Takealot adopts wait and see approach to Amazon's traction in SA
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Naspers-owned Takealot Group, South Africa's top online retailer, is maintaining a watchful eye after Amazon South Africa’s launch last month.
Naspers-owned Takealot Group, South Africa's top online retailer, is maintaining a watchful eye after Amazon South Africa’s launch last month.
Takealot was in a laager-like protective stance, explained Mamongae Mahlare, the group executive chairperson of Takealot Group.
Mahlare yesterday said: “I think they (Amazon) have had a soft start. But that is by no means an indication of the storm.They have a long game, they’re adjusting and they will learn.
“We hope in the long term all this investment, activity and competition ends up encouraging most South Africans to buy online,” she said.
In November 2023, the South African e-commerce platform takealot.com counted some 17.5 million visits worldwide. That month, over 90% of the visits were registered in South Africa, according to Statista.
But Mahlare said there must not be an underestimation of the impact of all the various e-commerce players.
Players included Checkers Sixty60, Makro, Temu, and Shein, among others.
Mahlare said Takealot was focusing on strengthening its South African footprint currently in the face of increasing competition rather than expansion in Africa.
Takealot’s owner, Naspers, Africa’s largest company by market value, recently boosted its investment in Takealot Group ahead of Amazon’s launch.
Mahlare said Naspers continued to support the business.
To be competitive, Takealot has had to up its marketing not just in advertising, but on social media, among other initiatives.
“We need to have the funds as required to fend off the competition to prosper, even to accept that the profit from this business might be lower as we invest. Naspers has a long-term view of the business and is committed to protecting this South African asset in order for it to continue to thrive,” she said.
Mahlare said that in three years’ time Takealot should have a bit more stability around how the increased competition would affect the platform.
Mahlare welcomed the government’s new regulations that will make it more costly for Chinese retailers, such as Temu and Shein, to bring in goods at a lower cost.
Batches of parcels brought into the country from Chinese retailers that are below R500 will be taxed at the same rate that local clothing retailers have to pay.
“There has been a lot of effort that’s gone into making sure that things are on an even playing field. Obviously still more needs to be done,” she said.
She said Takealot, the National Clothing Retail Federation of South Africa and a group of concerned parties were engaging with the Department of Trade and Industry as well as the South African Revenue Service to look at all the different ways exports were coming into South Africa and not paying taxes.
Mahlare said to level the playing field, international companies importing to South Africa also needed to pay tax to the South African fiscus.
“South Africans are buying products and the money is just going out to China, and the South Africa fiscus just ends up with the little bit you paid in duties,” she added, likening it to a land-grab.
Mahlare spoke about the importance of localisation and supporting online players versus international e-commerce. Sites such as Takealot, for example, had thousands of South African small businesses on their site, which supported job creation.
She said the South African master plan encouraged localisation and local production. There was more than consumers having the right to cheap products.
“If you are losing jobs in industries due to imports, local companies will go back to importing and jobs will be lost. There’s got to be a middle ground and say, yes you can bring the goods in, but it’s got to be properly competitive,” she warned.
Meanwhile, talking about the effect of the cost of living squeezing consumer spend, Mahlare said: “Absolutely.”
“Last year one could see the contraction as people just didn’t have money. You can see the spike of sales on payday. Also on the 15th of a month there is a huge spike. Whereas before there were spikes, but they weren’t huge. But as for the selection of goods people still buy everything.”
Apparently air fryers are in massive demand.
Mahlare said until South Africa’s interest rates came down and at least for six months, then it would start to have a material impact on people’s disposable income.
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