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Key Implications for the South African Market

With Amazon’s entry, the South African e-commerce landscape is set to become more competitive. Local e-commerce platforms and retailers will need to up their game to compete with Amazon’s vast product range, competitive pricing, and efficient delivery network. 

The Blessing of Competition

Heightened competition will likely lead to innovations and improvements in the local e-commerce sector, benefiting South African consumers. However, based on previous market entries by the e-commerce giant, local marketplaces stand to significantly benefit from their new competitor. For example, when Amazon launched in Sweden in 2020, many brands were negatively surprised by the platform. 

“…it immediately created a strong interest from brands in the other Nordic regions. Not only is Sweden a common market for most Nordic brands, but it was useful to give them a good idea of what to expect when Amazon expanded into their own countries. However, some of them were in for a nasty surprise. Not only were many of their own brands and products already listed, but their content was poorly translated, and often with incorrect prices,” explained Ulrik Grevenkop-Castenskiold, Head of Marketplaces (Nordics), Incubeta.

Brand loyalty and market trust are where local marketplaces have a competitive edge against Amazon, as well as in their localization capabilities. These are two areas that Amazon has historically stumbled with, which has in fact boosted the position of local marketplaces in other regions. For example, in the Netherlands Bol.com reigns as the preferred marketplace, surpassing Amazon in both size and popularity. They boast an extensive range of products, local partnerships, and a deep understanding of the Dutch and Belgian consumer markets. 

A Boosted Economy & Investment Areas

Unsurprisingly, Amazon’s penetration into South Africa is also expected to generate more jobs in the region. In fact, this already started in 2022, when Amazon advertised for over 300 jobs across software development, customer support, technical product management, and international compliance. 

To effectively serve the market, Amazon will need to make significant investments in logistics and infrastructure, potentially collaborating with local service providers. It appears they’ve already taken steps in this direction, forming partnerships with Pargo and The Courier Guy, including Pudo (according to its pickup location search tool).

 High warehousing costs and the reliability challenges of South Africa’s postal service pose big challenges for any retailer looking to sell their goods digitally. Remaining cost-effective whilst fulfilling Amazon’s promise of hyper-convenience and quick delivery will be no easy feat in the region. Consumers will expect delivery within a few days, but many businesses don’t have the resources to run their own distribution centers or to acquire their own delivery service (as Takealot did with Mr Delivery in 2014). Brands will be watching Amazon’s steps closely, potentially as they allow smaller players to tap into and leverage their infrastructure. If Amazon can pull it off, it would significantly lower barriers to entry for SMEs and niche retailers looking to claim a piece of the growing ecommerce pie.

Implications for Amazon Sellers and Vendors Worldwide

Diversifying an Already Global Network

Their presence in South Africa will open the doors to other international Amazon sellers and vendors, as it will now be part of their global fulfillment network. South Africa will offer international players a new and diverse customer base with a growing appetite for online shopping. Where storing, packing and shipping products to the region seemed incredibly daunting to international brands before, Amazon significantly lessens the load by promising simpler logistics, as well as reduced costs and delivery times. Conversely, the venture opens doors for South African brands to more easily access global markets – by building confidence and experience with the new local South African Amazon store, building into the other 22 (and counting) Amazon locales would be more straightforward and palatable for great South African vendors and sellers.

Unlocking Value from Strategic Partners

Brands can best position themselves for successful internationalization by partnering with organizations with deep Amazon expertise, as well as strong localization capabilities. While Amazon offers a good foundation for internationalization, competitive brands need to go beyond. Specifically, this entails a solid understanding of international trade laws, logistics, marketplace content and advertising, and localization (cultural and linguistic adaptations). Certified Amazon partner agencies such as Incubeta play a critical role in driving strategic and long-term growth, especially for scaling brands. 

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Overall, Amazon’s entry into South Africa in 2024 is a significant development with far-reaching implications. It promises to drive economic growth, foster competition and innovation, and expand opportunities for Amazon sellers and vendors worldwide. As Amazon continues to spread its global footprint, its presence in South Africa marks a pivotal moment in the ever-evolving landscape of e-commerce, benefitting both local and international players alike. The global marketplace is, indeed, becoming more interconnected than ever, with Amazon arguably leading the way.

Remember, size doesn’t matter – if you’re a large or small brand, Incubeta is here to help, so get in touch today and let’s work out your Amazon ZA strategy.

