Takealot welcomes Amazons SA debut

South Africas leading online retailer Takealot says Amazon.coms plans to launch its e-commerce business in the country shows the market is poised for growth, even as it faces power cuts and inflationary pressures. When you get a big player like that into the economy, it demonstrates the potential that sits within this market, said chief executive Mamongae Mahlare.

Takealot, owned by internet group Naspers, launched in 2011 and has become the largest online retailer in Africas most developed economy, reporting $827 million (about R14.99 billion) in revenue in 2022. E-commerce only makes up about four percent of SA retail, which presents a market growth opportunity three to five times the size of peer countries, Mahlare said.

SA has a growing tech-savvy and youthful population, together with one of the largest upper/ middle-income economies on the continent, making it an attractive base for technology giants like Amazon and Microsoft Corporation seeking to expand on the continent.

Although Amazon has provided web services in the country since 2004, it has held off on launching its e-commerce business due to challenges, including a less-affluent customer base, and problems with power and connectivity in some places.

Online market players, including Takealot and Google, have also faced government scrutiny over competition concerns in the sector.

Mahlare said SAs digital sector needs an enabling regulatory environment to ensure continued growth as it impacts on job creation and inclusivity by providing equal access to products and services.

As Amazon prepares to launch its e-commerce business in SA and Nigeria this year, Takealot will focus on its local advantage and boosting profitable growth of its three business units. Takealot.com, the groups largest unit, became profitable in 2021, Mahlare said, and the company is targeting profitability for online fashion platform, Superbalist, and food delivery service, Mr D Food.

To deal with power cuts, the business is running generators and investing in solar power, while remaining optimistic about national solutions.

Scenario B

Whether Amazon builds locally or not, it will use robots to collect your data

A lot has been said about Amazons plans to build its Africa headquarters and much less has been said about its products. The reality is that whether theres success in building a brick-and-mortar HQ or not, there is little that can be done to stop the Amazon DNA in South Africa. The fight against building on heritage land in Cape Town may be worthy, however, there is something that should be of greater concern to South Africans.

As Amazon plans to set up its online marketplace next year in South Africa, there is a need to be aware of the products that will come with the Amazonification of South Africa.

Some of those products are robots that collect citizens data in a way that we have never experienced before. Amazon is planning to acquire iRobot, a company that produces machines (vacuums) that clean homes and at the same time collect data about homes. The same company has a history of building military objects.

The vacuum machines, known as Roombas, work in part by using sensors to map the homes they operate in.

If Amazon succeeds in acquiring this company, it will form part of other robots that are already good at looking at what is happening inside peoples homes.

The ecommerce giant recently acquired video doorbell company Ring in 2018 and Wi-Fi router-maker Eero. Speakers and other devices with AI assistant Alexa can now control thousands of smart-home devices. As indicated in the past few weeks, Amazon is also planning to acquire a primary care chain, One Medical, which, if approved, would put the health data of millions in the US in its keeping.

Some of these products are not yet in use in South Africa; however, with the establishment of the local marketplace they may proliferate in this country.

It is important to understand what Amazon is doing in other countries to get a sense of what it may bring locally when it has a local presence.

When one considers the history of this company, a clear picture of what is coming emerges. Amazon has a record of making or acquiring technology that makes those concerned with data privacy uneasy. In 2020, Amazon introduced a home security drone, and recently a company that has forged partnerships with thousands of police and fire departments admitted to sharing home video footage with law enforcement without a warrant.

All these factors combined should raise alarm bells for those who are about to welcome this tech giant. The benefit of being a country that is laggard and slow at adopting technologies is that there is a benefit to observing potentially harmful technology before it hits our shores. Knowing what Amazon is already doing in other parts of the world should prepare local legislators as well as society to create safeguards against such harmful technology.

Observation of Amazon tells us that it is not just a company that sells products.

One activist, Evan Greer, described the company as follows: People tend to think of Amazon as an online-seller company, but really Amazon is a surveillance company.

That is the core of its business model, and that is what drives its monopoly power and profit. South Africa is already limping in terms of how big tech companies have collected its citizens data.

What Amazon will bring with its products will just add fuel to this situation.

Granted, Amazon is not alone, however, the backlash against this technology giant over its plans to build its Africa HQ has shielded something that requires even more focus.

Amazon may just decide to build as it is doing currently with its online marketplace. Such a process will be great for technology jobs in South Africa and will probably bring great innovation vibrancy. It may also bring data harm at a scale never seen before.

Q8

Resilient supply chains are integral to ensuring that all forms of risks to which Takealot is exposed to are minimised and their disruptive impact is greatly reduced. Key to the building of a resilient chain is the capability and capacity of the supply chain to respond to such disruptions. In the event of disruptions still impacting the supply chain, management needs to be prepared with strategies and action plans to manage disruptions You are required to briefly discuss five (5) ways in which Takealot can ensure resilience in their existing supply chains, so that the impacts of any disruptions on the service levels to their customers are effectively managed and minimised. (Mark allocation: 5 factors x 2 marks)