Why SA’s e-commerce retailers will soon be facing their toughest competition yet

An employee puts books in a bag for a customer at the Amazon Books store in Seattle. Photographer: David Ryder/Bloomberg

An employee puts books in a bag for a customer at the Amazon Books store in Seattle. Photographer: David Ryder/Bloomberg

Published Jun 2, 2023


Soon-to-launch Amazon will be bringing with it a wealth of global e-commerce experience and tech expertise that local players may struggle to match.

With global online shopping giant Amazon due to launch in South Africa soon, local business-to-consumer (B2C) e-commerce retailers will soon be facing their toughest competition to date.

Although surveys show a consistent increase in online shopping uptake by South Africans, tech entrepreneur and CEO of Innovo Networks, Damian Michael, warns that Amazon’s high profile, product range, cutting-edge technology and well-proven delivery and returns systems mean that SA-based online retailers will have to step up like never before to remain competitive.


If the rest-of-Africa experience is anything to go by, there could even be a post-Amazon shakeout in the e-commerce market, as inflation-hit South African consumers spend less and more e-commerce platforms compete for a consequently smaller share of the customer pie.

Jumia, for example, is sometimes known as the ‘Amazon of Africa’ due to its e-commerce involvement in more than a dozen countries.

But its once-aggressive expansion strategy has been pared back as it continues to make losses and reboots it management team.

Similarly, Copia, the Kenyan-based B2C platform, has suspended operations in Uganda and put planned expansions into Rwanda and Tanzania on hold.

“Amazon is a slick and well-oiled machine, and is bringing to South Africa unmatched global e-commerce experience, customer service expertise and tech capability,” observes Michael. “In our research, we’ve found that local online retailers are struggling with artificial intelligence, contact centre efficiency, reverse logistics (when customers return unwanted items), and a general lack of suitable skills and resources.”

Michael explains that, at a functional level, local e-commerce retailers are not delivering consistent customer excellence because they are unable to provide an integrated and seamless shopping experience.

Customers interact through many different channels

“Tech-savvy consumers expect to interact with a business through many different channels – from the website through to email, call centre, WhatsApp or the various social media platforms,” he says.

“But our retailers are currently multichannel focussed– meaning that if, for example, a customer phones the call centre to complain about a problem with the pick-up of an item being returned, the call centre team can’t see that the client previously complained about the same thing on WhatsApp and Facebook. The customer gets frustrated at having to explain everything again and there’s tremendous wastage of human resources in trying to resolve what may be a simple reverse-logistics issue.”

Similarly, the effective use of data and artificial intelligence is being hampered because multichannel is inherently channel-specific and fragmented, rather than providing a holistic perspective.

“The answer is omnichannel – where a single contact centre has an overview of all the data, all the customer orders, all the customer interactions, all the stock availability and all the product returns.” states Michael. “Done correctly, it is personalised, seamless, integrated and efficient. It is what the likes of Amazon do well.”

In South Africa, though, Innovo’s internal discussions with e-commerce retailers indicate a knowledge gap as to how to achieve an omnichannel approach.

“It does take time and it does require considerable tech expertise,” says Michael. “But it may be the difference between staying in business or not. A successful tech-driven returns strategy, in particular, can be make or break. US research shows that returns effect 20% of a retailer's inventory, which is a considerable number. But, at the same time, the returns policy may influence 100% of the consumer buying decision.”

A voice, data, and cloud solutions provider, Innovo Networks launched South Africa’s first full-stack omnichannel contact centre solution toward the end of last year, earning the company the 2022 Cape Business Process Outsourcing (BPO) Technology Innovation award. Cape BPO currently manages and streamlines the 1 900 contact call centres nationwide within South Africa.