This article was updated on 08.05.2024 – originally published in November 2023.

The post Amazon’s Arrival in South Africa: A Game-Changer for the Global Marketplace? appeared first on Incubeta.

Temu’s entry into the market has shaken up the competition for ad space among local brands, thanks to, in part, its substantial ad spend, exceeding $5 billion a year. This investment has created a fiercely competitive landscape in the online shopping sphere. 

For retail advertisers, aggressively bidding on Temu or Shein is crucial; neglecting this opportunity means missing out on a significant share of the market. Currently maintaining an average impression share of about 40%, Temu ensures that a significant portion of its target audience is exposed to its ads. It’s no surprise that whenever you search for a product, Temu seems to dominate search results. 

The surge in interest in Temu, as revealed by Google Trends data, has seen it outpace both Shein and Superbalist in monthly search volume. Interestingly, Temu appears to prioritize promoting its own brand terms over aggressively bidding on competitor terms, as evidenced by the absence of Temu ads in direct searches for Superbalist or Shein. 

Where are local brands falling short?

In South Africa, there’s been a notable emphasis on performance marketing in recent years, often at the expense of brand awareness efforts. Many brands underestimate the importance of building brand awareness from the outset, prioritizing immediate conversions and sales instead. Allocating only a small fraction of the budget to awareness, or ignoring it in its entirety proves challenging. A more effective strategy involves dedicating a substantial percentage of resources to awareness, with the remaining for conversions. As your brand’s audience expands, adjustments can be made to rebalance the allocation, gradually shifting focus towards conversions while maintaining brand visibility. 

It’s a common oversight for brands to neglect their awareness efforts until major holidays or retail seasons, overlooking the fact that they’re competing for consumer attention alongside numerous other brands at that precise moment. Prioritizing consistent investment in brand awareness and consideration phases ensures you remain top of mind and secure a share of the market. 

Here’s how local brands can remain competitive. 

1. Embrace local culture: With our robust South African culture at our disposal, local brands should craft marketing strategies that forge deeper connections with their audience.
2. Smart bidding: Amidst fierce competition, bidding on competitor terms within Google Ads is essential. While this may result in higher costs per click (CPC), failing to bid on your own brand terms while competitors do could lead to missed exposure and lost conversions.
3. An Omni-channel approach: Enhance brand visibility and reach by building a robust omni-channel presence. Integrating online platforms, physical stores, and mobile apps ensures consistent shopping experiences across diverse channels, captivating and retaining customers.
4. Build loyalty and provide value: Differentiate your brand from international competitors by offering competitive pricing and compelling promotions. Implementing discounts, loyalty programs, and exclusive deals encourages repeat purchases and fosters brand loyalty.
5. Prioritize customer centricity: Brands that prioritize customer satisfaction and focus on delivering exceptional experiences gain a competitive edge. South African consumers highly value superior customer service and are willing to pay a premium for it.
6. Personalization is key: Enhance customer experiences by incorporating personalized elements into your marketing campaigns. Utilize machine learning (ML), AI, dynamic creative optimization (DCO), and data driven creative (DDC) to tailor offerings to individual preferences. With the deprecation of third-party cookies, leveraging creative and ML becomes even more critical in identifying and targeting the right consumers for your products.

Amazon has entered the chat: How does this affect the dynamic between Temu/ Shein and local brands?

Amazon’s official launch in the South African market adds another layer of complexity to the local e-commerce market. While Amazon promises access to a wider array of products not currently available locally, the response from consumers remains uncertain. Factors such as pricing dynamics and shipping costs will play a crucial role in shaping consumer preferences. While Temu and Shein have established themselves as affordable options, Amazon may introduce competitive deals and improved pricing, potentially altering the market landscape. With the drawback of extended delivery times for Temu and Shein orders, Amazon’s arrival could disrupt existing dynamics. Recent reports suggesting Takealot’s contemplation of selling Superbalist highlights the market’s evolving nature and the pressure on local players. 

As the competition intensifies, robust marketing strategies and adaptability will be key for local brands to thrive amidst the changing tides. The evolving landscape underscores the need for continuous monitoring and dynamic strategic responses to remain relevant in the face of shifting consumer preferences and market dynamics.

The post Say Hello to Temu: South Africa’s Newest Retail Phenomenon appeared first on Incubeta.

The Amazon Item Data Quality (or IDQ) Score is a way of measuring the quality and quantity of the information that you give to your customers about your product. It’s derived from the detail page of your product.

