Amazon, a global marketplace and logistics company, is looking to attract more South African small businesses to its marketplace as it targets a bigger share of the country’s growing e-commerce market
The Small Business Digital Adoption Report, a new study of 1,400 South African small and medium-sized businesses by World Wide Worx, an independent technology market research firm commissioned by Amazon, found that 86% of respondents generate sales online. Yet only 32% of businesses selling online use major marketplaces, while logistics, delivery and returns remain significant obstacles to growth.
The findings, released on Tuesday, show that South African small businesses have moved beyond getting online. Their bigger challenge is managing the costs, deliveries and customer expectations that come with growth. Amazon is positioning its marketplace and logistics network as a way to help them scale locally and reach international markets.
“We expected to find a market that was still wrestling with the basics of getting online. Instead, we found a market that has moved past that stage and is confronting an entirely different set of challenges,” Arthur Goldstuck, chief executive (CEO) of World Wide Worx, said at the launch on Tuesday.
The research found that 62% of active online sellers identify logistics and delivery as a major challenge, while 46% struggle with returns management. By comparison, only 5% cited connectivity and 12% cited payment systems
Nearly two-thirds of the surveyed businesses have been selling online for at least six years, while 76% have a physical store presence, pointing to a hybrid retail market where digital channels increasingly complement traditional operations.
“The question is no longer whether they can sell online, but how do we get them the right partnerships, networks and tools to help them scale to the next level,” said Suzelle Abe, Amazon South Africa’s head of marketplace.
Abe said marketplaces could help businesses consolidate their online operations while accessing a broader customer base and infrastructure that would otherwise be difficult to build independently.
Through Fulfilment by Amazon (FBA), sellers can send inventory to Amazon’s fulfilment network, where the company handles storage, picking, packing, shipping, customer service and returns. The proposition is designed to free business owners from operational tasks so they can concentrate on their products and customers.
But outsourcing those activities comes at a cost, a particularly important consideration for small businesses already struggling with recurring digital expenses. The report found that 48% of respondents were concerned about ongoing subscription and administration fees, while 41% cited digital transaction fees.
Robert Koen, Amazon’s managing director for sub-Saharan Africa, told TechCabal in a separate interview on Tuesday that businesses should compare the full cost of operating their own e-commerce infrastructure with the fees a marketplace charges.
“Building your own website, buying the books, hiring your own team and having someone manage all those activities are significant costs. Sometimes those costs aren’t factored into the equation,” he said.
Koen said Amazon was currently offering referral fees of around 5%, alongside fulfilment fee promotions to encourage South African businesses to join its marketplace. The rate should not be confused with the total cost of selling, however, as fulfilment and other charges also affect sellers’ margins.
“If you put the two profit-and-loss statements side by side, even after accounting for the fees, it can be a no-brainer for sellers,” he said.
Beyond domestic sales, Amazon sees an opportunity to turn its South African marketplace into a stepping stone for local businesses seeking international customers.
“Once they understand how the South African marketplace works, listing products in the United States, United Kingdom, Brazil, Egypt or other markets is almost identical,” he said.
Amazon operates marketplaces in 23 countries, giving eligible sellers the potential to reach customers beyond South Africa. Koen said this could create additional export income and contribute to economic growth, although international expansion also requires businesses to navigate market-specific regulations, logistics and costs.
The company hopes its fulfilment network, nearly 5,000 pickup points and artificial intelligence (AI)-powered tools, can help businesses manage those demands, building on more than $2.5 billion it has invested in South Africa over the past decade, Koen said.