Amazon (AMZN) to Unveil E-Commerce Services in South Africa
Amazon AMZN gears up to expand its global footprint, bringing its e-commerce business to South Africa.
Notably, it is set to launch a local dedicated website in South Africa next year. The announcement comes amid South Africa's surge in online shopping post-pandemic.
Amazon is expected to gain solid traction across online retailers and several customers in the country on the back of its latest move.
Moreover, the move marks the e-commerce giant’s expansion in Africa after Egypt.
Amazon.com, Inc. Price and Consensus
Amazon.com, Inc. price-consensus-chart | Amazon.com, Inc. Quote
Intensifying Competition in South Africa
The latest move by Amazon is likely to challenge Naspers' South African retail business, Takealot.com, which is also making concerted efforts to strengthen its footing in South Africa’s online retail market.
Notably, Takealot.com partnered with Mastercard MA to offer select cardholders an R250 coupon for purchases of R1000 or more on Takealot.com for the next 12 months.
This partnership with Mastercard offers Takealot.com customers increased convenience and value through bulk shopping, everyday savings, nationwide delivery and over 100 Pickup Points nationwide.
Growth Prospects
Amazon’s recent plan positions it well to capitalize on growth prospects in the South African e-commerce market.
Per an ECDB report, the South African e-commerce market is expected to hit $6.32 billion in 2023 and reach $9.91 billion by 2027, exhibiting a CAGR of 11.9% during the forecast period of 2023-2027.
A Statista report predicts the South African e-commerce market revenues to reach $6.36 billion in 2023 and $9.97 billion by 2027, witnessing a CAGR of 11.9% between 2023 and 2027.
Further, the report predicts that user penetration in the South African e-commerce market will hit 49.4% in 2023 and reach 59.7% by 2027.
Moreover, the move will strengthen the company’s presence in the global e-commerce space.
Per a Precision Business Insights report, the global e-commerce market is expected to reach $21.27 trillion by 2028, exhibiting a CAGR of 14.5% during the forecast period of 2022-2028.
Strength in the booming online retail market will continue to aid the company in winning investors’ confidence in the near term.
Notably, AMZN’s shares have gained 54% in the year-to-date period compared with the industry’s growth of 33.2%.
Additionally, expanding its e-commerce footprint globally is expected to boost its online store sales.
The company’s online store sales stood at $52.9 billion, up 4% year over year in the second quarter of 2023.
Our model estimate projects 2023 online store revenues at $228.48 billion, suggesting year-over-year growth of 3.9%.
Zacks Rank & Other Stocks to Consider
Currently, Amazon carries a Zacks Rank #2 (Buy).
Some other top-ranked stocks in the broader retail-wholesale sector are Urban Outfitters URBN and BJ’s Restaurants BJRI. While URBN currently sports a Zacks Rank #1 (Strong Buy), BJRI carries a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.
Urban Outfitters has gained 42.9% in the year-to-date period. The long-term earnings growth rate for URBN is currently estimated at 23.75%.
BJ’s Restaurants has lost 8.7% in the year-to-date period. The long-term earnings growth rate for BJRI is currently estimated at 15%.
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