High IDQ scores are given to Amazon vendors and/or sellers that provide high-quality images, descriptive titles, clear and compelling bullet points or descriptions, correctly assigned product categories, variation families, and relevant hidden keywords.

A high Amazon IDQ score is actually a requirement for good ‘findability’ of products on Amazon. Strong content and a high IDQ score have a big impact on your results.

Note: Vendor Central sellers can access the report by submitting a ticket directly, this is not possible for Seller Central sellers unless they are in the SAS program

How does the Amazon IDQ Score work?

The Amazon system automatically gives each product an IDQ score on a scale of 0 to 100.

However, even though the IDQ score has ‘quality’ in its name, it’s not just about quality. In fact, when it comes to the IDQ score, it’s almost purely based on the quantity of your data. It’s the quantity that influences Amazon’s algorithm.

A product must be ranked with an IDQ of 90 or higher to be included in Amazon’s algorithm. This algorithm, in turn, determines whether a product is included in Amazon’s search function or is eligible for Amazon deals, among other benefits.

When assigning an IDQ Score, Amazon looks at whether a product has the following components:

1. Categorize products within the right Leaf Nodes

To increase your Amazon IDQ score, you want to make sure that your product is classified under the most specific and accurate node that it could possibly belong to.

A “node” (also known as “browse node”) is kind of a classification or label. Examples of nodes are “baby products”, “women’s wear”, “shoes”, “electronics”, etc. Each node or browse node represents a type of item for sale that customers can browse through. Consider the three main types of nodes:

• ROOT NODE – “Shoes”
• BRANCH NODE – “Men’s”, “Children’s”, “Women’s” > “Heels”,
• LEAF NODE (no ‘children’ nodes that follow it) – “Sneakers”, “Boots”, “Open-Toe”

Examples:

• Shoes (Root) > Women’s (Branch) > Heels (Branch) > Open-Toe Heel (Leaf)
• Personal Care (Root) > Hair Care (Branch) > Shampoo (Branch) > Dry Hair (Leaf)

On Amazon, nodes follow a hierarchy, where the ‘root note’ is the most general and the ‘leaf node’ is the most specific. Always make sure your product is categorized within under the most appropriate leaf node.

2. Use A+ Content and/or Premium A+ Content

Your product detail page needs A+ content if you want a high IDQ score.

2.a. A+ Content

Amazon A+ content refers to a product’s product description, where brands can tell their brand story with a combination of text, images, and videos.

Without A+ content, a product listing is limited to plaint text descriptions and standard photo reels. By adding A+ content to the standard product detail page, brands enhance the user experience and therefore drive higher conversion.

A few features that A+ content offers include:

• Header and footer
• Multiple, varied images of a product
• Video
• Bullet points
• 360° product views
• Basic (non-interactive) comparison tables
• “What’s in the box” section

For brands that think A+ content is still not enough, however, there is also Premium A+ Content.

2.b. Premium A+ Content (or A++ Content)

Amazon Premium A+ Content (or Amazon A++ Content) is a more exclusive tool that allows brands to use more complex elements, increasing the total number of modules from five to seven.

A few features that Premium A+ content offers include:

• Header and footer
• Video
• Full-width imagery
• More webpage real-estate
• Clickable Q&A
• Interactive comparison charts
• Image carousel modules
• Click-able hotspot maps
• Mobile-friendly and voice-friendly product pages
• Testimonials

3. Other Components to Achieve a High IDQ Score

Your product detail page must have:

• At least 5 bullet points
• At least 5 high-resolution images
• At least one review of 3 stars or more

The Impact of Amazon’s IDQ Score

If the product on the detail page follows all the points mentioned above, you’re on track towards getting a high IDQ score.

An IDQ score on its own doesn’t mean anything; brands should see it as a starting point. As an example, a product page has the required 5 bullet points, but if the text with these bullet points do not make any sense, it’s no use. You could have a high IDQ score without having good-quality descriptions. It is precisely this incompleteness that can greatly affect conversion.

Once an IDQ score is all set and done, brands need to take an extra step. Ask yourselves: Are the keywords correct? Is the product description aligned with the season? Are there any bullet points, and if so, is the text relevant?

If all the signs are green, then the Amazon algorithm will not only be optimally influenced, but your SEO efforts will also prove worthwhile.

