeria, and South Africa.
  • Codenamed Project Fela, the South Africa and Nigeria expansion are slated for February 2023 and April 2023. With eCommerce revenue in Africa expected to grow by $46 billion in 2025, Amazon is positioning itself to be a part of the growth. However, how will local players and Jumia and Konga compete with the eCommerce behemoth?

Is Africa’s eCommerce market ripe for global players?

Amazon expands to Nigeria and South Africa
Screenshot of seller dropdown menu on Amazon

According to Insider, Amazon’s profit margin in emerging markets is just 5% compared to developed markets such as the UK, US and Japan, where it gets a 25% profit margin.

While Amazon’s profit margin in emerging markets such as Nigeria and South Africa will not be as much as UK, US and Japan, it is playing the long-term game with its expansion into Africa.

Statista shows that eCommerce revenue in Africa will hit $46.1 billion by 2025. While that figure is significant growth from the $22 billion revenue recorded in 2021, it still pales in comparison to the $960 billion in eCommerce sales in the US alone.

However, high revenue does not equate high growth rate.

In the Q4 of 2021, Amazon made net sales of  $137.4 billion, a 9% increase from $125.6 billion in Q4 2020. By Q3 2022, its net sales increase was down by 2%. It recorded $121.2 billion in 2022, a 7% increase from $113.1 billion in Q2 2021.

With Amazon’s revenue growth rate reducing, the eCommerce giant is expanding into more markets to increase its stock prices. The company recently had its biggest one-day stock price drop since 2006. Does this mean the growth rate of the US and other developed markets has peaked? This could be the case as Amazon has also been dialling back on growing parts of its retail business in the US.

While its also ramping up hiring from Nigeria and South Africa, it is slowing things down in the US. 

While Amazon is vying for a piece of the African eCommerce market, it has local players such as Jumia, Konga, Takealot and Everyshop to contend with.
Interestingly, Takealot CEO Mamongae Mahlare told MyBroadbandthat Amazon’s foray into Africa’s eCommerce market shows that the current local players have built an “

 

Source: Bolu Abiodun | Techpoint.africa

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