Get an IDQ Audit for Your Listings

Wondering how your product listings perform in terms of quality and completeness? Our IDQ Audit can help identify areas for improvement and optimization opportunities. By analyzing key factors like categorization, content quality, and imagery, we provide actionable insights to enhance your listings and drive more sales. Get in touch to learn how we can help improve your product visibility and conversion rates.

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This blog was last updated 28.02.25

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What advice would you give to women looking to build a career in digital?

Natalie: Be open. Be curious. Find people around you who work in the industry and ask questions. 

Lisa: Really educate yourself on what part of digital you want to pursue, because there are so many different sectors you can get into. You can do this through internships and by networking with other women in the same industry. 

Amy: I think the most important thing is to be yourself. Have empathy with other people. Get your ideas across. Collaborate with others. 

Zaida: Be resilient and persistent. You will face challenges along the way but just keep pushing forward. 

What inspired you to pursue a career in digital? 

Amy: One of the beautiful things about this industry is that you can continue to change, adapt and jump into different areas, if you’re open and willing to learn. The fact that I can continue to shift roles, learn new skills and adapt is interesting and motivating.

Neli: I never stand still and this is why I do the best in more dynamic industries where the only constant is change.

Mónica: The data, definitely the possibility to measure everything that happens to connect with people and brands in a very precise way and under a data-driven strategy. I love it!

Meg: I’m really attracted to industries that are creative, innovative and really respect differences of opinion – of who you are and the role you play in the organization. 

Are there any digital trends or innovations that you find interesting or exciting?

Elba: AI is completely revolutionizing how data is obtained, analyzed, and utilized. It allows us to better understand our consumers and tailor our marketing strategies accordingly.

Natalie: I think a very hot topic at the moment is anything around first-party data and machine learning. I think these topics will really change our landscape in the future. 

Neli: I’m actually quite a big fan of data power strategies and how they can actually engage the customer in a more meaningful way. So I can’t wait to see how the industry evolves in this direction and how this impacts businesses. 

Lisa: I find influencer marketing the most exciting. I’m excited to see how it evolves.

What challenges have you faced as a woman in this industry and how have you overcome them?

Zaida: Being underestimated. I have been able to overcome that by breaking and resetting expectations as a competent and confident female. 

Lisa: I struggled with speaking up in meetings with ideas that I have. And talking to other women in industry I was able to see that they struggled with this too. Through sharing these experiences I was able to see that I wasn’t alone. Having this reassurance built my confidence.

How do you believe this industry can continue to empower and support women?

Natalie: I really believe in mentorship. I had a few female mentors throughout my career and I learned lots from them. So I would really recommend businesses supporting  mentorship programs. 

Neli: I believe fair parental leave is the best way to support women coming back to the workplace following such a big event in their lives.

Mónica: We need more women in this industry, and female leaders who will continue to support other women so that they can continue to develop, grow and have strategic positions.

Elba: What I hope for is that in selection and promotion criteria, any candidate is valued based on their experience and merit, regardless of gender.

Meg: Creating spaces for men and women to connect. I think it’s important to highlight that sometimes we don’t understand what it feels like to be the other. Businesses should look to create a safe space to be able to call out the situation, challenge perceptions and give people the opportunity to be themself. 

Want to learn more about career opportunities at Incubeta? Check out our careers page.

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Incubeta has become a reseller of the technology, enabling clients to benefit from the efficiency savings of Lunio as a part of a wider tech stack to support best in class media buying.

Claire Burgess, Director of Delivery said: ‘As a partner to our clients it is our responsibility to bring the best in class technology to power so we can optimise their media buying performance and efficiencies.

For clients that have implemented the technology, we are seeing the % of fraud detected, and removed from targeting. The identification and removal of this traffic is delivering more efficient use of spend for our clients and supporting testing in new areas to acquire new customers.”

Neil Ruth, VP of Partnerships at Lunio added: “Working closely with Incubeta will continue to create even more exciting new opportunities to help their customers obtain greater ROI from every dollar they spend on ad platforms like Google, Meta, LinkedIn, TikTok and more.

Partnerships like this are critical in our ongoing scale-up phase. We’ve already expanded headcount significantly since my appointment in September and we’ve also recently opened our first London office. So we’re delighted to partner with Incubeta in our efforts to make the internet a safer and more reliable place for driving profitable business growth.”

To find out about how you can trial Lunio, contact us today.

The post Incubeta Announces Partnership with Lunio – Fraud Detection & Prevention Software appeared first on Incubeta.